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Home News Swiss parliament passes US deal on UBS, new hurdle in way

Swiss parliament passes US deal on UBS, new hurdle in way

Published on 15/06/2010

Switzerland's lower house of parliament Tuesday passed a deal with Washington settling US tax evasion litigation against Swiss banking giant UBS, considered crucial for the bank's future.

The vote secured overall parliamentary endorsement of the deal after its rejection last week in the lower house but it immediately ran into a new technical hurdle.

Lawmakers now have to settle whether the agreement between Bern and Washington is open to a referendum, with the two houses of parliament in a split that could delay or even scupper the final green light.

Tuesday’s motion was approved by 81 votes to 61, with 53 abstentions.

Switzerland, the United States and UBS agreed in August 2009 that the bank would identify 4,450 US clients suspected of tax evasion in an attempt to settle lawsuits by US authorities to force the bank to hand over information.

The deal needed parliamentary approval after the Swiss supreme court in January called its legal basis into question.

The Swiss senate or upper house endorsed the agreement but it had to be re-submitted to the lower house.

The United States reiterated last week that it would revive potentially costly litigation for the troubled Swiss bank if Switzerland reneged on the agreement, which opened a corner of the country’s coveted banking secrecy.

The government repeatedly warned that a failure to approve it would harm the prized Swiss financial industry.

The lower house rejected the document in a first vote last week as the debate became mired in political bargaining over a tax on bank bonus payments.

A new hitch emerged after the lower house decided in a separate vote on Tuesday that the deal should be open to an optional referendum, unlike the senate which had ruled out such a move.

Under Switzerland’s complex legislative system, Swiss citizens have 100 days to petition for a national referendum challenging newly passed legislation, needing to collect 50,000 signatures.

That would delay application of the deal until August 19, the Swiss news agency ATS reported.

With parliament due to close its summer session on Friday, the two houses of parliament now have to settle the issue of the optional referendum within days.

Switzerland’s biggest business association, Economiesuisse, criticised the uncertainty and warned that a referendum would prevent Switzerland from respecting the agreement with the United States on time.

A referendum “is not justified, neither from a material point of view nor on the legal front,” it added.

Several centre-right parliamentarians also rejected the referendum option while Justice Minister Eveline Widmer-Schlumpf said there was no justification for the step.

She called on lawmakers “to end for once and for all the tiresome UBS story.”

Officials fear that a breakdown in the deal brokered by Washington and Bern could stoke tensions in broader political and economic relations between the two countries and jeopardise UBS’s banking licence in the United States.