Investors in Asia are joining international lawsuits against the Swiss government for its handling of affairs during the takeover of Credt Suisse, the iconic but troubled bank. Authorities in Switzerland forced Credit Suisse to merge with rival UBS to prevent own collapse.

Though the takeover averted a catastrophe in Swiss banking system, it made bonds worth USD 17 billion held by investors worthless.

An anonymous investor quoted by BBC had bought USD 500000 worth of bonds in January. The investor took the decision even after several problems in the bank.

"Whenever I spoke to them, the bank gave me constant reassurances that this was just a blip, so I decided to go for it. It didn't feel like I was gambling," BBC quoted the investor as saying.

The type of bonds bought in this case were reportedly AT1, a riskier type of bond the value of which can be written down to zero. This is something that happened when Credit Suisse was taken over by UBS.

Now, dozens of bondholders in Singapore are joining hands to hold the Swiss government responsible. The main grievance is the manner in which the merger was conducted.

The investors reportedly claim that terms of bonds should have made them first to be compensated when the bank was on the brink of collapse. The bondholders were to be given priority over shareholders. However, shareholders were allowed to exchange their Credit Suisse shares with UBS shares.

This in effect means that shareholders got something but bondholders did not.

The legal firm, which is representing bondholders, has alleged that the Swiss regulator's decision was "an unlawful action" and that it had "devastating consequences on thousands of retail and small investors globally."

Bondholders who talked to BBC expressed frustration after losing their money and&nbsp;questioned Switzerland's banking reputation.

"We're losing sleep over this. It should have been a rock solid investment, but now I think the reputation of Switzerland and Swiss banks has gone down the tube," said an Asian investor quoted anonymously by BBC.

"Who in the world is going to trust Switzerland anymore?"

(With inputs from agencies) 
 
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Investors in Asia are joining international lawsuits against the Swiss government for its handling of affairs during the takeover of Credt Suisse, the iconic but troubled bank.

Investors in Asia are joining international lawsuits against the Swiss government for its handling of affairs during the takeover of Credt Suisse, the iconic but troubled bank. Authorities in Switzerland forced Credit Suisse to merge with rival UBS to prevent own collapse. Though the takeover averted a catastrophe in Swiss banking system, it made bonds worth USD 17 billion held by investors worthless. An anonymous investor quoted by BBC had bought USD 500000 worth of bonds in January. The investor took the decision even after several problems in the bank. "Whenever I spoke to them, the bank gave me constant reassurances that this was just a blip, so I decided to go for it. It didn't feel like I was gambling," BBC quoted the investor as saying. The type of bonds bought in this case were reportedly AT1, a riskier type of bond the value of which can be written down to zero. This is something that happened when Credit Suisse was taken over by UBS. Now, dozens of bondholders in Singapore are joining hands to hold the Swiss government responsible. The main grievance is the manner in which the merger was conducted. The investors reportedly claim that terms of bonds should have made them first to be compensated when the bank was on the brink of collapse. The bondholders were to be given priority over shareholders. However, shareholders were allowed to exchange their Credit Suisse shares with UBS shares. This in effect means that shareholders got something but bondholders did not. The legal firm, which is representing bondholders, has alleged that the Swiss regulator's decision was "an unlawful action" and that it had "devastating consequences on thousands of retail and small investors globally." Bondholders who talked to BBC expressed frustration after losing their money and questioned Switzerland's banking reputation. "We're losing sleep over this. It should have been a rock solid investment, but now I think the reputation of Switzerland and Swiss banks has gone down the tube," said an Asian investor quoted anonymously by BBC. "Who in the world is going to trust Switzerland anymore?" (With inputs from agencies) You can now write for wionews.com and be a part of the community. Share your stories and opinions with us here. WATCH WION LIVE HERE ×

Credit Suisse: Bondholders in Asia sue Swiss government after wipeout

India has got the second set of Swiss bank account details of its nationals and entities under the automatic exchange of information pact with Switzerland, marking a key milestone in the government's fight against black money allegedly stashed abroad.

<a href="https://www.wionews.com/india-news/india-to-get-information-on-account-holders-in-swiss-banks-from-this-year-government-187932">Also Read: India to get information on account holders in Swiss banks from this year, says government</a>

India is among the 86 countries with which Switzerland's Federal Tax Administration (FTA) has exchanged information on financial accounts within the framework of global standards on AEOI this year.

India had received the first set of details from Switzerland in September 2019 under AEOI (Automatic Exchange of Information), when it involved 75 countries.

The information exchange this year involved nearly 3.1 million (31 lakh) financial accounts, FTA said in a statement on Friday. The number of such accounts was similar in 2019.

