"A massive, Orwellian monitoring and investigatory apparatus
is the logical, even inevitable, requirement
of the [lex americana] kind of law Switzerland has passed."
Wall Street Journal Europe editorial, 25-26 March 1988
"... die Einmischung der Justiz in die Verwaltung schadet nur den Geschäften,
während die Einmischung der Verwaltung in die Justiz die Menschen verdirbt
und geeignet ist, sie zugleich revolutionär und servil zu machen."
Alexis de Tocqueville, "Der alte Staat und die Revolution",
zitiert in: "Schweizer Antworten auf amerikanische Ideen",
Neue Zürcher Zeitung, 7./8.November 1987
courtesy by:
Swiss Investors Protection Association
box 2580  -  1211 Geneva 2  -  Switzerland  -  t+f: +4122-7400362
e-mail: swissbit@solami.com   Internet: http://www.solami.com/a7home.htm
last up-dated:  20 August 2000
 

INTRODUCTION

Phone tapping and stealthily outsourced Nazi assets (IG Farben) did not bode well for the planned UBS/SBC mega Swiss bank merger.  Drawing on a generation of active investor protection experiences, we still hope for the best but expect - and prepare - for the worst, i.e. a complete fusion flop.  That's independent of the fate of the Global Agreement on compensations for holocaust victims and their families (see our related amicus curiæ).   And independent of whether or not the currently biggest Swiss bank will be in the vanguard of protecting Swiss taxpayers from foreign fiscal aggressions facilitated by - of all places - the OECD and its anti-enterpreneurial bodiesNot least the on-going saga of the vainly fought-for special audit of UBS illustrates also both the underlying reasons for the rise and the fall of the centuries-old and enviously successful Swiss banking culture.

We have arrived at this conclusion through many seemingly unrelated events, e.g. InterhandelRees-Bericht, InterfipolHaile Selassie, Reza Palehvi, Ferdinand Marcos, Santa Fe, RJR Nabisco, Sasea, Rinderknecht, etc.   Sadly, some of these aberrations are seen to be linked to a few but influential Swiss bankers and their myopically self-serving - and now badly back-firing - neglect of fundamental principles and promotion of lex americana universalis.

Interestingly, that also points to possible remedies in harmony with the fundamentals.  Meanwhile, we open for business the Pillory, the Netizen's Debt ExchangeThus claimants - not only holocaust victims - might effectively turn the table on their solvent debtors, whatever their names, be they big or small, including the successors to Czarist Russia or to Nazi Germany's IG Farben assets abroad.


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    In the course of over 18 years of service to clients of Swiss financial institutions, SIPA, the Swiss Investors Protection Association (Association Suisse de Défense des Investisseurs ASDI) has had the opportunity to look inside a sphynx - Switzerland's banking establishment.  We were thus able also to appreciate the roots, values and principles which, over centuries, have made private Swiss banking the extraordinary success story it is.  This also sharpened our senses for developments which are not in harmony with the fundamentals of reliable, effective and timely client protection and other indispensable ingredients of successful banking.  Thus, we have come to be in the vanguard of corresponding battles on the legal, fiscal and political front both inside and outside of Switzerland.

    As is not unusual when you have the luxury and honor to represent individuals and defend their particular interests, other interests, sometimes claimed or declared to be "bigger" or more legitimate, stand in your way.  Of course, our association's own terms of reference have made it incumbant upon its representatives to never loose sight of, and in fact to always seek to also safeguard and promote Switzerland's and its financial community's wider interests at stake.  Nevertheless, in many of our efforts, we have not really seen eye-to-eye with some of the bigger names in Switzerland's financial and fiduciary community.  We have in vain looked out for them in the long-coming conflict with lex americana universalis - even when the Swiss Government, for once and with a widely-appreciated amicus curiae intervention of its own, saw fit to take a principled stand in the precedent-setting Aerospatiale case were the U.S. Supreme Court saw its ruling almost universally criticized.  And in order not to increase, or to limit the damages caused by some of these undelicate colleagues, we have more and more found reason to either remain silent, or to support appropriate counter-measures.

