Switzerland: Central Bank Chief in Ethics Storm Over Wife’s Dollar Trades

A trade made by the wife of Philipp Hildebrand, the Swiss National Bank Chairman, that netted SFr60,000 profit for the family, has landed the banker in a code of ethics storm.

The transaction was made shortly before the instruction radically halted the Swiss franc's appreciation of the US dollar, in a secret decision that would have been made known to only the most senior of all personnel that would have included Chairman Philipp Hildebrand.

The Swiss National Bank tried to quash criticism by releasing an independent auditors' report which concluded that currency deals from his private account were "delicate" but did not break internal guidelines.

It also released its previously secret guidelines for senior officials and said Hildebrand would hold a news conference Thursday.

The publication of the documents came hours after the Swiss political weekly Weltwoche claimed Mr Hildebrand had personally authorised the currency deals previously thought to have been conducted by his wife.

The bank said last month that Mr Hildebrand's wife, Kashya, a former currency trader who now runs an art gallery in Zurich, bought an unspecified amount of US dollars for herself and her daughter. The central bank did not say who authorised the sale, but said its oversight body had concluded there had been no inappropriate transactions nor any abuse of privileged information by those involved.

The PWC auditors' report cites emails indicating that Mr Hildebrand learned of his wife's decision to purchase 504,000 US dollars for 400,000 francs on August 16 - a day after the transaction occurred. The audit report does not say whether it was Hildebrand or his wife who, less than two months later, sold 516,000 dollars for 475,000 Swiss francs.

However, between the purchase and the sale of US currency, the Swiss National Bank increased franc liquidity and set the minimum exchange rate of the euro at 1.20 francs. The two actions helped to sharply raise the value of major currencies against the franc.

Auditors concluded that the purchase of US dollars two days before the SNB's liquidity decision was "delicate," but since Mr Hildebrand had declared the purchase a day before he had not breached any rules.

But public outcry over the currency deals has grown with media commentators and politicians demanding greater transparency from the SNB and from Mr Hildebrand, whose unblemished image is considered crucial to the credibility of Switzerland's small but powerful central bank.