A data leak has revealed that the major Swiss bank, Credit Suisse, has been managing the assets of global oligarchs, corrupt politicians and drug barons for decades. Clients included the sons of former Egyptian tyrant Hosni Mubarak, ousted Algerian dictator Abdelaziz Bouteflika, and Eduard Seidel of the Siemens scandal, the biggest German corruption affair in recent years.
Many accounts belong to former and current officials from the Arab world, who, according to the whistleblower, “extracted large sums of money from their countries at the time of the popular uprisings of the Arab Spring.” Some accounts also belonged to people accused of hollowing out the Venezuelan oil company PDVSA through corruption and money laundering.
The revelations, called “Suisse Secrets”, are particularly significant because the data leak of 30,000 accounts only covers a fraction of Credit Suisse's 1.5 million accounts. This leak alone, however, includes clients from over 160 different nationalities. This clearly shows that the rich and powerful around the world use every means at their disposal to accumulate money, avoid taxes and maximise their profits.
Credit Suisse, the second-largest Swiss bank after UBS, is a global player in the financial sector. It is the 41st largest bank in the world and ranks fifth among the asset-managing banks. The reaction of stock markets illustrated the danger posed by this scandal for the entire Swiss banking sector. Shares of Swiss banks fell far further than other European financial institutions that have been affected by the Ukraine crisis.
In Switzerland, the so-called Censorship Act is also making waves. The law was drafted in 2014, shortly before Swiss banking secrecy was brought to an end. It states, among other things, that journalists can be prosecuted, and face prison sentences of up to three years, if they publish data about any individual that they are sent in violation of banking secrecy. As such, the ‘Suisse Secrets’ leaks were published by a network of journalists from over 40 countries but without Swiss participation. This has exposed for all to see that parliament and the bourgeois state are defenders of the criminal interests of the bankers.
In the same week as the “Suisse Secrets” were released, Putin marched his troops into Ukraine. Switzerland was under pressure to support the EU’s sanctions against Putin's regime. But in the first week of the invasion, the Swiss government invoked “Swiss neutrality” and desperately attempted to find a loophole.
Russian oligarchs should have no problem using their bank accounts in Switzerland. About 80 percent of the Russian trade in raw materials is conducted via the Swiss financial centres of Geneva, Zug, Lugano and Zurich. The Swiss capitalists have also been doing business with the USA, the EU and Ukraine, where they of course benefited from the favourable business climate under the reactionary Maidan government since 2014.
Indeed, Switzerland has become the fourth-largest investor in Ukraine in recent years. This is the real meaning of ‘neutrality’: Swiss imperialism balances between the big blocs to maximise its wealth as far as possible.
One rotten apple?
It is absolutely clear that Credit Suisse is not just one bad apple in the financial business. All major Swiss banks have been linked to illegal activities in recent months and years: whether tax evasion by big French capitalists (UBS), or a worldwide network of money laundering (HSBC), banks in Switzerland have a dirty finger in every pie.
The ‘Suisse Secrets’ are only the latest in a series of major corruption and money laundering revelations in recent years, which include the Panama Papers, the Swiss Leaks and the Pandora Papers. In the end, all these scandals merely go to prove what we all know: that the global 1 percent dodge taxes and cheat the rest of the world.
The ‘Suisse Secrets’ are only the latest in a series of major corruption and money laundering revelations in recent years, which include the Panama Papers, the Swiss Leaks and the Pandora Papers / Image: Public Domain
The “Suisse Secrets” reveal nothing other than the extreme parasitic character of the Swiss banking centre and of Swiss imperialism in general. This has historically been facilitated by Swiss banking secrecy - the ban on disclosing bank client data - which was enshrined in law in 1934 and only formally ended in recent years.
The aim was to strengthen Swiss banks in their main discipline of asset management. Switzerland had a law for almost a century that was deliberately designed to allow Swiss banks to engage in money laundering and tax evasion for the criminals of the entire world. This clearly shows the role of the capitalist state in Switzerland as the guardian of the banking centre. The state is not a neutral entity but is linked by a thousand threads to the capitalist class.
