Swiss banks, hedge funds? assist with tax evasion

by Linda Beale

Two “R”s in the news: Rachel Alexandra and Rudolf Elmer–Swiss banks, hedge funds? assist with tax evasion
Maybe the world is looking up. A filly has won the Eclipse Award for Horse of the Year, by a whopping 130 votes to second runner Zenyatta’s 90 votes. I’ve always had a soft spot in my heart for horses, and especially for fillies. Comes from growing up visiting my country cousins in Tennessee, where my favorite part of the visit was getting to ride old Dan or some other horse.

And Rudolf Elmer is doing his bit, too, to add some cheer to the day. He’s the banker who worked for Swiss bank Julius Baer until he was fired in 2002 and has spent time sense sharing with the world the nefarious deeds of some of the Swiss institutions who have helped clients evade billions in taxes through uses of offshore havens. Says Rudolf “Offshore tax evasion is the biggest theft among societies and neighbor states in this world.” Swiss Banker Blows Whistle on Tax Evasion, New York Times, Jan 19, 2010

Elmer is flying to Germany where he is planning to blow the whistle even louder on Swiss banking assistance for tax evasion. The German authorities are “putting him up in a five-star hotel” but you can bet the U.S. authorities are eagerly probing his show and tell–apparently documents covering more than 1300 individuals and 100 trusts over five years that “detail the undisclosed role of American investment management companies in funneling American, European and South American clients who wished to avoid taxes to Julius Baer.” Elmer’s no saint, obviously, but the IRS strategy is described as “it takes a rogue to catch a thief” (echoes of television’s crime dramas).

The hiding places for all those wealthy tax scoflaws who thought they could just slip their millions into the shadows may not be much good these days. Further, the possible complicity of hedge and private equity firms in assisting tax evasion should, if verified, be the final nail in the coffin of the privileged “carried interest” taxation of hedge and equity fund managers’ compensation.