The Swiss Bank Employees Association has told an uncomfortable truth: it was “generally known” that for many years some of their employers profited from customers’ “tax evasion.” That is incontestable, as many of the banks’ managers concede. But the practice, supposedly now ended, raises an important question about ethics and business. Why were neither the managers of the Swiss banks nor their employees worried by this business model?
The hardly hidden truth was included in an Association press release which called on Brady Dougan, the chief executive of Credit Suisse, to apologise for insulting the Swiss bank’s employees.
Dougan, who was trying to explain to US legislators how Credit Suisse had stopped helping Americans escape taxes, said that “some Swiss-based private bankers went to great lengths to disguise their bad conduct from Credit Suisse executive management.” The claim, said the employees’ group, slighted the professionalism of the workforce. Besides, it was “hardly credible.”
That last statement is a little unfair. It makes excellent sense that some eager employees, anxious to bring in new business, and well aware that there was an official policy against aiding tax evasion, hid certain salient facts from their bosses. They knew that full disclosure would just get them into trouble, while bringing in new business would be rewarded, with few questions asked.
But if Dougan is right that the managers were totally ignorant, they hardly look good. After all, the commitment to change the old Swiss banking culture—which asked so few questions that accounts bore numbers rather than names—had started well before 2001, when Credit Suisse seriously began its efforts to clean up its relatively small US private banking operations.
Surely, bosses who were deadly serious about rooting out entrenched habits would have prodded, pried and even prosecuted to show that their institutions would henceforth compete on service, not on secrecy. Instead,
for many years they seem to have avoided looking too closely.
If Credit Suisse management was too relaxed about abandoning a flawed corporate culture, it had a lot of company. In almost every financial scandal of the last few years—from rogue traders to organised money laundering, from false disclosures to the manipulation of key interest and exchange rates—insiders who were truly interested could easily have found evidence that something was being done improperly. But in fact, attention was missing and action was scarce.
The explanation is simple. Employees knew they had little to gain from complaining about dubious behaviour because