Because we have a new wrinkle on this old adage that senior executives of large banks have no idea what actually goes on inside the bowels of the companies they get paid stunning amounts of money to run. Yesterday Credit Suisse Group AG Chief Executive Officer Brady Dougan said his bank’s top bosses didn’t know the employees there were helping clients hide billions of dollars from the Internal Revenue Service. And his statements obviously deserve to be taken seriously, given that he was testifying under oath.
“Some Swiss-based private bankers went to great lengths to disguise their bad conduct from Credit Suisse executive management,” Dougan told the U.S. Senate Permanent Subcommittee on Investigations at a hearing on the bank’s tax-evasion services. “While that employee misconduct violated our policies, and was unknown to our executive management, we accept responsibility for and deeply regret these employees’ actions.”
According to the Senate panel’s report on Credit Suisse, “in 2008, over 1,800 Credit Suisse bankers in eight different areas of the bank opened and serviced Swiss accounts for U.S. clients.” At one point there were 22,000 such accounts holding 12.4 billion Swiss francs ($14 billion). Yet the misconduct, as Dougan called it, was unknown to Credit Suisse’s most senior executives. Imagine that.
Perhaps they also weren’t aware back then that Swiss banks had a reputation for helping wealthy foreigners evade taxes in their home countries. If you were to ask the average guy on the street what Swiss banks do, there’s a good chance he would say something like: Hide money for rich people with secret bank accounts. But maybe that’s something Credit Suisse’s CEO wouldn’t know his bank was doing in real life.
From Russia With Love was released a handful of summers before my required attendance at America’s southeast Asian garden party. One lovely June afternoon mater’s mater gathered up myself, my two brothers and sister and chauffeured us the few blocks north to the Midtown, where we sat in the dark and watched the best James Bond movie yet. 1
Integral to the plot was Bond’s briefcase: among other things it secreted a dagger and 50 gold sovereigns. After Q had shown Bond these things my sister, ten at the time, leaned close and whispered in the dark, “That’s because he can’t go to banks. Everyone knows the only thing Swiss banks do is hide money.”
Let me repeat that: in 1964 a ten-year old girl knew that Swiss banks hid money for their customers.
On the safe assumption that Credit Suisse is not in the habit of promoting dolts as their CEO, Brady Dougan’s disingenuous testimony ranks right up there with Captain Renault’s famous exclamation:
“I’m shocked, shocked to find that gambling is going on in here!”