The outcome of a criminal probe into Credit Suisse may be revelaed in a congressional hearing tomorrow. Photographer: Gianluca Colla/Bloomberg
The outcome of a criminal probe into Credit Suisse may be revelaed in a congressional hearing tomorrow. Photographer: Gianluca Colla/Bloomberg

There is a chance that one of the great mysteries of Swiss banking soon may be solved: What ever happened to the Justice Department's tax-fraud investigation into Credit Suisse AG?

Back in August 2011, Bloomberg News ran an article that said the Swiss bank likely would reach a settlement with federal prosecutors and pay a penalty of more than $1 billion. The government already had told the bank that it was the target of a criminal investigation into the cross-border banking services it provided to U.S. customers.

Then 2 1/2 years went by. And nothing happened, at least not to the bank. (Seven Credit Suisse bankers had already been indicted by then, but none of them has stood trial.) It isn't that the Bloomberg story was necessarily wrong at the time. Sometimes deals fall through or get delayed. Prosecutors change their minds. It's anyone's guess what transpired.

The Justice Department usually doesn't explain why it declined to prosecute in any given situation. But there are exceptions, such as when U.S. Senator Carl Levin and his Permanent Subcommittee on Investigations call a hearing demanding explanations, which is what will happen tomorrow.

In 2009, the Justice Department struck a $780 million deferred-prosecution agreement with UBS AG over tax-evasion services it provided to wealthy Americans. It's common knowledge that several other Swiss banks were in the same business and also were the subjects of Justice Department probes. Yet only one Swiss bank, Wegelin & Co., has been prosecuted to date. It pleaded guilty and paid $74 million in fines and restitution after being indicted in 2012.

Tomorrow's hearing is bound to produce some fireworks, just as Levin's hearings almost always do. The first panel of witnesses will feature Credit Suisse Chief Executive Officer Brady Dougan and three other Credit Suisse executives. The second consists of two Justice Department officials: Deputy Attorney General James Cole and Kathryn Keneally, assistant attorney general for the department's tax division.

The second of those panels should make for even more interesting theater than the first. About a year ago, Attorney General Eric Holder told a different Senate committee that some banks are too big to prosecute because of the economic damage that might ensue. Is that why the Justice Department decided not to indict Credit Suisse? We should have an answer soon enough.

(Jonathan Weil is a Bloomberg View columnist. Follow him on Twitter.)

To contact the writer of this article: Jonathan Weil at jweil6@bloomberg.net.

To contact the editor responsible for this article: James Greiff at jgreiff@bloomberg.net.