By John Letzing
ZURICH--The upper house of Switzerland's Parliament voted
Wednesday to approve a controversial plan that would allow the
country's banks to submit information to U.S. legal authorities
investigating alleged tax evasion by Americans.
Lawmakers voted 24-15 to accept the proposed plan, which would
allow participating banks to sidestep Switzerland's longstanding
bank secrecy laws and provide information to the U.S. Department of
Justice. The plan, proposed late last month, would allow banks that
had problematic dealings with American clients in the past to
negotiate settlements.
The vote follows a recommendation on Tuesday by the upper
house's economics committee to reject the proposed plan.
The plan will now move on to the lower house of Parliament,
which is expected to vote on it next week. If the lower house
blocks the measure, Parliament is expected to extend its
consideration.
The Swiss Cabinet, which presented the proposed plan to
Parliament, has cautioned lawmakers that they need to act quickly
to pass the measure. The Cabinet indicated that if the legislation
is not passed, the U.S. DOJ may hit Swiss banks with indictments
and potentially severe fines.
Switzerland's biggest bank, UBS AG (UBSN.VX), has already
weathered a U.S. DOJ probe that resulted in a $780 million penalty
in 2009 and an admission that it helped Americans evade taxes with
Swiss accounts. The country's oldest bank, Wegelin & Co., was
indicted in the U.S., pled guilty earlier this year to helping U.S.
clients avoid taxes and is now defunct.
However, Swiss lawmakers have raised concerns about the lack of
specifics in the proposed plan-such as the size of potential fines
to be faced by participating banks. Christoph Blocher, a leader of
the right-wing Swiss People's Party, has estimated that the total
cost to Switzerland's banks will be as much as 10 billion Swiss
francs ($10.8 billion), though he and his colleagues lack precise
figures.
Mr. Blocher's party, which holds the largest voting bloc in the
lower house of Parliament, issued a statement on Tuesday that it
plans to reject the proposed plan. "Switzerland must not throw its
constitutional principles overboard" by rushing it through, the
party said.
Credit Suisse Group AG (CSGN.VX), which has already been
cooperating with the DOJ by providing information, has set aside
CHF295 million to deal with any resulting penalties. Analysts
estimate Julius Baer Group AG (BAER.VX), which is also already
cooperating with U.S. authorities, may be hit with between CHF200
million and CHF500 million in penalties. The potential cost to many
of the country's other roughly 300 banks is unclear.
How third-party Swiss attorneys and advisors found to have
helped Americans to evade taxes by stashing assets in local banks
will be treated is also unclear.
The Swiss Institute of Certified Accountants and Tax Experts has
said in a statement that it's "not in a position to estimate the
extent of the negative impact on our members should the proposal be
adopted" because of the lack of details.
Write to John Letzing at john.letzing@wsj.com