Switzerland’s efforts to calm a banking furore hit a major setback on Tuesday as nationalist and left-wing lawmakers blocked a treaty with the United States that would have allowed UBS to hand over thousands more files on its American clients to US tax authorities.
The Swiss government and Washington had painstakingly crafted the treaty last August to resolve a long-standing dispute over the bank’s alleged role in aiding tax evasion but 104 lawmakers in Switzerland’s lower house voted against the deal on Tuesday, compared to 76 in favour. Sixteen lawmakers abstained.
The government had urged lawmakers to approve the deal to avert harm to the Swiss economy, which is heavily dependent on the country’s banking industry.
The deal is crucial to UBS — the country’s largest bank — which has faced intense pressure from US authorities since 2007.
Last year the bank agreed to turn over hundreds of client files and pay a $780 million penalty in return for a deferred prosecution agreement. But Washington has signalled that unless UBS reveals a further 4,450 American names demanded in the US-Swiss agreement, it may face a crippling civil investigation just as the bank is recovering from the subprime crisis and seeking to rebuild its US business.
The deal was blocked on Tuesday by lawmakers from two biggest parties, the People’s Party and the Social Democrats. The bill will now be passed back to the upper house for further debate and could be voted on again by the lower house later this month. But lawmakers also voted to put any eventual compromise to a popular referendum, making a further delay likely.
— AP