By Michael Sidwell

The civil suit filed by the US Department of Justice on 19 February claims that UBS “engaged in cross-border securities transactions in the US that it knew violated security laws and helped US taxpayers set up dummy offshore companies,” reports the Financial Times (FT).

UBS will “vigorously contest” the case, said the bank in a statement, according to Bloomberg.

“The suit came a day after UBS reached a landmark settlement with the US government in which the Swiss bank admitted having enabled clients to evade taxes, agreed to pay [US]$ 780m (€ 610,7m) in fines and turn over about 250 client names to the US,” notes the FT.

The settlement has “provoked intensive questioning over the future of Switzerland’s famously secretive banking industry as international pressure mounts for more transparency,” continues the article.

Despite Swiss laws guarding bank client confidentiality, Finma, the country’s financial regulator, and the Swiss government have said that: “they had no choice but to let UBS hand over some names data to avoid a criminal case which could have threatened the bank's existence and hurt the Swiss economy, heavily dependent on the banking industry,” reports Reuters.

“Banking secrecy, ladies and gentleman, remains intact,” said Swiss President Hans-Rudolf Merz at a news conference (LA Times).

The Associated Press(AP) reports that Merz, UBS and Switzerland’s financial regulator have all asserted that the handover is not “a retreat from the principle of banking secrecy because it concerns only a small number of files that are linked to tax fraud – and not tax evasion.”

“Under a 75-year-old law, Swiss banking secrecy can only be lifted when individuals are deemed to have deliberately defrauded tax authorities as opposed to failing to declare all assets, a distinction only Switzerland and other tax havens make,” explains the article.

However, some experts say that the settlement has “opened cracks in Switzerland's famous bank secrecy laws,” according to Reuters.

“Germany, France and Britain want tough action against all offshore tax havens following last year's revelations that hundreds of rich Europeans had been stashing money away in the tiny Alpine principality of Liechtenstein, which has similar banking rules to Switzerland,” writes the AP.

“Nearly a third of the wealth that is stashed in tax havens around the world is in Swiss banks -- an estimated [US] $2.2 trillion [€1,7 trillion],” reports Reuters.

By Philippa Mary Williams

The IHT article by Dan Bilefsky details how the cost of bribes depends on the treatment and ranges “from €100 for a straightforward appendix-removal operation to up to €5,000 for brain surgery. The suggested bribery prices are passed on by word of mouth, and are publicized on blogs and Internet sites.”

Dr. Adela Salceanu, a psychiatrist and anti-bribery advocate, tells the IHT how “young doctors who refused to accept bribes were routinely chastised or threatened with dismissal by senior colleagues for subverting the black market.”

Bribery has reached such high levels that reportedly “if a doctor refuses a bribe, patients typically become anxious and distraught, believing this to be a sign that their illness is incurable and death is imminent.”

Bilefsky cites a World Bank study conducted for the Romanian Ministry of Health, which concluded that “so-called informal payments amounted to [US] $360 million [€282 million] annually.”

In every day terms, this reportedly means that “if an illness requires hospitalization, the Romanian patient typically pays three of four bribes, equivalent to three-quarters of a family monthly income”.

The IHT reports that a free phone line initiative recently set-up by the Ministry of Health for patients to report abuses was “jammed” within an hour.

Whilst such incidents in Romanian hospitals have been attracting national attention, the Associated Press reports that the country is also coming under increasing pressure from the EU to ‘demonstrate the existence of an autonomously functioning, stable judiciary which is able to try and sanction corruption and the rule of law’.

“It is important that the Romanian authorities regain its momentum on judicial reform and the fight against corruption so as to reverse certain backward movements of recent months,” stated the EU report. “Romania must demonstrate the existence of an autonomously functioning, stable judiciary which is able to detect and sanction corruption and preserve the rule of law.”

Deutsche Welle notes that “Romania could follow Bulgaria by having millions of euros in EU funding frozen“.

By Michael Sidwell

The New York Times, which broke the story, reports that court documents show that investigators have subpoenaed the bank records of Colonel Anthony Bell, now retired from the US Army, but who headed reconstruction contracting in Iraq in 2003-2004.

Two federal officials involved in the inquiry told the newspaper that the activities of US Air Force Lieutenant Colonel Ronald Hirtle, who was a senior contracting officer in Baghdad in 2004, are also being examined.

“It is not clear what specific evidence exists against the two men, and both said they had nothing to hide from investigators,” notes the article.

The inquiry is looking again at information supplied by Dale Stoffel, an American arms dealer and contractor who was killed in Iraq in 2004, said the New York Times.

A former business associate told the newspaper that Stoffel described how “Fifty thousand dollars [were] delivered in pizza boxes to secure contracts”.

“The reconstruction effort, intended to improve services and convince Iraqis of American good will, largely managed to do neither. The wider investigation raises the question of whether American corruption was a primary factor in damaging an effort whose failures have been ascribed to poor planning and unforeseen violence,” writes the article.