Gnomes of Zurich will fall like skittles before US investigators finish with them

So farewell, Wegelin & Co, the oldest bank in Switzerland and the one with the simplest strategy for growth — which was to offer secret accounts to American tax-evaders who could no longer obtain that valuable service from bigger Swiss banks such as UBS. Founded by a linen merchant in 1741, which makes it half a century younger than Coutts and Barclays, Wegelin last week pleaded guilty to helping US citizens evade tax on $1.2 billion, agreed to pay $58 million in fines and restitution, and announced that it is closing down. The explosive growth of Wegelin’s funds under management during the last decade — despite being headquartered in a house reminiscent of a giant cuckoo-clock in St Gallen, a quaint provincial town the size of Shrewsbury — must have looked suspicious even to the complacent Swiss authorities, but the bank did its best to put up a smokescreen. In an interview in 2008, one of its managing partners, Magne Orgland, spoke of the advantage of not being located in Zurich or Geneva because remoteness made it ‘easy to avoid the deadly emotions of greed and fear; after all, the world’s most successful investor Warren Buffett is based in Omaha’, and of combining ‘client servicing with modern financial theory’ — presumably a reference to the late Leona Helmsley’s very modern theory that ‘only the little people pay taxes’.

Wegelin’s fall is just one episode in a continuing international assault on tax evasion. George Osborne has struck a deal with the Swiss authorities that he hopes will flush out £5 billion of tax on an estimated £40 billion held by British taxpayers in Switzerland — though the Treasury admits a risk of ‘identification failure’, meaning that it expects many billions to stay buried. The Americans shun government-to-government accords, however, preferring to send in the Department of Justice.