While the statement did not explicitly name India among the 86 countries, officials told PTI that India is among the prominent countries with which Switzerland has shared details about financial accounts of clients of Swiss banks and various other financial institutions.

The officials further said a "sizeable number" relates to Indian citizens and entities in the overall exchange of information about over three million financial accounts by Switzerland this year with 86 countries.

Besides, Swiss authorities have already shared information about more than 100 Indian citizens and entities in the past one year on receipt of requests for administrative assistance in cases involving probes into financial wrongdoings including tax evasion, the officials added.

These cases mostly relate to older accounts that might have been closed before 2018, for which Switzerland has shared details with India under an earlier framework of mutual administrative assistance as Indian authorities had provided prima facie evidence of tax-related wrongdoing by those account holders. AEOI is applicable only to accounts that are active or were closed during 2018.

Some of these cases relate to entities set up by Indians in various overseas jurisdictions like Panama, British Virgin Islands and Cayman Islands, while the individuals include mostly businessmen and a few politicians and erstwhile royals as well as their family members.

The officials, however, refused to share details about the exact number of accounts or the quantum of assets held in the accounts held by Indians, for which the information has been shared with India, citing strict confidentiality clauses governing the exchange framework.

The information shared by Swiss authorities include identification, account and financial information, such as name, address, country of residence and tax identification number, as well as information concerning the reporting financial institution, account balance and capital income.

The exchanged information will allow tax authorities to verify whether taxpayers have correctly declared their financial accounts in their tax returns. The next exchange would take place in September 2021.

In its statement, FTA said the 86 countries covered under the AEOI this year include 11 new jurisdictions -- Anguilla, Aruba, Bahamas, Bahrain, Grenada, Israel, Kuwait, Marshall Islands, Nauru, Panama and the United Arab Emirates -- in addition to the existing list of 75 countries, with whom information was shared last year.

Further, FTA said the exchange of information this year has been reciprocal with 66 countries. In the case of 20 countries, Switzerland received information but did not provide any, either because those countries do not yet meet the international requirements on confidentiality and data security (9 countries) or because they chose not to receive data (11 countries).

A total of 38 countries will supply their data to Switzerland in accordance with the Global Forum on Transparency and Exchange of Information for Tax Purposes (Global Forum) by December 31, 2020. These countries have claimed technical difficulties due to the COVID-19 crisis. 
Switzerland's first such exchange took place at the end of September 2018 and involved 36 countries, but India did not figure in the list at that time.

Currently, around 8,500 reporting financial institutions (banks, trusts, insurers, etc) are registered with FTA. These institutions collected the data and transferred it to FTA. The count has increased from about 7,500 last year.

FTA sent information on around 3.1 million financial accounts to the partner states and received information on around 8,15,000 financial accounts from them.

FTA also said it cannot provide any information on the amount of financial assets.

Switzerland has committed itself to adopt the global standard for the international automatic exchange of information in tax matters. The legal basis for the implementation of AEOI in Switzerland came into force on January 1, 2017.

This is the second time that India has received details from swiss authorities under &nbsp;AEOI framework, which provides for the exchange of information on financial accounts, currently active as well as those accounts that were closed during 2018, the year in which the framework agreement became effective.

However, AEOI only relates to accounts that are officially in the name of Indians and they might include those used for business and other genuine purposes.

The Global Forum of the Organisation for Economic Cooperation and Development reviews AEOI implementation.

According to experts, the data received by India can be quite useful for establishing a strong prosecution case against those who have any unaccounted wealth, as it provides entire details of deposits and transfers as well as of all earnings, including through investments in securities and other assets.

On condition of anonymity, several officials said the details relate mostly to businessmen, including non-resident Indians now settled in several South-East Asian countries as well as in the US, the UK and even some African and South American countries.

A Swiss delegation was in India in August last year before the first set of details could get shared and the two sides also discussed possible steps to expedite the execution of tax information-sharing requests made by India in specific cases.

It is feared many Indians might have closed their accounts after a global crackdown on black money led to Switzerland buckling under international pressure to open its banking sector for scrutiny to clear the long-held perception of Swiss banks being safe haven for undisclosed funds.

Switzerland agreed to AEOI with India after a long process, including a review of the necessary legal framework in India on data protection and confidentiality.&nbsp;

India has got the second set of Swiss bank account details of its nationals and entities under the automatic exchange of information pact with Switzerland, marking a key milestone in the government's fight against black money allegedly stashed abroad.

