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Uproar over Swiss central bank chief's dollar deal
Swiss central bank publishes audit report that cleared president over delicate currency deals
By The Associated Press

GENEVA (AP) ' Switzerland's central bank sought Wednesday to quash criticism of its president by releasing an independent auditors' report which concluded that currency deals from his private account were "delicate" but did not break the bank's internal guidelines.

The Swiss National Bank published the report by auditors PricewaterhouseCoopers amid growing pressure on bank chief Philipp Hildebrand to reveal details of the deals that saw his family earn 75,000 Swiss francs ($83,000) from dollar currency swaps at a time when his central bank was acting to depress the value of the Swiss franc.

The central bank 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 Hildebrand had personally authorized the currency deals previously thought to have been conducted by his wife.

"The report by PWC shows that recent reports in certain media about the transactions of the Hildebrand family are partly incorrect and contain no information that wasn't already known to the controlling authorities," the central bank said in a statement.

The Swiss National Bank said last month that Hildebrand's wife Kashya, a former currency trader who now runs an art gallery in Zurich, bought an unspecified amount of U.S. dollars for herself and her daughter. The central bank didn't say who authorized the sale, but said its oversight body had concluded Dec. 22 there had been no inappropriate transactions nor any abuse of privileged information by those involved.

The PWC report cites emails indicating that Hildebrand learned of his wife's decision to purchase 504,000 U.S. dollars for 400,000 francs on Aug. 16 ' a day after the transaction occurred. The audit report doesn't say whether it was Hildebrand or his wife who, less than two months later, sold $516,000 for 475,000 Swiss francs.

However, between the purchase and the sale of U.S. 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 U.S. dollars two days before the SNB's liquidity decision Aug. 17 was "delicate," but since Hildebrand had declared the purchase a day before he hadn't breached any rules.

On the sale of U.S. dollars, the auditors concluded that it was part of a property deal that began in March. Because Hildebrand had held almost $1.2 million resulting from the deal for over six months, he also didn't breach SNB rules with Oct. 4 sale.

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

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