The dispute with foreign tax authorities is – rightly or wrongly – leaving traces on the balance sheet of Swiss banking. For the opaque world of investigators, it is bonanza time. And they are only just getting into gear, research by finews.ch showed.
Last Thursday, it was Valiant's turn. The regional bank agreed with U.S. authorities to pay a fine of 3.3 million dollars, closing its chapter in the tax dispute. With this payment, the total sum Swiss banks have been forced to send to the U.S. alone exceeds 4 billion francs so far.
Valiant executives will feel relieved. Swiss banking won't just yet. Apart from pending cases in the tax dispute, investigations surrounding the manipulation of interest and currency rates are ongoing. And the financial market is bracing itself for class action lawsuits by investors. Further payments seem inevitable.
Bleeding and Blooming
While Swiss banks are bleeding, the investigator and forensic evidence business is booming. Thorough investigations of intricate financial transactions and the protection against new risks create mountains of work for specialists.
The secretive world of investigators is rapidly expanding. While Swiss banks such as Wegelin or Bank Frey were forced to throw in the towel, faced with the threat posed by potential U.S. lawsuits, investigators from abroad have been attracted to Switzerland by the conflict.
Former Agents and Attorneys
Stroz Friedberg, an outfit founded by former FBI-agents, at the beginning of the year opened a branch in Zurich. It offers services ranging from investigations to risk detection and management.
K2 opened an office in Geneva this summer, bringing the world of Jules Kroll to Switzerland, a global player among investigators. K2 is promising Swiss CEO's sound sleep – with a little help by its specialists.
Dormant Accounts and Tax Dispute
«The action taken by foreign authorities against companies in Switzerland and abroad has prompted a true boom in forensics,» said Ivo Hoppler (pictured left) in an interview with finews.ch.
The co-head of the Swiss branch of Stroz Friedberg knows the causes of the boom. Cases involving Siemens were key for the development abroad, the dormant accounts investigations and the tax conflict with the U.S. the driving forces in Switzerland. Hoppler doesn't expect the pressure to abate soon.
U.S. Principles to Rule the World of Business
The U.S. are enforcing their principles of legality in a globalized economy. And they in turn make companies liable to first «independently» investigate potential misdemeanors and second to safeguard the control of compliance regulations themselves.
In the thorough world of Swiss corporate affairs, this can only be assured with the help of an army of specialists, reaching from investigative forensic experts, to IT nerds, legal advice and compliance units as well as lawyers.
Switzerland, sprinkled with a multitude of global companies, is particularly heavily affected by the trend, leading to fierce competition between investigators.
Big Four With a Problem
The big four consultants – Deloitte, KPMG, Ernst & Young and PricewaterhousCoopers traditionally owned the lion's share of forensics. Their knowledge was based on financial auditing and has since expanded into investigative work. KPMG for instance stakes a claim as full-service player in forensics and investigations, Philippe Fleury (pictured left) told finews.ch. Fleury is partner and forensics expert at KPMG in Geneva.
«We make half of our turnover with clients in the financial industry,» Fleury added.
The big four are faced with a problem though: Very often they have to reject mandates, because they're already partners of the company looking for help, for instance in accounting, which would lead to a conflict of interest.
Intense Competition
Despite the intense competition, the problem of the large players leaves a door ajar for Swiss niche players. They tend to score with local knowledge, professional reputations and experience. Examples are Peter Cosandey, a former attorney, and companies such as Coprin and Scalaris.
Foreign players also tend to tap the Swiss market to boast with the kudos of local experience. Stroz Friedberg for instance hired Hoppler, an ex-attorney, former partner at two consulting firms and a lecturer.
K2 named Frédéric Maendly, a former member of the attorney general's office, director of its branch in Geneva.
The new industry of secretive investigations is here to stay – even when the mandates from the tax dispute have dried up.
Cybercrime
«The investigative business has seen the peak in the banking industry,» said Hoppler. Growth may however surge in the field of cybercrime.
The danger lurking in the internet is affecting a large number of companies, with banks affected particularly. The number of cyberattacks is 300 percent bigger in the financial sector compared with all other sectors of the economy. The technology is developing at a staggering pace, making the development of countermeasures against attacks more urgent by the minute.
A 95 percent safety rate doesn't suffice in banking, because of the potential scale of the damage. The companies affected therefore need to invest in the best defense available.
