Pamp (Produits Artistiques Métaux Précieux) in Switzerland is the world's largest private refiner of precious metals, including gold ingots

I’ve just had a good chuckle reading Chris Bowlby’s BBC article on the gnomes of Zurich, where he takes us back to 1964, when British political leader George Brown apparently used the phrase for the first time. Bowlby relates a little Swiss banking political history and mythology, ending with musings on today’s British bankers who are moving to Switzerland to escape the UK tax man, public outrage and regulation. It’s an enjoyable read. He ends by wondering if someone will come up with another catchphrase for the next group the government will blame if ex-Brits who know the banking world start to speculate against sterling.

My guess is that we’ll come full circle. “Gnome” appears to have been popularized by Paracelsus, a Swiss (of course!) alchemist who used the word to describe people who could “move through solid earth as fish move through water”, according to Britannica. The British may find that they need those Zurich gnomes, or alchemists, to turn poor sterling into something more solid.

The “Paracelsian Debates“, ironically perhaps written up on a US government web site, were heated. Paracelsus’s ideas were sometimes called immoral and the man himself arrogant. They pitted the British and French against the ideas of the Swiss man who, despite their tirades, built a reputation for knowing his business.

Sound familiar?

Geneva, a city you’ve probably never seen, even if you live there

The pot at the end of the rainbow, for British bankers, might be in Geneva

Some things never change, and a certain class of wealthy Brits seeing quaint little Switzerland as a playground is one of them. Another is the itch of UK newspaper writers to get the editor to pay for a trip, preferably during the ski season, to trot along on the heels of the rich to write about this fabled, gorgeous, expensive, boring little police state where people survive on chocolate and cheese. The Times has just done it and so has the Telegraph.

If you’re determined to see a place as an old cliché, you will, and they did. Clichés work, of course, because they have an element of truth in them. The younger brother of a friend was put under my care for a long 24 hours in Paris when I lived there, and at the end he dismissed the city as boring, with terrible food and ugly people. The women were short and bony, he said, and restaurants didn’t even serve ketchup with their hamburgers which were, by the way, awful, he added.

I couldn’t disagree, but I did think he’d missed something.

So did England’s newspaper writers. Geneva officials might be annoyed with the articles, Times and Telegraph fans will lap it up, and the rest of us will roll our eyes in wonder.

Once a year people in Geneva dress alike, many in gray, it is true (photo: Laila Rodriguez)

When I began to work as a journalist in Switzerland my editor at Business Week, who was based in Paris, admonished me to always include something about cheese with holes, cuckoo clocks or gold under the streets of Zurich. Why, I asked, assuming that my job was to add something new, preferably intelligent to what the world knew about the place. “The editors back home want it. They say that’s what readers like, and they’ll never read the more serious stuff if we don’t give them the clichés first.”

I also worked for Time magazine then, and asked the bureau chief there if he agreed. Absolutely, he said. It helps the editors in New York keep Switzerland and Sweden straight in their minds. Those white, snowy capital S places.

A little cliché-busting

The Times and Telegraph reporters got some of the basics wrong and don’t appear to have entirely understood the Swiss tax system.

Sign out for British bankers?

Here is a summary of the news story, the more or less serious stuff that’s prompted editors to shell out the cash for an EasyJet flight from London, I assume (times are tough in the media world). Hedge funds are moving out of London to Switzerland: 8 of them made the decision in December. British media are increasingly focusing on the story because UK tax rates on bank bonuses and high income levels will go up sharply as of 1 April 2010, and this is prompting some companies to move.

Here are my two bits on the story: Geneva’s Ivan Pictet, president of the board of the Geneva Financial Center, said in October when asked about hedge funds moving in, that Switzerland is and will continue to have only a tiny role to play in the international hedge funds business. He used a figure of maybe up to 2 percent of the global business. Geneva would welcome more companies moving in, but it’s not about to replace The City as a hedge fund capital, he noted.

End of story. But if you want the editor to pay for that trip to the fabled playground you have to have a bit more to write. So here’s what we get: Geneva is boring, expensive, people all dress alike, and communes dictate how you live. Taxi drivers think only about money (well, you probably do recognize that one, but London has a couple of these, too). The place is crazily racist.

