Swissie scandal engulfs governor

Elizabeth Fournier
SWISS National Bank governor Philipp Hildebrand will today break his silence on controversial currency trades made by his wife.

Hildebrand has come under increasing pressure to clarify events, after details of foreign exchange transactions made from his personal accounts at Swiss private bank Sarasin were leaked by one of its employees to lawyers for the Swiss opposition party.

Despite accusations by Swiss weekly newspaper Die Weltwoche yesterday that Hildebrand was much more closely involved in the trades than previously thought, both the SNB and the Swiss Federal Audit Office have thrown their weight behind him, with his employer insisting there had been “no unauthorised transactions…and no abuse of internal information”.

But today he will have to face an increasingly incredulous media that is up in arms over the distinguished banker’s judgement. A press conference will be held late this afternoon in Zurich, where Hildebrand will answer questions on the scandal, and opposition politicians will be keen to maintain pressure – particularly Christoph Blocher, the Swiss People’s Party’s vice president and a vocal critic of Hildebrand, who passed the details of the trades to the Swiss government.

Kashya Hildebrand, a gallery owner who has previously worked for US hedge funds, is believed to have traded large amounts in Swiss francs over the summer, netting a rumoured SwFr75,000 profit after the central bank set a ceiling for the country’s rising currency on 6 September. The timing of the trades has led critics to allege Mrs Hildebrand used insider knowledge of the upcoming currency peg to make the most of likely movements.

Though the matter was investigated internally and closed before Christmas, a storm has been brewing in the Swiss media since the Bank Sarasin employee handed himself into authorities on 1 January for breaking secrecy rules.

Having previously insisted it had found no infringement of internal rules but refusing to give details, the SNB yesterday bowed to political pressure and published its internal ethical code for central bankers – including the requirement that any currency positions in personal accounts must be held for at least six months.

The country’s central bank has previously declined to reveal its disclosure requirements, unlike other reserve banks such as the Bank of England and the Fed, which publish full details on their websites. It also published a report by its auditor PwC, which again cleared Mr Hildebrand of any link to the trades. The contentious transaction dates back to early August, when Mrs Hildebrand sold SwFr400,000 in August to buy $504,000.

On Tuesday she claimed the trade was an opportunistic deal due to the US currency being “almost ridiculously cheap” at the time. Yesterday the Swiss Federal Audit Office said its investigation had shown that $516,000 was subsequently sold from the account on 4 October, but that as the rate was close to that of the first purchase from the account seven months earlier, it did not contravene the six-month rule.

Bank Sarasin said last night it had fired the employee who leaked the documents, but Die Weltwoche claimed he or she will attempt to pursue an insider dealing case against Hildebrand.