Those recalcitrant Swiss By ANJUM IBRAHIM

ARTICLE (April 05 2010): The results of a survey that asks respondents what is the first thing that comes to mind if Switzerland is mentioned would vary markedly depending on the sample selected. Cheese and chocolates in that order would probably be the consensus as far as the Western public is concerned. Protecting tax evaders would, in all probability, be the indignant cry of the Western tax authorities.

Assisting those, who have mercilessly looted the public exchequer of their countries, would be the rallying cry of the people of several Third World countries where corruption amongst the political leadership/bureaucracy/military high command is known to be extremely high as is the case in Pakistan.

But, so stated the Geneva prosecutor, when asked for his take on the Supreme Court directive to the government of Pakistan to write a letter requesting the Swiss authorities to reopen cases against President Zardari: the Pakistani President enjoys immunity as head of state and will continue to do so unless Pakistan lifts that immunity. Considering that the political leadership of this country has this week past agreed to a comprehensive package of constitutional reforms and during its nine-month long deliberations did not even consider the issue of presidential immunity as contained in Article 248 of the Constitution, it is unlikely that our Parliament would take any action on this issue.

It is fairly evident that the opposition political parties are relying on the Supreme Court to enforce implementation of its verdict on the National Reconciliation Ordinance (NRO), and apart from periodic statements, urging the government to implement the verdict, is unlikely to do anything else.

Those who therefore argue that the Geneva's prosecutor has a valid point need to be reminded of the almost universal anger that continues to be heaped against the Swiss by the tax authorities worldwide - an anger that has been ignored by the Swiss banks, supported by the Swiss government, until and unless a visible and credible threat of a bank's insolvency was at stake.

The Pakistani government's defence for non compliance with the NRO judgement is premised on claims of its 'selective' accountability (the Swiss case happens to be Zardari - specific), and the immunity enjoyed by the President in our Constitution. Implicit in this argument is, of course, the obvious: if the people of this country democratically voted President Zardari into power in spite of his tarnished image doing the rounds almost since the day of his marriage to the charismatic Benazir Bhutto, then the people's verdict is clear and must be respected over and above the Supreme Court's verdict. Additionally, so argue Zardari loyalists, any attempt to fully implement the judgement in this case would be an infringement of the trichotomy of powers dictum in a democratic set-up.

How far back can one date the Swiss banking secrecy laws? And is there a move to alter these laws with respect to making the world's corrupt/tax evaders pay for their transgressions? These two are critical questions with particular relevance to the financial and political fortunes of President Zardari in particular and those accused of corruption worldwide in general.

These laws, that helped catapult this small country into the annals of a developed world with extremely high per capita income, date back to the seventeenth century when the operative word was 'financial discretion'. This term was premised on the fact that all powerful potentates of that era could and did illegally confiscate properties/moneys of their political opponents. Interestingly, a similar case has been made by generations of Pakistani politicians forced to sit in the opposition either within a democratic dispensation or during periods of dictatorship with the operative term in use being political victimisation.

Post World War I, however, nations began to take action against Swiss banks whenever they determined that particular residents/citizens were engaged in illegal activity and banking their ill gotten wealth in offshore accounts in Switzerland. The Swiss have been forced to back down on a number of instances with respect to revelations of account holders that fall into three categories. First, wealth stolen by the victor as spoils of war. The Swiss government was forced to set up a $1.25 billion compensation fund for the holocaust victims.

Second, those tax evaders, who bank in Switzerland merely to hoodwink their domestic tax authorities and thereby do not pay taxes at home. In this context Paris and Berne signed an agreement which allowed the Swiss banks that had a presence in France to release the names of 3000 French nationals with the Swiss bank accounts to the French government with combined assets of 4.3 billion dollars. The French did not reveal the names, but began what was termed a terror campaign to get their citizens to pay back taxes and penalties on offshore accounts within a stipulated time.

