Newsweek, which was presumed dead and buried over a year ago after British media mogul, Tina Brown, failed to find a way to make it viable, has risen again like a zombie.
It’s specialty now is rightwing poison pen propaganda. It crossed a line last January when it published an article by an American ex-pat living in Paris. In a piece on "The Fall of France," she casually dropped a death threat against the French Finance Minister. I covered it here.
Later, The Guardian, Mother Jones and others started asking about Newsweek’s new owners. Who was behind the strange brand of sensationalist junk journalism the magazine featured?
In the end, it's not the owners or their secretive connections that count. What matters is what they publish and sell to the public under the familiar Newsweek masthead which lends legitimacy to a kind of journalism that strays far from the truth.
Now Newsweek claims that the Switzerland-based bank, Crédit Suisse, got off easy with a guilty plea and a $2.6 billion penalty because the White House intervened on its behalf. It could happen but the article makes no effort to substantiate any of its outrageous claims. It relies on verisimilitude which is its trademark nowadays. However, what seems true, isn't always true, and having followed the case, the Newsweek story sickened me.
According to the article, a former lobbyist who once represented Crédit Suisse and now works at the White House influenced the case in the bank's favor. The man accused of this improper interference is Broderick Johnson, who the President enlisted earlier this year to help get the "My Brother’s Keeper" program off the ground. "My Brother’s Keeper" is a non-profit mentoring program for black and latino boys and young adults. Here’s the original report that Johnson and a colleague wrote which serves as a charter for the organization.
"My Brother’s Keeper" is a good program. I support its cause:
empowering boys and young men of color, a segment of our society which too often faces disproportionate challenges and obstacles to success. These obstacles are found in our schools, our communities, our criminal justice system, our families, and even in the minds of our young people themselves. |
I would have forgotten Newsweek’s article with too many serious claims and accusations and no substantiation. But I was sorry to see that someone dragged it here and presented it with a disclaimer advising caution about the allegation of improper influence, while suggesting that the White House was guilty of a lesser offense. Maybe the administration was intimidated into cutting the ‘too big to fail’ banks some slack as Assistant Attorney General Lanny Breuer once admitted he had done.
There's that verisimilitude again. It sounds reasonable enough but it just doesn’t comport with the facts. It doesn’t explain the pivotal role of Senator Rand Paul in the matter either.
Fact check #1:
Did Crédit Suisse get off easy?
For a century, having a Swiss bank account meant something to the rich. They could invest their money in Switzerland without any reporting to the US Government about the taxable income earned. Most of the developed nations of the world have reciprocal tax treaties with the US. If an American earned income in those countries, it would be reported to the IRS and there may even be withholding. This practice supports the collection of revenue.
The Obama administration is taking unprecedented steps to eliminate the existence of Swiss bank accounts. Guess who's unhappy about that. The 1%.
I doubt that the Swiss think they’re getting off easy with the business they stand to lose in the future. Crédit Suisse was denied a deferred prosecution agreement like the one HSBC had, and it wasn’t allowed to settle without confirming or denying the accusations against it like the Wall Street Banks. It was forced into a guilty plea and the maximum dollar penalty was applied.
Getting off easy would mean looking the other way as previous administrations have done.
Fact check #2:
Did Crédit Suisse avoid ratting out its clients?
This is the part of the case that's still ongoing. The details are in a June 2014 Update here, A total of 106 Swiss banks, including Crédit Suisse, are agreeing to conduct business in accordance with a new tax treaty that the Senate must ratify. More about that below.
As this press release states:
Also, through the information that Credit Suisse has agreed to provide, the Internal Revenue Service and the Department of Justice will be able to make treaty requests to Switzerland for account records. For those account holders who closed their accounts knowing that our investigations were focusing on Credit Suisse, we are obtaining information that is enabling us to follow the funds to other Swiss banks or to banks in other tax haven and bank secrecy countries. |
Fact check #3:
Were Crédit Suisse executives charged?
Crédit Suisse is based in Switzerland. Its executives in Switzerland follow Swiss laws. US law has no jurisdiction there.
Fact check #4:
What about Robert Reich’s quote, “The Way to Stop Corporate Lawbreaking is to Prosecute the People Who Break the Law.”
8 individuals employed by Crédit Suisse were indicted in US District Court, Eastern District of Virginia (Alexandria) for offenses committed in the US in connection with this case. It seems odd that Reich didn’t know that. It was mentioned here, and here, on page 4:
WHEREAS eight individuals-six Crédit Suisse bankers, the head ofthe New York Representative Office, and one former employee of a Crédit Suisse subsidiary who worked closely with Créditt Suisse bankers -were indicted in the United States District Court for the Eastern District of Virginia in 2011 and accused of conspiracy to commit tax evasion; |
And it was mentioned
here.
Fact check #5:
How did the Justice Dept obtain a guilty plea from Crédit Suisse? Was the White House or any White House staff involved?
It’s almost laughable for Newsweek to accuse Broderick Johnson of interfering in the case. The story was covered extensively in the EU, especially in the French press because the US also has another unrelated case pending against BNP Paribas, a major French bank. The article at this link describes some of the negotiation process, including meetings between Attorney General Holder and the Swiss Finance Minister.