Geneva and Switzerland, as viewed by London’s newspapers

From the Times:

• Hedge funds and wealthy people want to take up Swiss residence so they can get a tax forfeit: lump sum taxation (GenevaLunch: Some  confusion here: the rules are clear that this is only for people who “do not pursue an occupation in Switzerland”, which lops out anyone employed by a hedge fund, no matter how much they make. There were, 5,000 people who paid lump sum taxes, less than 0.1 percent of the Swiss population, in 2008)
• “There are hardly any normal shops: most seem to sell only diamonds and furs.” (GL: That’s not called Geneva – it’s called a two-block area)
• “. . .supper at a studenty restaurant where they serve only steak and chips: £150 [CHF220] for three, excluding service (GL: That’s a silly price for what you ate unless it was in a trendy restaurant and included a bottle of wine. The wine is generally better and cheaper than in London – and service is included, by the way)
• A Geneva lawyer says he buys his groceries in France because Switzerland is too expensive (GL: ask him what he buys: some stuff is cheaper in France, other stuff cheaper in Switzerland, and the great thing about Geneva is you can do your shopping in both – toilet paper in Switzerland, steak in France)
• Geneva is boring. (GL: No, it’s small. There’s a difference. I have been to Cardiff three times, a city about the same size as Geneva, and thought it was boring, too – everything shut before 6 in the evening, food was either bad or else it was good but way too expensive. I had the good grace not to write that because I figured there might be more to the place, if I took the time to find out.)
• Communes rule people’s lives with police-state style rules (GL: okay, at this point the writer veers off into fiction, with visits from Interpol and commune rules about flowerbox colours, which is fun, but I’m starting to wonder if she really caught that EasyJet flight or just cobbled together the story over a nice cup of tea in London.)
• CHF40 an hour for cleaning help. (GL: that’s the rate you pay for a cleaning company, not a regular cleaning woman, who gets CHF20-25, and for this you get someone who is used to cleaning to Swiss standards, which is nice)
• Crans-Montana is not as well known as Gstaad because wealth whispers. (GL: Rubbish. Italians have been flaunting wealth for years in Crans-Montana, but the Brits don’t mingle with them – a language problem?)
• You can’t make friends in Switzerland. It’s an expat’s life or nothing (GL: The woman quoted is 26, can’t have been here long or have lived in many cities, and she goes home to London every weekend – a little reminder needed here that life in any city is what you make it, but you do have to make an effort).
• Switzerland, and especially Geneva, is racist (GL: Calling kettles black, etc. – look around you when you get back home).

The Times is having a hayday with Geneva-drubbing in its Sunday 16 January edition: we get another Times article, by a different Times writer, saying Geneva has no nightlife, so it won’t be able to attract London’s high-flying financial companies. He quotes the Economic Development agency in the city and some relocation agencies, looks briefly at the Glocals.com website. He doesn’t find much going on. It’s not at all clear that he actually visited Geneva  to write this. He makes the weird remark that a lack of nightlife and no show-off flashy lifestyles “constitutes one of the main obstacles facing Geneva, along with the rest of Switzerland, in the quest to attract the financial sector away from London.” (GL: Surely people with the smarts to make that kind of money can figure out how to spend it having fun? And outside London, not many people think Switzerland is scrambling hard to attract these people.)

And then the Telegraph jumps into the fray, but with a much more upbeat story, which appears the same day. I suspect they heard about the Times articles and decided to write the opposite story. But it, too, suggests London’s financial crowd wants its Little London in Zug or Geneva. Some do. Many don’t, from what I’ve seen.

From the Telegraph:

• “Jay-walking [is] an arrestable offence” (GL: And yet people do it all the time, but people are very rarely stopped for it unless they do it in front of a bored police offier – but hasn’t the journalist ever been to California? Switzerland is pretty relaxed on this, compared to a lot of places)
• “Each of Switzerland’s 27 self-governing cantons sets its own tax rate, many with ultra-low levels to attract foreign finance firms and workers.” (GL: true, but the thing that makes Switzerland interesting for staff is the relatively low income tax rates for individuals, which apply to all of us, not just rich bankers)
• “The Swiss, a conservative nation, generally expect mothers to look after their own children.” (GL: an urban myth related to the idea that Swiss women don’t work – although this was true 35 years ago. Things change. Switzerland has one of Europe’s highest number of couples where the husband works full-time, the wife part-time: twice as many as the number of couples where the wife does not work, which is about equal to the number of couples where both work full-time. And it has one of the highest percentages of couples where both work part-time, according to 2008 figures published by the UN’s Economic Commission for Europe. Childcare options are limited, but changing. The Swiss political system reacts slowly.)
• Switzerland’s 27 cantons (GL: 26 – more on them at www.ch.ch)