Today, the Swiss banking centre is in a deep crisis. In the last decade, banking’s share of Swiss GDP has fallen from 13 percent to 8.5 percent. The profits as well as the share prices of the two big banks UBS and Credit Suisse have also plummeted massively since 2008.
The financial crisis of 2008 was a near-death experience for the Swiss banks. UBS had to be rescued by the Swiss state with 60 billion Swiss francs. Among other things, the financial crisis exposed the fact that the big Swiss banks did not limit themselves to asset management, but since the 1990s had ventured deep into risky investment banking. In doing so, they had made powerful enemies; after all, this is the territory of the big US banks.
The US banking sector brutally capitalised on the weakness of the Swiss banking centre after the 2008 crisis. The USA threatened the devastated UBS with criminal charges for aiding and abetting tax evasion. This attack on the Swiss banking centre was part of the global campaign of the great powers (above all the USA and the EU) against tax havens since the 1990s, not for ‘moral’ but purely competitive reasons. Swiss banking secrecy, and thus the heart of the banking centre, was attacked head-on.
The Swiss government fought tooth and nail to preserve banking secrecy. But in the end Switzerland had to admit defeat to the great powers. The Swiss banks were forced to pay gigantic fines and to hand over thousands of clients’ data. By the end of 2009, UBS had lost 30 percent of its assets under management.
In 2014, Switzerland finally joined the OECD's declaration on the automatic exchange of information (AEOI) in tax matters. The AEOI came into force in 2017. Since then, Swiss banks have had to collect financial information on their clients and, if necessary, transmit it to the tax authorities of certain countries.
But the formal end of banking secrecy does not mean that corruption, money laundering and tax evasion are over. On the contrary, since Swiss banks are now at the mercy of international competition, they are forced to take ever-greater risks.
This includes focusing on ‘emerging markets’ in Latin America, the Middle East and Africa. These countries have major wealth and income inequality. These large and new assets are profitable, but the clients are riskier: political scandals and money laundering are becoming more of a problem. A particularly large number of clients from the Credit Suisse data leak come from emerging markets. While populations are often subjected to catastrophic living conditions, Swiss banks help local elites drain money from the country.
The AEOI agreement does indeed pose a certain difficulty. But at the same time, numerous ways exist to circumvent the exchange of information. There is no AEOI agreement with over 90 countries worldwide. “Suisse Secrets” has now uncovered that, for example, clients are being issued residence confirmations from countries without an AEOI agreement. Or the Swiss banks operate through one of their branches in the corresponding countries. Credit Suisse, for example, has branches in more than 50 countries without disclosing which ones. And these are just a few of the many loopholes in the AEOI.
The “Suisse Secrets” clearly prove that criminal schemes are still an integral part of the Swiss banking centre today.
The decline of the Swiss banking centre
With the formal fall of banking secrecy, the Swiss banks lost their position of near-monopoly in asset management. International competition intensified massively. Today, Swiss banks have to manage 20 percent more assets to make the same profit as they did before 2008.
We are seeing the decline of the Swiss banking centre on every front. Since 2009, the number of foreign banks in Switzerland has dropped from 123 to 71. In the same period, the sector lost almost 20 percent of its employees.
A third of Swiss private banks are likely to exit the market in the coming years / Image: Romy Biner Hauser, Wikimedia Commons
According to the main Swiss bourgeois newspaper NZZ, a third of Swiss private banks are likely to exit the market in the coming years. Bernhard Brauhofer, leading expert on corporate reputation, sums it up well: “You can simply see that security and all that Switzerland stands for has really been lost. Investors and savers are not only noticing this in Switzerland, but also in other countries.”
Credit Suisse is in particularly dire straits. While the two big Swiss banks were roughly equal for a long time, UBS’s profits are now more than double those of Credit Suisse.
In the last few months, one shock followed another. Last March, $5 billion (a half-year's profit) were lost on the overly-risky Archegos deal. In October, there came a $500 million fine for involvement in the Mozambique administration corruption scandal. In December, there were charges of money laundering with Bulgarian drug traffickers. In January 2022, the Chairman of the Board of Directors Horta-Osório resigned after only eight months, after it became known that he had violated quarantine regulations twice. At the beginning of February, the bank slid into the red, and dividends were cut to 10 centimes. And now, we have this devastating data leak.
