Keep Bonuses Secret, Mystery Bank Asks in Credit Suisse Suit
(Bloomberg) -- An anonymous bank has gone to court to hide the fact that it paid bonuses to staff, in a move that the judge said was “astonishing.”
Zahra Al-Rikabi, an attorney for the mystery bank, said during a court hearing on Thursday that her client is concerned about being publicly named in a lawsuit Credit Suisse Group AG is bringing against U.K. tax authorities. That case, scheduled for trial in June, is challenging a one-time 50 percent bankers’ bonus tax levied in the wake of the 2008 financial crisis, during a period of public fury over how much financiers earned.
“We don’t want anyone to know we paid this tax because we don’t want anyone to know we were paying bonuses,” Al-Rikabi said in court. She said her client had instructed her not to reveal its name, and she acknowledged that the situation was “odd.”
“Is that a serious submission?” Judge Matthew Marsh asked, and the attorney confirmed.
The attempt is a sign of how the Credit Suisse lawsuit -- in which the bank is seeking to recoup money it paid under a levy that ultimately raised 3.4 billion pounds ($4.4 billion) -- is starting to draw in the rest of the industry. It may end up throwing fresh light on events at the height of the financial crisis and refocus attention on bankers’ pay, by revealing details of how much each bank paid under the levy. Credit Suisse paid 440 million Swiss francs ($443 million).
The bid for secrecy at first glance seemed “astonishing,” Marsh said, because lots of companies pay bonuses and lots of information already has to be disclosed in company accounts. He gave her 48 hours to make a formal application to have the bank’s name hidden from court documents. Even Credit Suisse doesn’t know the name of the bank, Aidan Robertson, the Swiss bank’s attorney, said in court.
Al-Rikabi didn’t immediately respond to an email seeking comment. Credit Suisse and the tax authority HM Revenue and Customs declined to comment.
Thursday’s hearing centered on the question of how much information should be disclosed about the amounts paid by other banks. Some have already objected to those figures being released, George Peretz, HMRC’s lawyer, told the court.
“The events of 2008 to 2009 remain a matter of deep public controversy,” as does the level of bankers’ pay, which may help explain the objections, he said, though he added that it wasn’t his place to make the banks’ case. Apart from the mystery bank, no other banks were represented.
Marsh said his “judicial eyebrows were raised” by the suggestion that details of taxes paid almost a decade ago, in which individuals aren’t named, could be “somehow confidential and revelatory.”
Marsh asked Robertson during the hearing whether his bid for documents was a “fishing expedition.” Robertson said it wasn’t and Credit Suisse needed to know how much the other banks paid under the tax in order to make its case at next year’s trial.
The tax on bankers’ bonuses -- which was announced “in a blaze of publicity by the then-Chancellor” -- amounts to state aid, Robertson said. That’s because it was only levied on bonuses paid between Dec. 9, 2009 and April 5, 2010, which meant some banks didn’t have to pay it on some or all bonuses that were distributed outside the time period.
Credit Suisse alleges that it ended up paying more than others, and the bank suspects that about six banks escaped the tax, Robertson said. It wants to see HMRC documents that would show how much each of the banks paid, and which either paid nothing or paid less than would be expected. Such disclosure would potentially make details of the payments public.
Marsh told HMRC to give banks a deadline of Dec. 17 to raise any objections to a redacted form of a spreadsheet held by the tax authority, containing some details of banks’ payments of the tax, being disclosed. They’ll get the opportunity to object in court if they want to, he said.
The tax authority had argued that such details should be disclosed confidentially, or with banks’ names anonymized, because taxpayer confidentiality is “critical to the operation of the tax system.”
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