US prosecutors have charged six Swiss bankers and a Swiss consultancy for the super-wealthy with helping to hide more than $60m from American tax authorities through an elaborate offshore evasion scheme.
In an indictment unsealed on Tuesday, the US Department of Justice said the six earned bumper fees helping wealthy American clients of the Zurich-based private bank IHAG defraud the US Internal Revenue Service between 2009 and 2014.
The case is the latest to emerge from the 15-year crackdown by US authorities on tax fraud by rich Americans in offshore jurisdictions.
Switzerland — a country that has long prized the discretion and secrecy of its banking industry — has been a focus of the effort.
“Taxpayers contemplating hiding money abroad — and the foreign bankers, attorneys and finance professionals who design and execute strategies to assist their evasion — should know that the Tax Division and IRS have the investigative resources and expertise to unravel even the most elaborate schemes,” said acting deputy assistant attorney-general Stuart Goldberg in a statement accompanying the latest charges.
According to the Department of Justice, the IHAG bank scheme — dubbed ‘the Singapore solution’ by its creators — involved money being routed via Hong Kong and Singapore to remove any information to link it to US clients.
IHAG, set up by Swiss arms manufacturer and art collector Emil Georg Bührle in 1949, is not itself a party to the litigation.
The bank said it had “fully co-operated with the relevant authorities” and stressed the charges related to the conduct of individuals more than six years ago.
It signed a non-prosecution agreement with US prosecutors in 2015, under which it paid a $7.4m fine and agreed to fully co-operate by sharing information relevant to future investigations.
A key element of the tax evasion process allegedly used by some of the bank’s clients was an elaborate scheme to exploit a loophole in Hong Kong law.
This involved setting up nominee accounts with a Hong Kong bank. The corporate entity set up to control each account was in turn controlled by at least 10 shell companies in the British Virgin Islands. Banks in Hong Kong do not have to conduct extensive ‘know your client’ due diligence checks if no single shareholder of an account’s controlling party owns more than 10 per cent of it.
Funds were then transferred from the Hong Kong accounts to an asset manager in Singapore.
The six individuals accused by the DOJ of running the scheme include former IHAG bank deputy chief executive Peter Ruegg.
Ruegg was arrested in Mallorca in August, on the basis of an Interpol arrest warrant. He has subsequently resigned from his position at IHAG.
Others defendants include Daniel Wälchli, an executive board member of the holding company that owns IHAG bank, and former IHAG bank counsel and compliance chief Ivo Bechtiger.
The indictment accuses the Swiss consultancy Allied Finance Trust of being at the centre of the scheme.
The company did not respond to a request for comment. Its Zurich chief executive, Rolf Schnellmann, and the chief executive of its Liechtenstein parent company, Bernhard Lampert, are also named as defendants.
The sixth, Roderic Sage, is the chief executive of a Hong Kong company that is alleged by the Department of Justice to have been a key facilitator of the scheme.