    With the wider involved interests foremost in mind, we have, however, left no doubt that some of these "peanut gnomes" and their apparatchick allies in Berne and elsewhere "deserve to be shaken down and out".  Having - over the past some 20 years - engineered and effectuated the decline of the Swiss banking culture - inluding Swiss laws & practices - to the level of foreign bureaucrats' needs, bank clients are more than ever well advised if they follow their own nose and, as a rule, keep away from the big names.  Of course, that is no guarantee against bad experiences either.  But it is likely to help in an environment which - sometime despite of your banker - has been left to deteriorate under influences not favorable to the individual client.  This is because, in practice, the Swiss legal system evolved in a way which - as the damaged client sees it - looks pretty much rigged against him (both the Marcos family and the Philippine government could tell you something along that line, if they wouldn't be afraid of the gag rules which, over the past ten years of unnecessary and sterile court fights, prevented them from going public with their complaints).

     Thus, when the story of the holocaust victim families and their allegedly looted Swiss bank deposits resurfaced in early 1996, most observers weren't impressed. Expecting the matter to dissipate again in the sand in the course of the normal minimum five-year secretive proceedings with the victims once again taken for a ride, SIPA blew the whistle and even worked out a genuine alternative solution,providing for a prompt global one billion dollar settlement. Intriguingly, that was turned down by the very people who allegedly spoke for the victim families (which raises the spectre of them being led to pursue third parties' hidden agendas)At any rate, the subsequent developments still proved one important thing: the legal path is neither the only nor the most effective road to a satisfactory claim settlement - at least not in cases involving the big Swiss banks.

     The question thus arose: what generally applicable lesson can be drawn from this experience -for you and other claimants (includingsome holocaust victims) and other holders of bad debts?  The answer is SIPA's debt exchange, which starts with the following, continuously updated listExcept for the B Claims growing out from allegedly non-settled trusteeship functions with varying degrees of political implications (e.g. the stealthily outsourced, long-hidden and now re-surfacing foreign IG Farben assets apparently controlled by some Mideastern sources), this list is meant to be illustrative of the kind of debt claims which might thus find an inexpensive and prompt out-of-court settlement:
 

NETIZEN DEBT EXCHANGE, list of alleged debtors:

A    Claims for services/goods/documents received and/or for rights harmfully exercised by

B    Claims based on allegedly non-settled trusteeship functions Our pilot project represents a private and public debts exchange - the first on the Internet. In the case of the pre-revolutionary Russian bonds issued in France, Soviet nationalizations and related claims, the Governments of France and Russia have concluded and immediately put into effect their long-negociated agreement of 27 May 1997 on the "final settlement of the reciprocal financial and real claims which appeared before 9 May 1945".  Under this agreement, the Russian Government has pledged to pay until 1 August 2000 US$ 400 million (the first US$ 100 million reportedly has already been paid by August 1997) as the difference between the claims of both parties.  And the French Government will thus no longer support related claims and has set up a commission to work out the conditions and effectuate the compensations for the individual French nationals.

     This has given rise to much further debate - which may be short-circuited in favor of the victims and the market by way of giving all claimants an opportunity to register and/or directly market their claims by e-mail to swissbit@solami.com.  For one thing, the figures don't add up to even a shadow of the some US$ 50 billion - at current rates - which were invested notably in Russian railways and which, for the French investors at the time, were thus evaporated in the Siberian steppe.  For another, these were mostly private investors of French and other nationalities.  The deal worked out secretly is the result of unrelenting pressure from the bond holders and their association's president who managed to keep French public opinion, parliamentarians and banks unswervingly on their side.  Still, and to the surprise of almost all observers, the deal stealthily put into effect seems to mix state obligations with private ones and, on top of it, to discriminate against non-French nationals.  The justification and legal basis of all this is doubtful at best.

