The US judge who presided over the criminal court case that toppled Switzerland’s oldest bank, Wegelin, has defended the US justice system’s behaviour and denies the US has been a bully in its treatment of Swiss banks.

The US
judge who presided over the criminal court case that toppled Switzerland’s oldest bank, Wegelin, has defended
the US justice system’s
behaviour and denies the US
has been a bully in its treatment of Swiss banks.

Judge Jed Rakoff ordered Wegelin in March this year to pay a
fine of $74 million for helping US citizens to dodge taxes. Wegelin has ceased
to operate in the US
and its non-US operations have been sold to the Raiffeisen Group. To all
intents and purposes, the Wegelin name – dating back to the early 1740s – no longer
exists.

The comments by Rakoff to the Swissinfo publication come as Swiss banks, such as Vontobel, last
week began to state how they are going to sign up to the recent Swiss-US tax
pact, agreed in August, that is designed to draw a line under years of
wrangling between the two countries over the conduct of Swiss banks. The pact
has been seen in some quarters as a nail in the coffin of Swiss bank secrecy
law, which in its current form dates back to 1934.

A number of large Swiss banks, such as UBS – which settled
criminal and civil cases with US authorities in 2009 – no longer provide offshore
banking services to US clients.

“What led to recent US activities was the feeling that
the Swiss banks had become more aggressive in promoting their ability to help
clients evade taxes. They were in effect advertising this to US citizens as an
advantage of holding Swiss bank accounts,” Rakoff told the publication. “The
Department of Justice felt this went too far. It’s bad enough that Switzerland
made itself available to help people evade their taxes, but even worse that they
were actively promoting it,” he was quoted as saying.

“It is a sad but true fact in the history of the world that
powerful nations have acted as bullies towards less powerful nations. That
remains a very real danger, but I don’t think it fits this situation. What
right does one state have to impose its laws and values on another? That’s an
age-old debate. The US
does not have the right to impose its values on another country unless that
country is directly harming us,” he continued.

“The US
perception is that Swiss banking secrecy is an economic decision taken by Switzerland to
foster its strong banking activity. That’s not sufficient justification for the
harm done to us through massive tax evasion,” he said.

The degree of co-operation that Switzerland is willing to
give towards other countries over tax matters remains controversial in the
state; last week, Swiss lawmakers voted against ratifying an agreement with
France over inheritance taxes, for example, claiming the deal would hit Swiss
sovereignty.