Fact check #6:
Was Broderick Johnson a lobbyist who represented Crédit Suisse?
Public disclosure records show that he was once registered as a lobbyist but there’s no record that he ever represented Crédit Suisse. That allegation is for Newsweek to prove.
Public disclosure records are available at this link.
Fact check #7:
Why did the Senate hold a hearing and was the tax treaty ratified?
It was focusing on the status of efforts to hold Swiss banks and their US clients accountable for unpaid taxes on billions of dollars in hidden assets.
The committee unanimously agreed to ratify a tax treaty between the US and Switzerland to legalize disclosure of the identities of American tax evaders. When Senator Carl Levin motioned on the floor of the Senate for a vote to ratify the treaty, Senator Rand Paul blocked it from proceeding with an objection. (This is a feature of the Senate's parliamentary rules. Any one Senator can object to a motion and stop it.)
Here's an excerpt from the Congressional Record dated June 12, 2014. The text starts in the center column near the bottom of the page"
The PRESIDING OFFICER.
The Senator from Michigan.
UNANIMOUS CONSENT REQUEST—EXECUTIVE CALENDAR
Mr. LEVIN. Madam President, I ask unanimous consent that at a time to be determined by the Majority leader, in consultation with the Republican leader, the Senate proceed to executive session to consider Calendar No. 9, treaty document 112–1; that the treaty be considered as having advanced through the various parliamentary stages up to and including the presentation of the resolutions of ratification; that any committee declarations be agreed to as applicable; and that the resolution of ratification be agreed to.
The PRESIDING OFFICER. Is there objection?
The Senator from Kentucky Mr. PAUL. Madam President, I object.
The PRESIDING OFFICER. Objection is heard.
The Senator from Michigan. Mr. LEVIN. Madam President, I now ask unanimous consent that I be recognized immediately following the three voice votes that we expect coming up now.
[cont'd on next page after other business Levin referenced]
TAX TREATIES
Mr. LEVIN. Madam President, the unanimous consent proposal that I just made a few moments ago that was objected to by the Senator from Kentucky related to the need of the Senate to take up the ratification of five tax treaties that were approved by the Committee on Foreign Relations on a unanimous voice vote, including a revised U.S.-Switzerland tax treaty that was amended in 2009, with a protocol enabling the United States to obtain more information—more information from Switzerland about U.S. taxpayers with hidden Swiss bank accounts. We have been trying to close down these offshore tax havens and the way in which they aid and abet American tax avoidance for years. Here we have a tax treaty which will help us get more information about the American taxpayers who are trying to avoid paying their taxes to Uncle Sam, and we get an objection to the ratification, even to taking up the ratification of this treaty. American taxpayers have had it. I would say have had it up to here, except that will not come across on the record. They have had it with profitable corporations and wealthy individuals avoiding taxes through the use of tax havens, shell companies, and tax avoidance schemes. The American people want us to end it. We ought to legislate an end to it. By the way, it is long overdue. We ought to close the tax loopholes which are used so the most profitable corporations in this country avoid paying taxes by shifting their intellectual property to shell corporations that they create in tax havens or by other kinds of tax dodging. We can put an end to it. We can close those tax loopholes. We ought to do it but that is not what should be before us today. What should be before us today but for that objection we had from the Senator from Kentucky, are the tax treaties which have been approved by our Foreign Relations Committee, one of which was signed 4 years ago. We have all heard about Swiss bank accounts that are used to hide money from Uncle Sam. Back in 2008, in a bipartisan report I issued with then the ranking Republican on the Permanent Subcommittee on Investigations, Norman Coleman, with bipartisan support, we disclosed that . . . . I am very disappointed there has been another objection by Senator PAUL to proceeding to ratify—or to at least consider the ratification of this treaty. I yield the floor.
Mr. MCCAIN
Credit Suisse recently paid a $2.6 billion fine and pled guilty to criminal charges, admitting to facilitating tax evasion for their U.S. clients. Taking advantage of Switzerland’s opaque banking practices, Credit Suisse became a safe haven for tax evasion. The clients seeking these services and the bank itself believed that they were, and would remain, outside the reach of U.S. tax authorities. The recent guilty plea proves that this belief was at least partly mistaken. This criminal penalty was a welcome development, but it was also lacking in several ways, including that, as part of the agreement, the U.S. government did not require the bank to turn over the names of the U.S. clients holding secret bank accounts with Credit Suisse. With more than 20,000 unidentified Americans having held accounts at Credit Suisse in Switzerland during the relevant period (most of whom never disclosed their accounts as required by U.S. law) this agreement provided no direct accountability for those taxes owed. We need to ensure this does not happen again. The Swiss tax protocol we are discussing today would make it easier to get those names and account information. Working under the assumption that the United States would be unable to pierce the veil of Swiss bank secrecy, U.S. persons have secreted their money away in countries such as Switzerland for far too long. Passing this treaty is necessary to prove this assumption wrong and to deter future attempts at tax evasion.
|
It goes on but that's enough text to see what happened.
This is the way things go nowadays folks. It doesn't get any more naked than this. Why did Senator Rand Paul block the treaty. He's protecting the privacy rights of his 1%'er sponsors.
.