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Tax evasion scandal closes Switzerland's oldest bank

posted 4 Jan 2013, 03:22 by Mpelembe   [ updated 4 Jan 2013, 03:22 ]

Wegelin, Switzerland's oldest bank, is to close after being implicated in tax evasion revelations in the USA.

BERNSWITZERLAND (JANUARY 27, 2012) (REUTERS) -  Wegelin & Co, the oldest Swiss private bank, said on Thursday (January 4, 2012) it would shut its doors permanently after more than two and a half centuries, following its guilty plea to charges of helping wealthy Americans evade taxes through secret accounts.

The plea, in the U.S. District Court in Manhattan, marks the death knell for one ofSwitzerland's most notable banks, whose original European clients pre-date the American Revolution. It is also potentially a major turning point in a battle by U.S. authorities against Swiss bank secrecy.

However, despite the guilty plea it is still unclear whether the bank has turned over, or plans to disclose, names of American clients to U.S. authorities. This is one of the key demands in a broad U.S. investigation of tax evasion through Swiss banks.

Wegelin admitted to charges of conspiracy in helping Americans evade taxes of at least $1.2 billion for nearly a decade. Wegelin agreed to pay $57.8 million to the United Statesin restitution and fines.

Last February Wegelin became the first foreign bank in recent memory to be indicted by U.S. authorities and vowed to defend itself against the charges. The bank, founded in 1741, was declared a fugitive from justice when its Swiss-based executives failed to appear in U.S. court.

The surprise plea effectively ended the U.S. case against Wegelin, one of the most aggressive bank crackdowns in U.S. history.

In a statement on Thursday Wegelin said "Once the matter is finally concluded, Wegelin will cease to operate as a bank."

Wegelin, a partnership of Swiss private bankers, was already a shadow of its former self - it effectively broke itself up following the indictment last year by selling the non-U.S. portion of its business.

The fate of three Wegelin bankers, indicted in January 2012 on charges later modified to include the bank, remains up in the air. Under criminal procedural rules, the cases of the three bankers - Michael BerlinkaUrs Frei and Roger Keller - are still pending.