     On closer analysis, the Russian negotiators, while appearing to cave in to French pressure, seem to have won this one - some even say they clobbered their French counterparts.  Indeed, some of France's ENArchs (the often aloft wizards who graduated from France's Temple of Administration) are seen to have managed to totally relieve Russia of a monster debt for a plate of lentils - comparatively speaking. In doing so, they have now caused the French victims of Bolshevik recklessness to be additionally spoliated by having the French State settling its debts on the back of these very victims.  What may have escaped these ivory tower negotiators is that, not least, the Holocaust debate has revived and significantly sharpened the citizen's perception of and sensitivity for fundamental principles.  And that a new cross-European alliance has come to life between the original victims of 70 years of Soviet expropriations and those who - for tapestry, nostalgia or investment purposes - had bought these "non-valeurs" privately or at the Bourse de Paris where they remained quoted until 1996, purportedly in deferrence to the fundamental principles at stake.

     Growingly, these interested parties may then appreciate a few essential facts.  Firstly, that their governments found it possible and indicated to resort to the compensation of reciprocal claims - as successfully practised since time immemorial.  Secondly, that as a result of this, they may thus no longer have only the Russian Government as their legal debtor.  And thirdly, that they may thus finally get even.  Either directly by themselves claiming compensation with their dues (e.g. taxes) to the government.  Or indirectly, i.e. by way of our debt exchange which provides for their claim to be sold eventually - at a discount, of course - to an investor who either is capable and willing to wait for the results of the official procedure, or who is prepared to effectuate compensation himself.

     The above Russian bond case illustrates what this electronic debt exchange essentially is all about.  Following are some related observations, considerations and explanations.  Eventually, this exchange is expected to evolve into what President Clinton publicly called for, i.e. a genuinely tax- and customs-free virtual market place for countless real goods and services The above list is an example, reflecting real services, real claims and "misunderstandings".  Private and public debts are, of course, nothing new on the market.  If they haven't fallen due yet, various factors, more or less reliably, allow the investor to assess the chances of his money to flow back at the prescribed date - thus driving e.g. bond prices up and down.  The more solvent the private or public debtor, the smaller the risk and the commission/discount for early cashing.  Similarly, in the case of uncontested and not-yet-due bills on solvent debtors, factoring agents buy them up at a relatively small discount.

     Not so in the case of junk bonds.  And not so in the case of contested bills - even if they concern debtors who are not known to have liquidity problems.Characteristically, junk bonds entail higher risks and correspondingly higher yields/discounts.  And in the case of contested bills, the market players - if any can be found at all - regularly talk about an effective write off, offering perhaps a 1 to 5% consolation price.This imbalance could be rightened somewhat - at least when the debtor is solvent - with the help of what may be called a junk debt exchange.

This is how it could work - not least for you:

     Assume you owe a payment to a given creditor X.
Before you pay X, you routinely check at the SIPA debt exchange whether X is listed as allegedly owing an overdue amount of money to someone. You found X on the SIPA debt list, you click on the entry mentioning X and - thanks to the net - you are in direct contact with that claimant, which we may call Y. If you have convinced yourself that Y's claim merits better treatment, you negotiate with Y - directly over the net or with our assistance - in order to buy his claim against your creditor X, or a suitable fraction of that claim, at a price you and Y can live with (perhaps 20, 50 or 80%, depending on the circumstances and the negotiating skills brought to bear).
Thereupon you merely notify X, preferably (but not indispensibly) before your debt falls due, that with regard to your debt to X you effectuate payment by compensation with the title you acquired for receiving payment on the debt of X to Y.With that, your debt is legally off your shoulder, regardless of whether X accepted or contested his debt to Y, and regardless of what discount you agreed with Y (1).

