Swiss parliament clears way for US tax deal

By ELIANE ENGELER, Associated Press

Swiss lawmakers on Thursday gave final approval to a treaty with the United States that will hand Washington thousands of files on suspected tax cheats, agreeing to drop plans to allow a referendum on the issue.

Parliament's upper and lower house agreed that there will be no possibility of referendum on the deal that will see the country's biggest bank, UBS AG, divulge the names of 4,450 American clients suspected of tax evasion to U.S. authorities.

The agreement between both houses secured final approval of the treaty, which the government hopes will eventually end UBS's three-year battle with U.S. tax authorities that culminated in revelations the bank had for years helped American clients hide millions of dollars in offshore accounts.

UBS chief executive Oswald Gruebel welcomed the decision.

"I and the whole bank thank the Federal Council and those parliamentarians who worked to find a solution to this issue," he said in a statement.

The lower house voted 81-63 to drop its earlier demand that Swiss voters should be allowed to approve the deal in a referendum before it comes law. Forty-seven lawmakers abstained.

A popular ballot would have made Switzerland miss a late August deadline to hand over all 4,450 names because the vote would have been held in November at the earliest.

"Nothing now stands in the way of UBS client details being disclosed in cases where the decision handed down has taken legal effect," said the Swiss Justice Ministry in a statement.

The deal is crucial to UBS, which has faced intense pressure from U.S. authorities since 2007. Last year the bank agreed to turn over hundreds of client files and pay a $780 million penalty in return for a deferred prosecution agreement. But Washington has signaled that unless UBS reveals the further 4,450 American names demanded in the U.S.-Swiss agreement, it may face a crippling civil investigation just at a time when the bank is recovering from the subprime crisis and seeking to rebuild its U.S. business.

Swiss authorities have already transmitted the names of about 400 UBS clients who signed waivers as part of the Internal Revenue Service's voluntary disclosure program, according the Swiss Federal Tax Administration. A further 100 UBS clients gave their consent directly to Swiss authorities.

Shares in UBS were up 1.10 percent at 15.68 Swiss francs ($13.95) on the Zurich exchange.