Credit Suisse Accused of Illegal Tax Dodge, CEO Dougan Urged to Resign

NEW YORK (TheStreet) -- The code of silence that Swiss banks observe when protecting their clients from financial scrutiny is legendary. And Credit Suisse (CS) CEO Brady Dougan may have hoped that he'd be similarly shielded once U.S. tax authorities started to close in with a rumored $1.6 billion penalty for helping the bank's U.S. clients dodge taxes. No such luck.

From Swiss political parties like the Social Democrats to individual shareholders at a recent company shareholders meeting, the knives are out for Dougan. He is first in line to take the fall for dragging the bank into a complex U.S. Department of Justice investigation that could see criminal charges being pressed.

What has made matters worse for Credit Suisse is that when Swiss rival UBS (UBS) was being charged for similar misconduct in 2009, Credit Suisse's top management was issuing statements ruling out similar problems at their bank. Since then, U.S. Attorney General Eric Holder has only intensified his scrutiny of big banks.

As recently as February of this year, in testimony in front of the U.S. Senate, Dougan sought to deflect the blame for tax dodging onto a small group of company executives. Bizarrely, the Senate proceedings descended into senators and Dougan sparring over how much taxable money Credit Suisse helped its clients hide.

Dougan steadfastly maintained that only $7 billion was hid from the Internal Revenue Service, while the Senate's estimate was $10 billion. Did a few billion really seem worth haggling over, given the grave charges involved?

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