Swiss Tax: Swiss parliament slams cabinet over UBS tax affair

31 May 2010 -- A powerful Swiss parliamentary panel sharply criticized the government Monday for its handling of a tax evasion dispute with the United States, as lawmakers weighed a settlement between the countries that would take the pressure of banking giant UBS AG.

Finance Minister Hans-Rudolf Merz, who was president last year, might have averted having to hand over data on thousands of UBS' American clients to U.S. authorities, parliament's "control committee" said.

The rebuke probably won't derail parliament's approval next month of a deal reached between Switzerland and the U.S. last year that would reveal 4,450 wealthy Americans suspected of dodging taxes through undeclared bank accounts.

But it is another setback for the embattled government in Bern, which has shown rare signs of disunity among its coalition partners.

The nationalist Swiss People's Party recently dropped its opposition to the accord, leaving only the Social Democrats fighting against it.

The control committee exercises oversight of the work of the federal government and includes members of all major parties. Its 370-page report censured Merz for failing to keep other members of the Cabinet informed about developments as finance minister and president, and called this a "fatal error."

Merz said he withheld information from other Cabinet members to avoid leaks that could jitter financial markets, the report said.

It also criticized Switzerland's foreign and justice departments, and said the Cabinet as a whole lacked "the most elementary ability to work as a team" throughout the UBS affair -- against the spirit of Switzerland's consensus style of democracy.

Switzerland's largest bank wants the agreement with Washington ratified, so that it won't have to face lawsuits in U.S. courts. It has admitted helping Americans clients dodge their tax obligations.