I’m left with a sense that the British, or maybe just British bankers and wealthy Brits, don’t relocate well. Fortunately, I know quite a few of them in Switzerland, and I suspect that the ones who like to live well and who know how to spend their money well were all out doing that when the UK journalists came to town for a day. The problem might be that these people are hard to spot: they’ve learned how to fit in and enjoy life.

Links to other sites:

• Times, UK: “Bonus supertax sends the City’s super-rich to Switzerland”,
• Times: “Lack of Nightlife could dull Geneva’s appeal”
• Telegraph, “British bankers find the good life in Switzerland – even before tax“
• Swiss federal government page on tax forfeits (lump sum taxation)
• social networks popular with English-speakers in Switzerland: English Forum, Glocals
• to keep track of what’s happening in the Lake Geneva region: our own very popular blog for newcomers in Geneva, Geneva’s best-read source of news in English (guess who!) and GenevaLunch resources and events
• radio in English
• Geneva Welcome Centre has a What’s on page in English, and the Sortir web page at TSR (public television) has the most complete listing around of music, movies, shows and other entertainment in the region.

I don’t object to the IRS or any other government going after frauds and schemers who are hiding millions from the taxman, but I do feel uncomfortable when the taxman begins to talk as if God is on his side and we’re probably all tax sinners. The IRS’s stridently righteous tones in recent months sounds far too like the talk of the McCarthy era in the 1950s, which threw a net so wide to catch Communists that it caught anyone wearing pink. So I appreciate the Time magazine article entitled “Foreign tax cheats find the US a safe haven”, published in October. It puts a little balance back into the holier than thou accusations coming out of the IRS office.

What’s that phrase, about the pot calling the kettle black?

Patrick Liotard Vogt is moving from Zurich to New York. He went to school at rich kids’ school Le Rosey in Rolle, so we can probably safely assume that he spends time on roads between Zurich and Geneva. The very-rich jet-setting 25-year-old who says he is involved with some 40 companies (he’s chairman of Poken, a startup I know and like, founded by IMD graduate Stéphane Doutriaux). The Huffington Post carries a lengthy interview with him. The last line caught my eye: he likes to drive too fast. So that’s who is in one of those cars zooming past on the autoroute.

And another line: “I come from a family that is more about being successful than being rich. We always learned that if you give something you have to get something. My great grandfather was the CEO and Chairman of Nestle. He started at the bottom and worked his way up. That’s very motivating.”

I had to read that quote a couple times to make sure I had it the right way around: it’s not about philanthropy.

Chat, message and do whatever else you do as a social networker, but don’t forget that the world is watching: Estée Lauder has decided we have to look good while we do it. Ad Age reports that the venerable cosmetics company is now offering free department store makeovers with professional photo shoots in the US for those precious mug shots we post on our accounts.

Stories not making front page headlines but that are worth a moment’s reflection:

The US Justice Department says crimes by girls have been rising and by 2004 girls’ crimes were 30 percent of the total by juvenile delinquents. Little research has been done in this area, so no one seems to know why crimes by girls are increasing, although one part of the answer could be changes to the justice system in the US.

Meanwhile, in Copenhagen where the IOC (International Olympic Committee) just awarded the 2016 Games to Rio de Janeiro, the sports group also adopted a number of recommendations. One of these is the challenging Recommendation 66: “The Olympic Movement should strengthen its partnership with the computer game industry in order to explore opportunities to encourage physical activity, and the practice and understanding of sport among the diverse population of computer game users.” (good luck!) Olympic Congress Recommendations in full

And, in a peculiarly American news approach, both Bloomberg and Associated Press have now managed to put Roman Polanski (sex crime escapee) and tax cheats (IRS tax dodgers) into bed together with a lovely duvet-style Swiss feather cover over them (read that: Switzerland and Swiss neutrality = haven for all crimes committed by right-thinking Americans, which indicates editorial confusion).