India has got the second set of Swiss bank account details of its nationals and entities under the automatic exchange of information pact with Switzerland, marking a key milestone in the government's fight against black money allegedly stashed abroad. Also Read: India to get information on account holders in Swiss banks from this year, says government India is among the 86 countries with which Switzerland's Federal Tax Administration (FTA) has exchanged information on financial accounts within the framework of global standards on AEOI this year. India had received the first set of details from Switzerland in September 2019 under AEOI (Automatic Exchange of Information), when it involved 75 countries. The information exchange this year involved nearly 3.1 million (31 lakh) financial accounts, FTA said in a statement on Friday. The number of such accounts was similar in 2019. While the statement did not explicitly name India among the 86 countries, officials told PTI that India is among the prominent countries with which Switzerland has shared details about financial accounts of clients of Swiss banks and various other financial institutions. The officials further said a "sizeable number" relates to Indian citizens and entities in the overall exchange of information about over three million financial accounts by Switzerland this year with 86 countries. Besides, Swiss authorities have already shared information about more than 100 Indian citizens and entities in the past one year on receipt of requests for administrative assistance in cases involving probes into financial wrongdoings including tax evasion, the officials added. These cases mostly relate to older accounts that might have been closed before 2018, for which Switzerland has shared details with India under an earlier framework of mutual administrative assistance as Indian authorities had provided prima facie evidence of tax-related wrongdoing by those account holders. AEOI is applicable only to accounts that are active or were closed during 2018. Some of these cases relate to entities set up by Indians in various overseas jurisdictions like Panama, British Virgin Islands and Cayman Islands, while the individuals include mostly businessmen and a few politicians and erstwhile royals as well as their family members. The officials, however, refused to share details about the exact number of accounts or the quantum of assets held in the accounts held by Indians, for which the information has been shared with India, citing strict confidentiality clauses governing the exchange framework. The information shared by Swiss authorities include identification, account and financial information, such as name, address, country of residence and tax identification number, as well as information concerning the reporting financial institution, account balance and capital income. The exchanged information will allow tax authorities to verify whether taxpayers have correctly declared their financial accounts in their tax returns. The next exchange would take place in September 2021. In its statement, FTA said the 86 countries covered under the AEOI this year include 11 new jurisdictions -- Anguilla, Aruba, Bahamas, Bahrain, Grenada, Israel, Kuwait, Marshall Islands, Nauru, Panama and the United Arab Emirates -- in addition to the existing list of 75 countries, with whom information was shared last year. Further, FTA said the exchange of information this year has been reciprocal with 66 countries. In the case of 20 countries, Switzerland received information but did not provide any, either because those countries do not yet meet the international requirements on confidentiality and data security (9 countries) or because they chose not to receive data (11 countries). A total of 38 countries will supply their data to Switzerland in accordance with the Global Forum on Transparency and Exchange of Information for Tax Purposes (Global Forum) by December 31, 2020. These countries have claimed technical difficulties due to the COVID-19 crisis. Switzerland's first such exchange took place at the end of September 2018 and involved 36 countries, but India did not figure in the list at that time. Currently, around 8,500 reporting financial institutions (banks, trusts, insurers, etc) are registered with FTA. These institutions collected the data and transferred it to FTA. The count has increased from about 7,500 last year. FTA sent information on around 3.1 million financial accounts to the partner states and received information on around 8,15,000 financial accounts from them. FTA also said it cannot provide any information on the amount of financial assets. Switzerland has committed itself to adopt the global standard for the international automatic exchange of information in tax matters. The legal basis for the implementation of AEOI in Switzerland came into force on January 1, 2017. This is the second time that India has received details from swiss authorities under AEOI framework, which provides for the exchange of information on financial accounts, currently active as well as those accounts that were closed during 2018, the year in which the framework agreement became effective. However, AEOI only relates to accounts that are officially in the name of Indians and they might include those used for business and other genuine purposes. The Global Forum of the Organisation for Economic Cooperation and Development reviews AEOI implementation. According to experts, the data received by India can be quite useful for establishing a strong prosecution case against those who have any unaccounted wealth, as it provides entire details of deposits and transfers as well as of all earnings, including through investments in securities and other assets. On condition of anonymity, several officials said the details relate mostly to businessmen, including non-resident Indians now settled in several South-East Asian countries as well as in the US, the UK and even some African and South American countries. A Swiss delegation was in India in August last year before the first set of details could get shared and the two sides also discussed possible steps to expedite the execution of tax information-sharing requests made by India in specific cases. It is feared many Indians might have closed their accounts after a global crackdown on black money led to Switzerland buckling under international pressure to open its banking sector for scrutiny to clear the long-held perception of Swiss banks being safe haven for undisclosed funds. Switzerland agreed to AEOI with India after a long process, including a review of the necessary legal framework in India on data protection and confidentiality.

