Swiss Central Banker Fails to Calm Currency Scandal

Friday, 06 Jan 2012 11:46 AM

 

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Switzerland's biggest political party on Friday piled fresh pressure on the embattled head of the country's central bank to quit over a currency trade scandal.

Swiss media said Philipp Hildebrand had failed to defuse the crisis when he pledged at a news conference on Thursday to fight accusations of wrongdoing over the controversial trade by his wife Kashya and refused to step down.

She spent 400,000 Swiss francs ($420,000) to buy dollars last August, just three weeks before the Swiss National Bank (SNB) imposed a cap on the soaring Swiss currency.

Philipp Hildebrand, a 48-year old former hedge fund executive, told reporters on Thursday he learned of the trade the following day.

The Swiss People's Party (SVP), a vocal critic of Hildebrand and the SNB's intervention in foreign exchange markets under his charge, called on Friday for a special parliamentary session to examine the case.

"It is unlawful and completely untenable that leaders of the Swiss National Bank carry out currency actions also in their private affairs. Philipp Hildebrand is no longer acceptable as chairman of the Swiss National Bank," the SVP said.

In practice it would be hard for the SVP to get a special session as they would need to secure a majority in the lower and upper houses.

Swiss tabloid paper Blick ran a picture of Hildebrand leaving an up-market restaurant in Zurich with his wife and daughter after the Thursday press conference.

Other political parties appeared satisfied with Hildebrand's performance and his promise to improve transparency at the central bank.

The government has also backed Hildebrand, who has been under intense pressure since a Bank Sarasin employee leaked bank account details of him and his wife, showing the family bought foreign currency very close to the time the SNB capped the franc.

HOUSE RAIDED

Switzerland guards bank client confidentiality jealously and the employee is also in the firing line.

Sarasin has fired the 39-year old IT worker and police in the Swiss canton of Thurgau told Reuters on Friday that they had searched his house.

Sarasin said the former employee had worked alone and that it had filed a charge with the Zurich public prosecutor's office against him for violating bank client confidentiality and commercial secrecy.

The bank has also filed charges against third parties for inducing those actions but did not specify who the third parties were.

"The criminal charge is thus also directed against persons who induced the Bank's employee to violate bank client confidentiality and who received confidential information and exploited it for their own or other people's purposes," Sarasin said in the statement.

The Zurich public prosecutor's office has already begun investigating the breach of client confidentiality.

According to the head of the SNB bank council, the bank details were passed to lawyer Hermann Lei, who has close links to Christoph Blocher, a leading member of the SVP and Hildebrand's sharpest critic.

Lei was not immediately available for comment. He said on his website on Thursday that he was not the lawyer for the former Bank Sarasin employee.

Blocher approached the Swiss government with his concerns about the transactions at the end of last year.

Blocher on Friday denied he had ever actually seen any bank documents, although he said several different people had approached him about the transactions.

"If an employee of mine had done this they would have been sacked. If I'd done this I would have gone to prison (for insider trading)," Blocher told a news conference in Rorschach in eastern Switzerland.

Swiss media said Hildebrand had not ended the crisis with his appearance on Thursday.

"It is simply hard to understand that in the middle of the biggest currency crisis for decades, the president of the Swiss National Bank would have no idea whether his wife was speculating on currency markets," Swiss newspaper St. Galler Tagblatt wrote in an editorial.

Leading newspaper Neue Zuercher Zeitung called on the central bank chief to publish the email sent by his wife ordering the dollar transaction.

Hildebrand on Thursday shifted some of the focus to his wife, an economist who worked at the same hedge fund her future husband did.

"We married relatively late, and from the beginning our marriage has always been, how shall I put it: Well, let's say my wife is a strong personality," he said.

Kashya, now owner of a Zurich art gallery, was born in Pakistan and later moved to the United States. She now has dual American-Swiss citizenship.

Tagesanzeiger said in an editorial that the affair had cut Hildebrand down to size, but that he should stay in his post unless new harmful revelations emerged.

"The Swiss public and in particular politicians will now debate whether a man with this flaw should still lead the central bank. If no new facts emerge then Switzerland would do well to not lose this head," the Swiss newspaper wrote.

© 2014 Thomson/Reuters. All rights reserved.

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