Swiss banks and Fifa figures tied to offshore activity

Swiss bank UBS, banned Uefa boss Michel Platini and the former secretary general of Fifa are among those named in leaked documents as being connected to secret offshore companies.

Swiss banks and Fifa figures tied to offshore activity
Photo: Martin Abegglen

The Panama Papers is a huge cross-border journalism collaboration by the International Consortium of Investigative Journalists (ICIJ) that has been analyzing millions of records leaked from an international law firm based in Panama.

In them, UBS and HSBC Switzerland are named alongside 500 banks worldwide as having created offshore companies for their customers through Mossack Fonseca, a legal law firm which administers offshore firms in tax havens including Switzerland, the British Virgin Islands and Cyprus.

According to the ICIJ, Mossack Fonseca worked with 1,223 banks, law firms and other intermediaries in Switzerland, the third most after Hong Kong and the UK.

The largest offshore leak in history, The Panama Papers contain details on more than 214,000 offshore entities connected to people in more than 200 countries including celebrities and politicians.

Among those named are some 140 politicians and public officials around the world including the president of Ukraine, Pakistan and Iceland's prime ministers and the king of Saudi Arabia, plus associates of Russian president Vladimir Putin.

Also named in the papers as having used offshore companies created by Mossack Fonseca are several figures connected to the scandal surrounding world football’s governing body, Zurich-based Fifa, said the ICIJ.

They include Michel Platini, president of Uefa, also based in Switzerland, who was handed a six-year ban for receiving an irregular payment from former Fifa president Sepp Blatter, who was also banned.

Jérôme Valcke, former secretary general of Fifa and Blatter’s right hand man, who was banned on corruption charges in September, also appears in the documents as owner of a British Virgin Islands company.

Furthermore, the documents reveal that the law firm of a member of Fifa’s ethics committee had business relationships with high-level Fifa executives who have since been banned by the committee.

According to the ICIJ, Juan Pedro Damiani and his law firm did work for at least seven offshore companies linked to former Fifa vice president Eugene Figueredo who has been charged with fraud by US authorities.

The records also show that Damiani’s firm served as an intermediary for a company linked to father and son Hugo and Mariano Jinkis, businessmen who have been charged with fraud and money-laundering, said the ICIJ.

The ICIJ points out that the leaked documents do not implicate Damiani and his firm in illegal conduct.

However the link raises further questions in the ongoing Fifa scandal which erupted last May with a raid on the world football governing body’s headquarters in Zurich.

Using offshore structures is entirely legal, however the anonymity of such structures can allow corruption to fall under the radar.

Speaking to The Guardian, a spokesperson for Mossack Fonesca said it complies with anti-money-laundering laws and carries out thorough due diligence on all its clients.

Contacted by Swiss paper Le Temps, John Christensen, director of Tax Justice Network, said: “During its nearly 40 years history, Mossack Fonseca has been associated with a multitude of criminals for which it creates secret and sophisticated structures allowing them to pursue their activities.”

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Reader question: Can a foreign national obtain a loan in Switzerland and under what conditions?

When it comes to borrowing money from a Swiss bank, nationality may play a role in some cases, but not in others. This is what you should know about this process.

Reader question: Can a foreign national obtain a loan in Switzerland and under what conditions?
Getting a losn in Switzerland is subject to many conditions. Photo by Claudio Schwarz/Unsplash

Like almost everything in Switzerland, consumer loans are regulated by legislation, in this case the Consumer Credit Act.

It defines a loan as between 550 and 80,000 francs, “offered by commercial providers of financial services”. Lower or higher amounts are not subject to the Consumer Credit Act.

As is the case in many other countries, Swiss banks have strict criteria about who they lend money to. After all, no financial institution wants to deal with people who are not creditworthy.

Whether or not a foreign national can borrow money from a bank depends on their permanent place of residence and permit status.

As a rule, Swiss lenders don’t give loans to non-residents. So if you reside abroad, there is practically no chance that a bank in Switzerland will lend you money.

However, some financial institutions make exceptions for cross-border workers. If you fall under this category, you can use this interactive tool, select “ Permit G” under “Residence Permit” and see what, if any, options, there are.

READ MORE: EXPLAINED: What cross-border workers should know about taxation in Switzerland

If you are a foreign national but have a permanent residence status (Permit C), your chances of getting a loan are practically the same as those of Swiss citizens — provided, of course, that you meet all the requirements set by lenders (see below).

What about other permit holders?

If you have a B Permit, you might be approved for a loan, depending on how long you have had this permit — obviously, the longer the better.

However, “you may be offered a higher interest rate or a limited loan amount. This is because of the statistically higher probability that you will return to your home country. Some lenders require the loan to be repaid by the time the B permit expires”, according to consumer comparison site 

Holders of other, temporary or conditional permits are not accepted.

READ MORE: ‘A feeling of belonging’: What it’s like to become Swiss

What conditions — other than residence permit — should you fill to be considered for a loan?

You must be at least 18 years of age, though additional restrictions may apply to applicants under 25 — for instance, a higher interest rate or a limited loan amount. That’s because “lenders are generally more cautious with young applicants as their financial circumstances are usually less settled and the risk of default is deemed to be higher,” Comparis noted.

The same cautious approach applies to pensioners, especially those who have no regular income. The social security payments (AHV/AVS) do not count as income for the purpose of the loan.

There is also other eligibility criteria, based on employment status and salary. People with a regular income have a higher chance of obtaining a loan than those who are self-employed, temporarily employed, work on hourly basis or, logically, unemployed.

Other factors, including your existing debts, are also taken into account in the decision process.

Basically, lenders favour applicants with a stable income and good financial standing, in much the same way as supplemental health insurance carriers prefer young and healthy people.

Keep in mind that if your loan application is rejected, this will be recorded in the database of the  Central Office for Credit Information, making it more difficult, though not impossible, to get a loan in the future.

The same rules do not apply to American citizens

That’s because Swiss and European banks are subjected to US demands to disclose the assets of Americans overseas in order to prevent tax evasion.

As adherence to these requirements is a major headache for the banks and in some cases also violates their country’s privacy laws, financial institutions prefer not to deal with Americans at all, even those who are permanent residents.

If you are a US citizen who also has Swiss nationality, you may have an easier time of it, but could still face hurdles in obtaining loans and other banking services.

There is no immediate relief in sight, although many organisations representing Americans abroad are lobbying in Washington to change the existing legislation.