India gets set of Swiss bank account details under automatic information exchange framework

A person with over $26 million&nbsp;in a Swiss bank account will now have to pay taxes despite her declared income of $2,261, the Income Tax Appellate Tribunal (ITAT) said in a crucial ruling.&nbsp;

Dismissing an appeal filed by assessee Renu T Tharani, ITAT Mumbai said on Thursday that over $26 million&nbsp;lying in her foreign account can be taxed by the Income Tax Department.&nbsp;

"The assessee is not a public personality like Mother Terresa that some unknown person, with complete anonymity, will settle a trust to give her $ 4 million," the tribunal recorded.&nbsp;

"Cayman Islands is not known for philanthropists operating from there, if Cayman Islands is known for anything relevant, it is known for an atmosphere conducive to hiding unaccounted wealth and money laundering, and that does not advance the case of the assessee," the Tribunal observed.&nbsp;

"This is a jurisdiction which has double the number of companies than residents, most of which remain only on paper and it will be naive to believe that these companies are located here, in a country with around 65,000 residents, for bonafide core activities, rather than the benefits of anonymity, secrecy and liberal tax laws," the tribunal noted in its order.&nbsp;

"The assessee is closely involved with the transaction and it is inconceivable that the assessee will have no direct knowledge of the owners of the underlying company and settlers of the trust which has her, as she herself puts it as the beneficiary of such a huge amount. This inference is all the more justified when we take into account the fact that the assessee has been non-cooperative and has declined to sign the consent waiver," it further said.&nbsp;

"One of the arguments raised by the assessee, as set out in a chart showing arguments of the assessee - below paragraph 20 earlier in this order, that the assessee could not have performed the impossible act of signing consent waiver because she was not owner of the account is too naïve and frivolous to be even taken seriously. If the assessee was indeed not the owner of the account, there was all the more reason to sign the consent waiver form because it would have established that fact when the HSBC Private Bank (Suisse) Geneva was to decline the information on the basis of that consent waiver," it added.&nbsp;

It further said that "there is nothing to controvert this fact stated in the base note and since the assessee has declined consent waiver in this case, the assessee cannot decline correctness of the details obtained from the HSBC Private Bank."

According to relevant facts noted in the order, the assessee had filed her income tax return, on July 29, 2006, disclosing an income of $2,261&nbsp;for the relevant previous year, but subsequently the investigation wing of the income tax department received information that the assessee is having a bank account with HSBC Private Bank (Suisse) SA Geneva.&nbsp;

The department, in 2014, decided to reopen the assessment.

In a notice issued under section 148 of the income tax act in October 2014, the department said that she maintained a bank account with HSBC Bank in Geneva, Switzerland where she maintained a peak balance of $3,97,38,122&nbsp;during the financial year relevant to the Assessment Year 2006-2007 &amp; a peak balance of $23,55,851.60 during the financial year relevant to Assessment year 2007-2008.

In response to the notice issued by the I-T Department, she had denied having an account with HSBC in Geneva in her name. &nbsp;

She later received a base note from the Deputy Director of Income Tax (International Taxation) with the details of the account claiming that it is in the name of GWU INVESTMENTS LTD "wherein it is said that I am the beneficial owner or the beneficiary."&nbsp;

Tharani claimed she did not receive any amount from the company, either as a beneficiary or as a beneficial owner.

The tribunal noted that the assessee is a beneficial owner of GWU Investments Ltd, Cayman Islands. "There is nothing to controvert this fact stated in the base note, and since the assessee has declined consent waiver in this case, the assessee cannot decline correctness of the details obtained from the HSBC Private Bank," it said.

"There is a series of coincidences, right from the HSBC account being closed after the information contained in the base note coming out and to the underlying company being removed from the name of Register of Companies in Cayman Island, right from assessee living in complete denial about any knowledge about a HSBC Private Bank (Suisse) SA account in her name to her lack of information about the company which is holding $ 4 million for her, and, despite assessee being purportedly so clean in her affairs, her thwarting any efforts of the income tax department to get at the truth by declining to sign the consent waiver form," it further said.&nbsp;

"It is wholly un-understandable as to how can assessee, on one hand, seek to treat a cleverly worded private letter from HSBC Private Bank (Suisse) SA as gospel truth, and, on the other hand, effectively stall, by declining consent waiver and by stating half truths- even if her statements have an element of truth, the Assessing Officer obtaining direct information from the same organization. There is no meeting ground in this approach. In any case, for the reasons set out above and as evident from the base note, the assessee is beneficial owner of GWU Investments Ltd, Cayman Islands," the order concluded.&nbsp;

A person with over $26 million in a Swiss bank account will now have to pay taxes despite her declared income of $2,261, the Income Tax Appellate Tribunal (ITAT) said in a crucial ruling.