In the “Suisse Secrets” leak, a crack has emerged in the declining Swiss banking centre at its weakest link.
Swiss capitalism at a dead end
Switzerland has historically been one of the most stable capitalist countries. But the material basis of this stability is decaying massively. In the global crisis of capitalism, international competition is clearly heating up.
The niches for Swiss capital are becoming smaller and smaller, cherry-picking from the world markets is becoming less and less possible. The abolition of banking secrecy is part of this. But it applies to all the cornerstones of Swiss capitalism.
What seemed to be eternal Swiss stability is coming to an end – a clear sign of the depth of the world capitalist system’s general crisis / Image: der Funke
Switzerland's tax advantages are under international fire, most recently from the OECD's tax reform. Fewer and fewer large corporations are settling in Switzerland. Relations with all-important economic partners are in crisis, as can be seen in failed negotiations on the framework agreement with the EU. As a result, at least two-thirds of trade on industrial products could face major problems in the next few years.
Swiss capitalism is in relative decline. In 1970, Switzerland's per capita economic output was 110 percent higher than the OECD average and today it is only 57 percent higher. Labour productivity in Switzerland has been growing more slowly than most OECD countries since 1990, a whopping 22 percent less than in Sweden, for example. At the same time, living conditions in Switzerland have been stagnating for 25 years.
The Swiss bourgeoisie is largely at the mercy of the international situation. It can hardly assert its own interests in the increasing tensions between the big blocs. Therefore, the ruling class is increasingly attacking the working class. The Swiss capitalists urgently need reforms to improve their conditions of profit, at least within their own national borders. Many hard attacks are already being prepared: on pensions, via the tax system, working hours and social benefits.
In the end, this will only provoke the resistance of the working class. What seemed to be eternal Swiss stability is coming to an end. This is a clear sign of the depth of the world capitalist system’s general crisis.
Hypocrisy and rot exposed
The “Suisse Secrets” have exposed the tremendous hypocrisy of the ruling class. As with the Panama Papers, they claim that no laws have been broken. Or they try to sell corruption and money laundering as a necessary evil. In the words of the NZZ: “Criminal money always seeks the path of least resistance. It will never be completely avoidable that money of criminal origin also finds its way to the Swiss financial centre.”
From a capitalist point of view, they are right. But in the eyes of the masses, the “Suisse Secrets” are simply revolting. It is clear that, as with the Panama Papers, the ruling class will once again get away unpunished. But the resulting radicalisation will sooner or later backfire on the elite.
The duty of Marxists in Switzerland is to fight the regime of the bankers and bosses / Image: der Funke
Under capitalism, the working class creates all the wealth in society. But the capitalists concentrate it in a few hands and stash it in their private bank accounts. At the same time, they tell us that there is not enough money for healthcare or education.
In this respect, the “Suisse Secrets” expose the character of the capitalist state. Banking secrecy was explicitly a law for the criminally rich and the bankers. Despite politicians talking about “regulating the financial market”, in reality the state acts as an organ for the interests of the bourgeoisie as a whole.
The Swiss social democracy is now demanding the abolition of the Censorship Act. Of course, this law is harmful to the working class. But to raise this as the only demand flowing from the “Suisse Secrets” scandal fuels the illusion that the bourgeois state can be depended on to ‘clean up’ the finance sector. The reformist demand to “tax the rich” is also woefully insufficient. The capitalists will always find ways to pay as little tax on their ill-gotten wealth as possible, fair or foul.
The duty of Marxists in Switzerland is to fight the regime of the bankers and bosses. First and foremost, we must name and expose the parasitic nature of the Swiss banks: they are the asset managers for corrupt regimes around the world. They plunder the fruits of the labour of the international working class.
Beyond that, we Marxists in Switzerland can set ourselves no lesser aim than the expropriation of the banks, the return of the money to the working populations all over the world and the democratic planning of society’s wealth under workers’ control.