Bank sharing deal

Swiss lawmakers handed a defeat to the country's government on Tuesday when a majority voted to reject a deal that would have seen the country hand over data on suspected US tax evaders to American authorities.

Switzerland had reached an out-of-court settlement with its largest bank, UBS, and the United States in August 2009 that would have seen the bank give up the names of 4,450 American clients suspected of tax evasion. The deal came after long negotiations and could have avoided the threat of a costly lawsuit by US tax authorities.

The government had championed the agreement, but was forced to put the deal to a vote in the lower house of parliament when a court decision earlier this year expressed doubts about its legal basis in Switzerland, which has a strong tradition of banking privacy.

Opposing interests

Swiss Justice Minister Eveline Widmer-Schlumpf spoke to lawmakers before the vote, urging them to "close this difficult chapter and fix the problems" of the Swiss financial sector.

The final vote count was 104 in favor, 76 against and 16 abstaining. Two major parties, the left-wing Socialists and the right-wing Swiss People's Party, voted against the deal - but for opposite reasons.

The Swiss People's Party, Switzerland's largest, said it would only vote for the bill if the government promised to reject taxes on bonuses in the banking industry, and if it limited its own authority in signing future accords with other countries.

Meanwhile the Socialist Party had argued in favor of taxing wages and bonuses above one million Swiss francs (720 million), in addition to tougher regulations on the capital banks earn.

The deal must now return to the senate, which voted to approve the deal last week. Depending on the senate's actions, it may return again to the lower house.

The government is hoping lawmakers will reach a compromise before the end of the current parliamentary session on June 18.

Author: Andrew Bowen (AFP/AP)
Editor: Chuck Penfold