     This is but one scenario why it may be in the interest of both debtor and creditorto utilize the services of an effective impartial debt exchange (e.g. for an indirect measurement of a debtor's market standing, or for buying back one's own debt at a discount). Such a market place for private and public debts is herewith opened for business.  It works in both directions and - initially at least - it is free of any commissions and fees (2).  It will be automated as soon as we will have resolved some technical problems.If you have a documented, uncontested or contested but bona fide money claim for goods or services received or rights exercised harmfullyby any private person, company or public institution in or outside of Switzerland,you can now submit this claim for registration on this provisional SIPA site,which is hosted by the Global Ivory Tower, by e-mailing to:  swissbit@solami.com

-    your own return e-mail address,
-    name & address of person/company/institution to be put on pillory,
-    a nutshell description (max. 7 words) of the subject of the claim
     (optionally: a short bookmark or earmark note),
-    the amount due (in US$ or Swiss francs),
-    whether it is overdue or not, and
-    your preference for maintaining this exchange through ads or registration fees.
With your application, you accept the conditions of registration, as detailed on this site. You thereby declare on your honor as a netizen
(a) that you own and can freely dispose of the submitted bona fide claim or parts thereof and
(b) that you will sell only what is yours and are prepared to negotiate a discount.

Your claim will then be published in the SIPA debt list within approx. 14 days, with the manager of the debt exchange reserving the right to refuse publication of a claim or to withdraw a claim from the list without giving any reason or entering into related communications. During the test period only notoriously solvent persons, companies and institutions will be listed, the UN representing a borderline case. In the event, the manager, by way of associated specialists, avails his good offices and related services, e.g. if professional assistance is needed for working out a fair discount, for arbitrating a case, or for obtaining a prompt and mutually satisfactory out-of-court settlement.

Nota bene: The manager of the debt exchange cannot guarantee anything and he cannot either be held responsible for any element of the claims thus published.  Nevertheless, in the interest of all parties concerned, he makes a due diligence effort to withhold or withdraw publication of manifestly false or unfounded claims.
 
 

NOTES

(1)    It may well be that X has had good reasons for not paying.  But then again: maybe not, and X just tried his luck. Since claimant Y may no longer have the time or be able to afford the lawyer and court costs, no judge is examining the merits of the case and, in the event, tell X to pay up.Decency - regrettably an increasingly rare bird - aside, why should X (a company or such immunity-covered persons as ambassadors, federal judges or other high "public servants") miss the given opportunity to save a few bucks - in the given case on the back of a goods and services supplier Y who usually happens to have a relatively shorter breath? Because someone, Z, may owe X a money debt which Z may be interested to settle at a discount. Because Z may see himself as being in a more favorable position than Y to get Y's claim honored by X. And because Z may have aquired from Y, at a discount, said claim which Z now can legally deduct from Z's debt and payment to X.All this is legally feasible because under Swiss law, e.g., the right to effectuate payment by compensation even for non-admitted counter debts (articles 120 & 422 CO) would turn the table on X.  For if X didn't agree with Z's deduction, X would have to take the legal initiative at his own risks and expense, and he would not have a legal remedy to get his claim against Z recognized and enforced - until the competent court would have positively and definitely decided in favor of X.  This, in law and in effect, results for Y in an effective legal transfer of his burden of proof which Y thus can unilaterally impose on X - albeit at a cost (i.e. a lesser but prompt payment of his claim against X, reduced by the discount he agreed with Z).  All the while, for Z, the discount thus obtained from Y is in effect to cover Z's risk that X may go to court and seek to proof that the claim Z bought from Y isn't due or is otherwise inoperable.

(2)    Although this exchange is inspired by the net philosophy of uninterfered low-cost communications, developing and maintaining this service involves costs which somehow must be defrayed. If you need this service, you probably appreciate our concern for not wanting to promote free-loading practices.  As our investment the registration will be free during the test period; evt. changes will be announced on this site.  We have not made up our mind on which financing method to choose, and we expect those who register their claim for publication to indicate their preference and/or to suggest their own ideas of how to defray these costs.