A person with over $26 million in a Swiss bank account will now have to pay taxes despite her declared income of $2,261, the Income Tax Appellate Tribunal (ITAT) said in a crucial ruling. Dismissing an appeal filed by assessee Renu T Tharani, ITAT Mumbai said on Thursday that over $26 million lying in her foreign account can be taxed by the Income Tax Department. "The assessee is not a public personality like Mother Terresa that some unknown person, with complete anonymity, will settle a trust to give her $ 4 million," the tribunal recorded. "Cayman Islands is not known for philanthropists operating from there, if Cayman Islands is known for anything relevant, it is known for an atmosphere conducive to hiding unaccounted wealth and money laundering, and that does not advance the case of the assessee," the Tribunal observed. "This is a jurisdiction which has double the number of companies than residents, most of which remain only on paper and it will be naive to believe that these companies are located here, in a country with around 65,000 residents, for bonafide core activities, rather than the benefits of anonymity, secrecy and liberal tax laws," the tribunal noted in its order. "The assessee is closely involved with the transaction and it is inconceivable that the assessee will have no direct knowledge of the owners of the underlying company and settlers of the trust which has her, as she herself puts it as the beneficiary of such a huge amount. This inference is all the more justified when we take into account the fact that the assessee has been non-cooperative and has declined to sign the consent waiver," it further said. "One of the arguments raised by the assessee, as set out in a chart showing arguments of the assessee - below paragraph 20 earlier in this order, that the assessee could not have performed the impossible act of signing consent waiver because she was not owner of the account is too naïve and frivolous to be even taken seriously. If the assessee was indeed not the owner of the account, there was all the more reason to sign the consent waiver form because it would have established that fact when the HSBC Private Bank (Suisse) Geneva was to decline the information on the basis of that consent waiver," it added. It further said that "there is nothing to controvert this fact stated in the base note and since the assessee has declined consent waiver in this case, the assessee cannot decline correctness of the details obtained from the HSBC Private Bank." According to relevant facts noted in the order, the assessee had filed her income tax return, on July 29, 2006, disclosing an income of $2,261 for the relevant previous year, but subsequently the investigation wing of the income tax department received information that the assessee is having a bank account with HSBC Private Bank (Suisse) SA Geneva. The department, in 2014, decided to reopen the assessment. In a notice issued under section 148 of the income tax act in October 2014, the department said that she maintained a bank account with HSBC Bank in Geneva, Switzerland where she maintained a peak balance of $3,97,38,122 during the financial year relevant to the Assessment Year 2006-2007 & a peak balance of $23,55,851.60 during the financial year relevant to Assessment year 2007-2008. In response to the notice issued by the I-T Department, she had denied having an account with HSBC in Geneva in her name. She later received a base note from the Deputy Director of Income Tax (International Taxation) with the details of the account claiming that it is in the name of GWU INVESTMENTS LTD "wherein it is said that I am the beneficial owner or the beneficiary." Tharani claimed she did not receive any amount from the company, either as a beneficiary or as a beneficial owner. The tribunal noted that the assessee is a beneficial owner of GWU Investments Ltd, Cayman Islands. "There is nothing to controvert this fact stated in the base note, and since the assessee has declined consent waiver in this case, the assessee cannot decline correctness of the details obtained from the HSBC Private Bank," it said. "There is a series of coincidences, right from the HSBC account being closed after the information contained in the base note coming out and to the underlying company being removed from the name of Register of Companies in Cayman Island, right from assessee living in complete denial about any knowledge about a HSBC Private Bank (Suisse) SA account in her name to her lack of information about the company which is holding $ 4 million for her, and, despite assessee being purportedly so clean in her affairs, her thwarting any efforts of the income tax department to get at the truth by declining to sign the consent waiver form," it further said. "It is wholly un-understandable as to how can assessee, on one hand, seek to treat a cleverly worded private letter from HSBC Private Bank (Suisse) SA as gospel truth, and, on the other hand, effectively stall, by declining consent waiver and by stating half truths- even if her statements have an element of truth, the Assessing Officer obtaining direct information from the same organization. There is no meeting ground in this approach. In any case, for the reasons set out above and as evident from the base note, the assessee is beneficial owner of GWU Investments Ltd, Cayman Islands," the order concluded.

Mumbai tribunal orders 80-year-old woman to pay tax on $26 million stashed in Swiss bank