than people working toward a safer and better world. is it a surprise then that foreign institutions have problems with sanctions compliance and u. s. institutions do not? i do not excuse this in any way, but i do understand it. let us now turn to tax evasion. on may 19, credit suisse pled guilty to conspiring to help certain americans evade their tax obligations to the federal government. credit suisse agreed to pay a fine of $ 1. 8 billion. like the criminal disposition concerning bnpp, this was headline news. credit suisse had well developed compliance rules addressing what relationship managers could and could not do when travelling into, and through, the united states. but those compliance rules, while cogent, were largely ignored by certain credit suisse personnel. why is that? here, again, i believe that the answer lies in the organizational value system. credit suisse was not alone in aiding customers to evade taxes. ubs had similar problems although it escaped without a plea to a federal felony. would it come as a surprise to anyone in this room that some of the swiss cantonal banks may also have “ issues ” with respect to u. s. tax compliance? switzerland, the home country to the two big swiss banks and the jurisdiction that charters them, does not have a law that criminalizes tax evasion, meaning the willful failure to report income and to pay the tax due on that income. this may be one of the reasons why switzerland has earned a reputation as a tax haven, although that reputation may be changing as switzerland faces external pressure from the international community. so, is it surprising that personnel from switzerland, working for an organization that for many years had a business strategy of taking funds from high net worth customers without many questions about taxation at the source, did not turn square corners when visiting new york? does it shock you that they would meet with u. s. customers and discuss their accounts, even though that was prohibited by the rules imposed by compliance? once again, when the rules are in conflict with an organizational value system, watch out! people will find a way around them, either by closing their eyes or by whispering in the darkness. finally, let me turn to foreign corrupt practices. i have selected this topic because official corruption is a problem that some u. s. financial institutions have found challenging during the last year. and, in my view, there are certain features of u. s. law that might give rise to

and it has led them to the doors of foreign banks only. what explains this phenomenon? some foreign institutions, unlike their american counterparts, did not see the values that motivate and support u. s. economic sanctions rules. at most u. s. financial institutions, and i may be myopic in seeing too much nobility in them, there is a widely accepted understanding that our u. s. sanctions are tailored to accomplish a laudable public purpose. the sudanese sanctions are designed to coerce a regime to cease certain horrific practices, like genocide. the iranian sanctions are designed to stifle the iranian regime ’ s nuclear ambitions. the cuban sanctions are intended to hinder the advancement of communism in the americas and to change an oppressive regime through a trade embargo. for u. s. financial institutions, which operate on the basis of a public charter issued in the united states, the public purposes supporting economic sanctions and the detailed sanctions regulations are in harmony. with respect to rule compliance, the staff will follow those rules not simply because they are required to but also because they want to. while i am not here to speak for foreign institutions that have committed sanctions evasion, including bnpp, my sense from the evidence is that these institutions looked at economic sanctions very differently. they looked at economic sanctions as technical “ american ” rules that were not seen as consistent with the organization ’ s and the home country ’ s larger value system. in europe, they found no similar sanctions, and there it was perfectly legal at the bis central bankers ’ speeches time to do business with these sanctioned jurisdictions. some european bankers almost naturally adopted the view that there was no value system underlying the technical american legal rule. the foreign institutions saw the situation as providing financial services to just another country ; not to a country committing genocide ; not to a country building a nuclear weapon ; and not to a country fostering a dehumanizing ideology. this failure to correlate the rule with the value is the root of real mischief. it erodes what some commentators call the “ culture of compliance ”, and it tends to foster an employee population that will be inclined to look for loopholes, to place toes on the edge of the permissible, or even to turn a blind eye to a black letter compliance rule. and, the organization ’ s compliance staff will also suffer from a stifled motivation and the absence of any meaningful authority – it relegates that staff to a bunch of box checkers, rather