Credit Suisse CEO to defend tax record

The Brady Bunch

Credit Suisse sought to limit the fallout of a damning congressional report, which accused it of helping U.S. customers to evade taxes.

CEO Brady Dougan is due to appear before the U.S. Senate Permanent Subcommittee on Investigations Wednesday and, according to a pre-release of his speech, will acknowledge that Swiss banking secrecy laws have historically been vulnerable to abuse. He is expected to accept that misconduct had previously occurred at Credit Suisse.

"Credit Suisse acknowledges that misconduct, centered on a small group of Swiss-based private bankers, previously occurred at our bank. While that employee misconduct violated our policies, and was unknown to our executive management, we accept responsibility for and deeply regret these employees' actions," the speech, seen by CNBC, said.

(Read More: Credit Suisse'helped US tax evaders' )

"Although it was not and is not illegal for Swiss banks to accept deposits from Americans, it is absolutely unacceptable for Swiss-based bankers to help U.S. taxpayers evade taxes or to provide them with securities advice in the U.S. without being properly licensed."

The Swiss company has been accused of "systemic" abuse, with more around 1,800 bankers helping 22,000 American customers avoid U.S. taxes. A report by the congressional committee said Tuesday that it made false claims in U.S. visa applications, conducted business with clients in secret elevators and shredded documents.

The report also alleged that Credit Suisse created an office at Zurich airport where more than 10,000 U.S. accounts were held, known by the code name SIO85. At its peak, the assets of the more than 22,000 customers totaled as much as $12 billion, it claimed, with Credit Suisse helping clients to create offshore shell entities.

(Read more: Credit Suisse CEO claims business solid despite results miss)

Dougan is also set to outline the steps taken by the bank since the subcommittee's investigation began in 2008. He will state that the bank has built a business culture where hiding income and assets of U.S. clients is "absolutely unacceptable" and has taken proactive steps to require that only U.S. clients who are compliant with U.S. tax laws can deal with the bank.

Internal investigations have concluded that Credit Suisse's executive management were not aware of the problems noted in the congressional committee report, according to Dougan, and these Swiss-based private bankers violated the company's policies.

In his testimony, Dougan is also set to dispute some of the findings by the Senate and the way it garnered that information.

"The subcommittee assumes that every U.S. client account held abroad was undeclared...that is a demonstrably inappropriate assumption," the speech states, adding that the subcommittee has also chosen to "speculate" based on a number of methodologies which are problematic and generates results that are "unreliable".

In 2008, UBS faced similar allegations and had to appear before the Senate subcommittee before paying $780 million the following year. The settlement also involved the bank agreeing to hand over U.S. client names with secret Swiss accounts.

(Read More: Credit Suisse has 'work to do' on litigation: CEO )

Fourteen institutions in total are under criminal investigation to determine whether they used hidden Swiss accounts to help U.S. clients cheat the tax system. A deal between the United States and Switzerland was agreed in August as part of a U.S. drive to lift the veil of Swiss bank secrecy and crackdown on wealthy Americans evading taxes.

Credit Suisse shares slipped around 2 percent at the session open in Europe on Wednesday. The bank agreed to pay $197 million to regulators in a separate investigation last week after failing to register as a cross-border securities business while servicing thousands of U.S. clients. The Zurich-based lender set aside 295 million Swiss francs ($332 million) in 2011 to deal with any potential costs resulting from U.S. tax matters.

By CNBC.com's Matt Clinch. Follow him on Twitter @mattclinch81

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