Credit Suisse helped US customers hide as much as $10 billion (€7.3 billion) in assets from the Internal Revenue Service, more than double the amount previously known, according to a US Senate committee.

A report by the Senate Permanent Subcommittee on Investigations criticized the Zurich-based bank for failing to discipline any senior executives in the face of widespread tax evasion fostered by 1,800 Credit Suisse employees serving US clients.

The firm also misled investors about growth in its private banking unit, according to the report.

The Justice Department has failed to use all its legal tools in its criminal probe of whether Credit Suisse, the second-largest Swiss bank, helped US clients evade taxes, according to the report.

Lax enforcement also allowed Credit Suisse to turn over the names of only 238 US account holders to prosecutors, the report said.

This US inaction symbolizes a larger problem in a five- year crackdown on offshore tax evasion, the subcommittee said.

Prosecutors have “failed to utilize available US legal means to obtain the names of tens of thousands” of Americans who owe billions of dollars in taxes and whose identities are still hidden by the Swiss, according to the 176-page report.

"The Department of Justice must take firm action to obtain the names of persons who hid those assets" and cheated on taxes, said senator Carl Levin, a Michigan Democrat who chairs the panel.

"They owe Uncle Sam, they owe the people of the United States. "

He added: “Simple justice requires that tax cheats must come clean, pony up, and face the consequences.”

Hearing today

Mr Levin's committee will hold a hearing in Washington today that will include testimony by Credit Suisse chief executive Brady Dougan, three other bank executives and two Justice Department officials who coordinate the tax crackdown.

Calvin Mitchell, a spokesman for Credit Suisse, said the bank would make its written testimony available before the hearing.

The bank last week paid $197 million to US regulators and admitted it serviced thousands of American accounts without authorisation. It’s the biggest of 14 Swiss banks under criminal investigation, and seven of its bankers were indicted in 2011 on charges of helping clients conceal assets from the IRS and avoid paying taxes on them.

The Justice Department told the bank in 2011 that it was a target of the probe. The bank has said it’s trying to resolve the case.

1,800 bankers

“Credit Suisse has yet to admit that its US cross-border business was largely a dishonest enterprise, dominated by undeclared accounts and US account holders dodging US taxes,” the report said.

“The bank has not developed or implemented lessons learned that would guide the bank for the future.”

Of the 1,800 bankers who serviced US clients, only 10 have been disciplined and none was fired, the committee said.

“To date, no bank executive or senior official at Credit Suisse has been identified as responsible for any of the misconduct in Credit Suisse’s cross-border activity, even though that activity went on for decades, involved tens of thousands of US clients and billions of dollars,” the report said.

Senator John McCain, an Arizona Republican on the committee, said it's not plausible that senior management wasn't involved, considering the systemic misconduct.

“If you believe that, I have some beachfront property in Arizona,” Mr McCain said. “You think all this was coming for all these years in this fashion and nobody knew about it? It defies logic or reason.”

‘Systemic’ conduct

The report, he said, shows the conduct is “systemic, it extended over years, it involved tens of thousands of accounts, and billions of dollars.”

The report offers fresh details about how Credit Suisse helped clients cheat the IRS by opening accounts under false names, avoiding the mail when delivering account statements and servicing clients in the US or Switzerland.

One client was given an account statement hidden in a Sports Illustrated magazine, according to the report. Almost 10,000 US clients visited a branch office at the Zurich airport given the code name “SIOA5.”

Mr Dougan told the committee that “the airport office was needed because many US clients traveled to Switzerland to go skiing” and didn’t want to go into Zurich.

Mr Levin described the experience of one account holder: “He was guided into an elevator remotely controlled, with no buttons, no floors. The meeting took place not at a banker’s office, but in a separate bare, conference room. All of these being a dramatic demonstration to the client of the secrecy that Credit Suisse practiced.”

The committee details three ways that it estimated the amount of undeclared assets held by the bank’s US clients. It concluded that “the vast majority” of 22,000 accounts opened for US customers -- 85 per cent to 95 per cent -- may have been hidden from the IRS.

At its peak from 2001 to 2008, the bank held as much as $12 billion in assets for US customers, according to the report, meaning that about $10 billion was undeclared. The indictment in 2011 said the amount was $4 billion.

Bloomberg