After the crash of Lehman Brothers in 2008, UBS, the biggest Swiss bank, found itself on the edge of collapse. The Swiss government bailed them out to a tune of $60 billion dollars. What came next was well outlined in an April 8, 2010 special report by Lisa Jucca with Reuters titled, “How the U.S. cracked open secret vaults at UBS“.
The report, in part, read:
Investors the world over breathed a sigh of relief on October 16 when the Swiss government rescued UBS. But unbeknownst to them at the time, the bank faced a potentially devastating crisis on a very different front.
One day after the bailout, top executives from UBS and Swiss regulators were summoned to a closed-door meeting in New York by U.S. officials who were conducting a wide-ranging tax fraud investigation that centered on the bank.
The UBS delegation, led by newly-appointed Group General Counsel Markus Diethelm, arrived armed with the results of an internal report highlighting instances of tax fraud within the bank, insiders told Reuters. The plan was simple: admit guilt, settle the case quickly and move on.
But Kevin Downing, the U.S. Department of Justice Tax Division Attorney who had been investigating UBS since the middle of 2008, chose that meeting to drop a bombshell: he wanted the bank to disclose names of U.S. tax evaders as a condition for a settlement.
That put UBS in the nightmarish position of either breaching nearly a century of Swiss bank secrecy or risking indictment in the United States.
“UBS was already in a position of weakness from the credit crisis,” said one person who attended the meeting and spoke to Reuters on condition of anonymity. “It became crystal clear at that meeting that without addressing the issue of client names, no settlement could be found.”
Interviews with insiders and a review of documents reveal previously undisclosed details about how the sprawling tax case was resolved — at several points in the process, for example, Secretary of State Hillary Clinton was involved.
The article goes on to talk about the UBS case but what it doesn’t mention is the deal that Hillary Clinton brokered kept the lion’s share of the mega-tax-dodgers out of the limelight.