After this dubious snuggle-down, what comes out is that a) Switzerland is “no longer” a haven, which implies that it has been, for all crimes, while forgetting completely about accurate reporting and b) that Switzerland, tut-tut, will have to live like the rest of the world, which is a sign that the writers, or more probably their editors, haven’t budged since 1980. Switzerland may not be a member of the European Union, but it has adopted much of the legislation, for a start and, frankly, the days when Switzerland was an island of oddity are over. Now Switzerland is as odd as any other country around. Back in 1980 all Swiss stories published in the US had to include gold under the streets of Zurich, cheese with holes, chocolate and cuckoo clocks, even though the Swiss have tried for years to point out that cuckoo clocks are Austrian, not Swiss. As for the other three, my editors at three major US news publications all told me this, at one point or another during the early 1980s. It made for some slightly skewered reporting at the time.

Looks like some things never change, but I’m not talking about the Swiss, who have.

Pierre Bessard of the Liberales Institut, a Zurich-based research group, has contributed an Op-Ed article to the New York Times today called “Leave Swiss banks alone” which I think has the best explanation I’ve seen for the Swiss attitude towards paying taxes.

Ironically, given the US pressure on Swiss banking secrecy, it probably mirrors what many Americans believe they believe about the role of government. Switzerland puts it into practice.

The average Swiss on the street I’ve spoken with in recent months is embarrassed by and angry about UBS and its activities in the US, but these people also feel quite strongly about the importance of maintaining the citizen/government balance. They feel equally strongly about privacy.

Rich and famous people come to Switzerland for two reasons: the banks, and the fact they can breath more easily. True, the mountain air is crisp and relatively clean, but the Swiss respect their privacy – it’s all part of the same recipe, and it’s not so much designed to make a nation rich as to ensure national self-respect.

I can’t count the number of people from other countries (outside the US) who have told me they just don’t understand the US bankruptcy system. I occasionally make a stab at explaining it, saying that the idea behind Chapter 11 is that you don’t kill off the business, but help it get back on its feet. Trying to explain why this isn’t unfair to people owed money by the company that is in difficulty is something I do less well. I still get riled when I think about the $650 I was owed by Robert Maxell, once Rupert Murdoch’s rival, when Maxwell fell overboard at sea. The lawyers hired to sort out his unhealthy financial situation wrote to me at least twice a year for five or more years to tell me I was unlikely to get any money, but they were trying. No comment.

So here is a living, breathing example of how the system works. The Minneapolis Star & Tribune, one of the top 20 US newspapers for decades, filed for bankruptcy at the end of 2008. It was suffering, like everyone else in the media industry, from weaker business, fading advertising revenue and problems specific to its own financial history. The Star (actually known locally as the Strib) will soon rise, it seems. Read all about it!

The next two weeks will be tense ones for the Swiss government and UBS, with difficult negotiations underway with the US Justice Department over the Swiss bank providing information to IRS tax officials on 52,000 bank clients. The problem dates back to July 2008, and in the early months there appeared to be little US media understanding of, or support for, the Swiss position, but the tide may be turning. The New York Times ran a more balanced editorial last week on the issue after several earlier articles that seemed to show UBS and Switzerland in general as evil-doers. This week the Wall Street Journal and today Time magazine carry articles on the standoff, and show a better understanding of the Swiss argument that the US is playing bully, expecting to ride roughshod over an existing tax treaty.

Nevertheless, the clichés don’t die hard and as is too often the case Time starts out by mentioning chocolate, watches and neutrality, for American readers who would otherwise possibly mix us up with Sweden, that other cold Sw- country. The clock might be ticking for the negotiators but at least Time left out the enduring (Austrian) cuckoo clock myth.

My favourite bit of newspaper (online for me) reading this summer is the refreshing and interesting series of articles by Jean-Claude Peclet that Geneva-based newspaper Le Temps has been running about chocolate, “Sur les pistes de chocolat”, tracing it from the Côte d’Ivoire to the Amazon, looking at sources around the world, looking at various business and economic issues – and I imagine we’ll eventually end up in Switzerland with the author, eating some excellent Swiss chocolate. Highly recommended!