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Last March, Crédit Suisse belatedly decided to dispatch a special team, of investigators to Chiasso. What they found, as Chairman Aeppli delicately described it later, was that "contacts between the Chiasso branch and Texon ... were of a completely different nature than we had thought." Kuhrmeier and two assistants were arrested, along with three lawyers from next door. Crédit Suisse's then president Heinz Wuffli resigned, along with two other top company officials...

Author: /time Magazine | Title: BANKING: Less Go-Go in Switzerland | 7/18/1977 | See Source »

...depositors the higher interest rates, Kuhrmeier had to find riskier investments than the Eurodollar market. He chose a Liechtenstein-based holding company called Texon Finanzanstalt, which he had founded in 1961. Over the years Kuhrmeier funneled $868 million of Crédit Suisse's Chiasso deposits to Texon. The company then bought stakes in more than 150 Italian companies dealing in, among other things, wine, plastics and vacation resorts...

Author: /time Magazine | Title: BANKING: Less Go-Go in Switzerland | 7/18/1977 | See Source »

...Kuhrmeier concealed this operation from his superiors in Zurich. Whenever bank auditors visited the Chiasso branch, the books that recorded Kuhrmeier's Texon dealings and other incriminating papers were spirited through a private doorway into a collaborating law firm next door. Crédit Suisse's Chiasso branch, says Bernhard Miiller, director of the Swiss Banking Commission, "was a bank within a bank...

Author: /time Magazine | Title: BANKING: Less Go-Go in Switzerland | 7/18/1977 | See Source »

...well at their Chiasso branch. In January 1976, for example, Philippe de Weck, chairman of the Union Bank of Switzerland, showed Crédit Suisse a copy of a bank guarantee, improperly issued on fiduciary deposits, that had been channeled to Texon. Questioned about the violation, Kuhrmeier explained it away by saying, "It was a special favor that had to be done for a friend...

Author: /time Magazine | Title: BANKING: Less Go-Go in Switzerland | 7/18/1977 | See Source »

What moved Kuhrmeier to set up his bank within a bank remains a psychological mystery. So far, investigators appear to be convinced that he gained no personal profit from the alleged fraud. But as a top London banker points out, the scandal "could have happened in any other country. Slack management is not just a Swiss problem." What makes the case special is that no other country seeks to maintain such a mystique about its "inviolable" banking system. The scandal spotlighted the extent to which Swiss banks are trusted to police themselves. The chief external watchdog, the Bern-based Federal...

Author: /time Magazine | Title: BANKING: Less Go-Go in Switzerland | 7/18/1977 | See Source »

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