The End of Swiss Discretion

On the lam? Evading taxes? Looting your national treasury? Switzerland has long been a see-no-evil haven for rich criminals like Roman Polanski—but that’s finally changing.

Abdelhak Senna, AFP / Getty Images

When Swiss authorities did America’s bidding and arrested Polish-born filmmaker Roman Polanski for his sleazy, decades-old Hollywood sex crime, it brought something that Switzerland hates: exposure.

Living amid crystalline alpine beauty, where glaciers have long sat unperturbed on mountain peaks, the Swiss are gradually coming to the realization that, just as the ever-brighter light of the sun is melting away those glaciers, a brighter light on the country’s economic fabric—built on centuries of discretion and neutrality—will also precipitate unwelcome change.

Switzerland doesn’t like to embarrass its rich guests, and tends not to go after them for crimes that it can easily overlook—or it didn’t, until now.

From a Swiss perspective, it really is shocking that the Zurich Film Festival invited one of Europe’s most respected living film directors to receive a lifetime achievement award, at age 76, only to see authorities nab him coming off a commercial flight. It isn’t that talent voids a sex crime, even one that happened 32 years ago. Or the fact that Polanski’s Swiss neighbors appear to adore him. It is, in part, that authorities could have discreetly arrested Polanski at the chalet he owns in Gstaad. Switzerland doesn’t like to embarrass its rich guests, and tends not to go after them for crimes that it can easily overlook—or it didn’t, until now.

Western Europe’s most frozen country is thawing under the glare of 21st-century globalization. The nation that was spared from the ravages of World War II by its oft-stated "neutrality" (never mind its accommodation of Nazi depositors) shed some of that insistent exceptionalism when it became a full member of the United Nations in 2002. Late last year, the Swiss acknowledged their geographic location inside of the European Union when they ceased regular border checks. But the greatest transformation of all has to do with banking secrets. In the ‘90s, the Swiss grudgingly agreed to reimburse the families of Jews who lost savings during the Holocaust. Over the last dozen years, they gave in to pressure to expose the finances of corrupt foreign leaders who had looted their homelands. And just this August, under intense pressure from the IRS, the massive Swiss bank UBS agreed to do the unimaginable: turn over a list of 4,450 American depositors suspected of hiding $20 billion in Switzerland.

Full coverage: The Polanski ScandalMarcia Clark: The Lost Polanski TranscriptsRobert Goolrick: Polanski’s Victim and MeYes, the Swiss glacier is melting. But this climate change could have profound effects on the economy. Switzerland became one of the world’s wealthiest and most stable nations by catering to wealthy foreigners, regardless of the origins of their wealth. Letting Polanski visit regularly and buy property in Gstaad was a no-brainer in a country that allowed American fugitive commodities trader Marc Rich to live unmolested for 18 years before President Clinton granted the billionaire an 11th-hour pardon. (Rich reportedly remains in Switzerland to this day.) But both Rich and Polanski are small pickings, morally and otherwise, if you compare them to the stunning array of cruel and corrupt 20th-century despots who stored tens of billions of dollars in Switzerland’s impenetrable vaults: Abacha, Duvalier, Marcos, Mobutu, Suharto, Saddam, Traoré, Qaddafi…

Far from being chagrined by this subsidy of dirty money, Switzerland long cultivated an old-world allure as the opulent refuge for well-heeled expatriates, from Russian “businessmen” to Middle Eastern oil royalty. Cameroon President Paul Biya used the Hotel Intercontinental in Geneva as an unofficial residence for years. Hell, several children of North Korean leader Kim Jong-Il studied at the International School of Bern, under false names, in the 1990s, according to a recent report by the Swiss magazine Actuels. School officials declared themselves shocked and surprised by the news. (Kim Jong-Un swam, skied, and played plenty of basketball, and he was a fan of Michael Jordan and Jean-Claude Van Damme, according to students there.)

The world’s corrupt elite can ski in some of the world’s most prestigious resorts such as Gstaad or Courcheval, which posts street signs in Russian and boasts a dedicated helicopter landing pad. The local shops feature million-dollar jewels and designer European fur to show off back in Moscow. The foreigners purchase mountaintop chalets and villas on Geneva’s Lake Léman for tens of millions of Swiss francs. And of course, they store their ill-gotten gains in bank accounts that were, until now, so discreet that they could be registered by number, not name.

Switzerland, meanwhile, could long be counted on to stand up for its rich expatriates in various ways. Racing world champions such as Michael Schumacher and France’s biggest rock star, Johnny Hallyday, are among the many multimillionaires who have been drawn to the country’s low taxes. (Hallyday lives near Polanski’s chalet.)

But all of this dubious wealth has become a millstone for the Swiss. First there were the Holocaust lawsuits, and then various actions against the ill-gotten gains of war and blood-diamond profiteers and dictators. After extensive court battles, Swiss courts ordered about $1.8 billion from the accounts of deposed leaders returned to their homelands last year—not to their heirs, but to the national treasuries or organizations working to advance development. (That decision actually put Switzerland at the forefront of returning such loot.) One big winner was Nigeria, which won back $600 million that had been stolen by General Sani Abacha.

Such actions are, in a sense, allowing Switzerland to launder its reputation. That was recognized this week when the Paris-based Organization for Economic Cooperation and Development added Switzerland to a list of countries that have agreed to take themselves out of the offshore financial-haven business and share tax information with at least a dozen countries they have signed agreements with (the U.S., the U.K., France, Mexico, and Spain, among others). The Swiss insist that they won’t allow foreign “fishing” expeditions into their accounts, but they will look at requests on a case-by-case basis, when foreign governments provide evidence of possible abuse.

So what is melting the glacier? The IRS actually demanded a list of 52,000 UBS clients, so giving them fewer than 5,000 could be seen as a defensive victory for Switzerland in a crisis situation. Perhaps they fear additional scandals involving other Swiss institutions such as Credit Suisse.

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But the truth is that no one knows how much murky money there is in Switzerland. Nabbing Polanski, exposing a few thousand other Americans, and making some promises about the future may be a sacrifice Swiss authorities are willing to make if they can limit their other clients’ exposure.

Eric Pape has reported on Europe and the Mediterranean region for Newsweek since 2003. He is co-author of the graphic novel, Shake Girl, which was inspired by one of his articles. He has written for the Los Angeles Times magazine, Spin, Vibe, Le Courrier International, Salon, Los Angeles and others. He is based in Paris.