A large tax evasion investigation in the US has expanded to Bank Leumi (TASE: LUMI) and Asian banks, "The Financial Times" reports. The heart of the investigation is suspicions that Swiss banks, including UBS AG (NYSE; SWX: UBS), advised clients to divert money to accounts in banks in other countries rather than report them to the Internal Revenue Service (IRS).
"The Financial Times" quotes a Miami tax lawyer, David Garvin, as saying, "Many of the Swiss bankers simply told their clients that they should move their money to other secret accounts." He added that the US government had made it clear that it would go after any bank it knew to be a problem.
"The Financial Times" quotes another lawyer as saying that clients had voluntarily disclosed offshore accounts in New Zealand, Australian, India, the Bahamas, the Cayman Islands, and the Channel Islands.
"The Financial Times" says that Swiss bankers are afraid that the US authorities will expand their investigation to more Swiss banks, after four bankers from Credit Suisse Group AG (NYSE: CS; SWX: CSGN; XETRA: CSGZ) were indicted last week. Garvin says that the US authorities have received information about accounts at Bank Leumi and China Merchants Bank (HKSE: 3968, Shanghai: 600036).
"The Financial Times" says that expansion of the investigation follows the IRS voluntary disclosure program, which prompted 14,000 people to report offshore accounts and unpaid taxes in exchange for leniency. Last week's conspiracy charges against the Credit Suisse bankers allege that one of them advised his client to transfer his account to an Israeli bank, which a person familiar with the matter says is Bank Leumi. Two other clients allegedly transferred accounts to a Bahamas bank.
Bank Leumi told "The Financial Times" that it was not aware of the investigation.
"The Financial Times" says that the US has not alleged that Bank Leumi was engaged in any wrongdoing.
Published by Globes [online], Israel business news - www.globes-online.com - on February 28, 2011
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