The Swiss parliament on Thursday was to start debating a deal reached between Bern and Washington on the disclosure of UBS AG client data to tax authorities in the United States, according to dpa. If passed, the deal reached by the two governments last year would see Switzerland hand over data on some 4,500 clients to the US government agencies, in the largest lifting of the bank secrecy veil since it was legislated in 1934. A key parliamentary committee this week backed the deal, but added a caveat saying that a referendum might be needed. A final vote by the lawmakers is expected this month, during the summer session of the houses of parliament. In Switzerland's direct democracy, the use of public polling for laws is common, but the government had hoped to push the one-time deal on UBS through without having to garner votes of support from half the population, which has attachments to bank secrecy. Meanwhile, a parliamentary report released this week criticized how the government handled the UBS affair once it broke. Three federal councilors - the local equivalent of ministers - who were most involved in the affair came under the heaviest scrutiny and criticism. Parliament said they failed to anticipate the problems that would arise from the bank's operations in the US, which quietly came under investigation there as early as 2007. Starting in 2008, when UBS was first openly accused of helping wealthy US clients avoid paying taxes, Switzerland has been facing increased pressure on its prized bank secrecy rules. As the financial and economic crisis deepened, G20 countries became even more interested in recovering lost tax revenues from so- called tax havens. In February 2009, Swiss regulators handed over data on some 250 UBS clients to US authorities and UBS was fined 780 million dollars. The next day, Washington announced it was widening the investigation to thousands more wealthy customers of the bank. A month later, the Federal Council - or executive branch of government - said it would relax bank secrecy to comply more closely with international rules on transparency, and began to renegotiate double taxation agreements with more than a dozen countries. Several other key financial centres with privacy laws launched similar moves at the same time, fearing a backlash from the world's most important economies. Bern's deal with the US on the 4,500 UBS accounts was reached last August as a kind of compromise, but has since been tied up. First, the courts rejected the handing over of the data. Then the legislators stepped in, as various parties' support had to be secured, with some lawmakers weary of backing changes to the privacy rules and others demanding a crackdown on bankers' bonuses in return. While it appears enough support has been gathered in the two houses of parliament to pass the deal, a referendum - or even leaving the door open to that option - could complicate matters. The US wants the client data this summer, but polling the Swiss population could take longer. It remains unclear what will happen if the vote should ultimately fail, but the Swiss government would likely face problems with Washington and UBS could see its position on the other side of the Atlantic be jeopardized.
