Wegelin to close after US tax evasion scandal
4 Jan 2013
Switzerland's oldest private bank is set to close down after it admitted helping rich Americans evade tax.
Wegelin, founded in 1741, was slapped with a $57.8m (£36m) fine by US authorities after pleading guilty to charges of conspiracy to aid over 100 US taxpayers hide at least $1.2bn for almost 10 years.
The disgraced institution has become the first foreign bank to plead guilty to tax evasion charges in the US and marks a watershed moment for the highly secretive Swiss banking industry.
In a New York court, a senior Wegelin executive admitted that the bank knew it was wrong, but thought they would not be prosecuted because it was legal in Switzerland, and common practice in Swiss banking.
Otto Bruderer, a managing partner at the 271-year-old bank, told the court: 'Wegelin was aware that this conduct was wrong."
When the bank was first charged in February last year, it promised to fight the charges and was even declared a fugitive from justice when three of its Swiss-based executives failed to appear in court.
It claimed because it only had no foreign branches it could not be prosecuted by the US, and that it broke no Swiss laws.
In a statement, Wegelin said: 'Once the matter is finally concluded, Wegelin will cease to operate as a bank.'
Wegelin was quick to break itself up after last year's indictment by selling off the non-US element of its business.
In 2009, Swiss banking giant UBS agreed to enter into a deferred-prosecution agreement and hand over thousands of client names and pay a $780m fine after pleading guilt to criminal wrongdoing by selling tax-evasion services to Americans.
Assistant US attorney general Kathryn Keneally said the Justice Department would continue "to find those who continue to shirk their tax obligations," in addition to those who aid them and profit from it.
Sally Brown, an international tax associate at Milestone International Tax Partners, said: 'This is evidence of the death throes of the Swiss banking system. Secrecy has been eroded over the last few years as a consequence of the actions of UBS. In a way, the Swiss banks that have historically been assisting (or, indeed, encouraging) foreign tax avoidance now have to reconsider their approach in line with the growing international trend to curb tax avoidance.'