Another example is the US demand that UBS Switzerland release information of 52,000 accounts to the Internal Revenue Service (INS) to ensure that these account holders pay their due tax to the US. The INS estimates an annual loss of $100 billion in tax revenues on assets stashed abroad. The UBS continues in its efforts to fight attempts to reveal to the US authorities more names of its American clients with undeclared accounts.

The Swiss and US officials met recently and agreed in January to a $780m deal with the US Department of Justice agreeing, in return, to settle criminal charges against the bank's private banking activities. And very recently, the German government was offered data by a whistleblower of 150 of her nationals with around 2.5 billion Euros in the Swiss banks, which could generate tax revenue up to 200 million euros.

And finally, the corrupt potentates of the Third World countries, who banked their ill-gotten wealth in Switzerland like Ferdinand Marcos of the Philippines - wealth accumulated through graft or skimming off development assistance for the country. The Swiss banks were forced to remit the money to the people of the Philippines.

In Pakistan, the case is markedly different. The Supreme Court as opposed to the Federal Board of Revenue or the Ministry of Law is focused on the case involving President Zardari and his several million dollars held in Swiss accounts. The bank complicit in this transaction is none other than the UBS the same bank that the INS, the tax collection arm of the US government, successfully forced to reveal the names of US tax evaders. This no doubt would lend credence to the view that this particular bank has been engaged in supporting money launderers.

What are the known facts in the case? A Geneva investigating magistrate found sufficient grounds for prosecution of Benazir Bhutto and Asif Ali Zardari in a money-laundering case linked to alleged kickbacks in 2003; the court ruled that the amount of money involved rendered it a case of aggravated money laundering, which carries a sentence of five years in prison. The couple went into appeal, the verdict was automatically stayed and a new investigation begun. The appeal process was said to have been near completion and a verdict expected in a few weeks when the NRO was promulgated by Musharraf and on his verbal orders Malik Qayyum, the-then Attorney General, requested the court in Switzerland to close the case as it was premised not on facts but on political victimisation. Why did not the former first couple of Pakistan wait for a verdict to clear them of all wrong-doing instead of signing an NRO with the infamous Musharraf is not clear! Even if the PPP's claim that the case itself was politically motivated is accepted, yet no one can actually aver that this money did not belong to the President, a rather large sum to account even for a wealthy Pakistani, or that the Swiss court verdict would have been motivated by our internal political considerations.

Those Pakistanis, who feel that the Supreme Court verdict is enough to get the Swiss to restart the case against Zardari or that his immunity would save him, are missing the point! What would determine the restart of the case is probably the clout that our internal institutions can exercise on Switzerland. There are no Swiss banks in this country so unlike the US, Germany and France, there can be no overt pressure on that count. As a country, we do not have sufficient Swiss francs to manipulate the Swiss franc's value. Reliance on the Swiss justice system to render justice to millions of Pakistanis is hardly going to carry much weight with the Swiss banks or the Swiss government, especially given that our government is not that keen either. So effectively that may well be a dead end in any case.

Those who feel that those millions of dollars that were frozen till the NRO became effective must also understand that the money is in all probability in yet another off-shore account by now, details of which are not known and the 12 boxes, removed from Switzerland, are not likely to contain that information.

There may be a silver lining in all this. The Swiss Foreign Minister recently revealed that the Swiss government is debating amendments to the secrecy laws that would facilitate the return of hidden wealth. However, it will be prospective instead of retrospective. Or in other words, future corruption would not be tolerated while the past corruption would not be scrutinised. This law, if made effective, would imply that the days when corrupt officials/politicians could go into self-imposed exile to escape justice are over. However, the people of this country are unlikely to forget past transgressions, especially with the steady erosion of the quality of life in this country and would, therefore, applaud efforts to bring back the looted wealth.

Source: http://www.brecorder.com/index.php?id=1040993&currPageNo=1&query=&search=&term=&supDate=