More on UBS and Secret Banking Jurisdictions

by Linda Beale
crossposted with Ataxingmatter

More on UBS and Secret Banking Jurisdictions: Birkenfeld Tells All to Global Post

Bradley Birkenfeld, the UBS banker who opened the floodgates of information on the bank’s nefarious practices of aiding and abetting tax evasion, is currently in prison. But he has also done a tell-all interview with the Global Post, a series that began on August 5. See Michael Bronner, Telling Swiss Secrets: A Banker’s Betrayal, GlobalPost, Aug. 5, 2010. Links to additional articles in the series are provided at the end of each post and here:

Part 2: 222 billionaires

Part 3: The golden goose

Part 4: A triple-double cross

Part 5: A reversal of fortune

Remember the banking sequence in the Da Vinci Code movie/book. A mundane world from the outside reveals itself to be a high-tech world of illusions, where bank vehicles can easily evade police inspectors and move clients beyond their range. Birkenfeld’s description of the real Swiss bank is not so different–or if anything seems more surreal, since the bank even taught its bankers how to fool FBI and customs inspectors in order to move client assets around without the authorities knowledge. As the article notes:

The bank had held training sessions for cross-border bankers on how to elude FBI and U.S. Customs scrutiny when traveling with sensitive bank documents; how to obscure client information on PDAs and encrypted laptops; and various other evasive trade craft not usually associated with honest banking. Birkenfeld had the pilfered PowerPoints to prove it.

***

The bank would admit to intentionally subverting U.S. tax laws and defrauding the U.S. government by sending dozens of unregistered bankers, Birkenfeld among them, to the United States on thousands of illegal trips to facilitate tax evasion schemes for wealthy U.S.-based clients — a fraud hiding as much as $20 billion in secret undeclared accounts and earning UBS up to $200 million a year in ill-begotten profits. Id.

Birkenfeld’s lifestyle, of course, was similar to the Wall Street titans with their million-dollar bonuses eating holes in their pockets.

He cultivated contacts among event organizers so he could swing VIP treatment for himself and his clients. “I just generally spent money the way I saw fit,” he said. “I wouldn’t go out and buy somebody a Rolex, but I mean, if I spent $500 for a lunch I could justify it.”

Birkenfeld got paid, too: A starting salary of 180,000 Swiss francs (just over $170,000) plus an American-style bonus, which in his best year, he said, put him at one million Swiss francs in total compensation (about $946,000). When home from the road, Birkenfeld drove a BMW M5 and split time between a plush apartment in Geneva and a chalet in the shadow of the Matterhorn in the Swiss Alps. Id, Part II.

Birkenfeld’s defection was a game-changer. The IRS got some names right away, thousands through an amnesty program that had clout because of the settlement with UBS which promised 4500 names, and with the Swiss Parliament’s decision in June, those thousands more. Each account name provides tie-ins to other sources of information–Bahamian or Singaporean companies, bankers, lawyers, etc. UBS is not the only bank whose secret operations will be exposed with the new information provided by those who came in under the IRS amnesty program–Credit Suisse and HSBC are also under investigation, as the article notes; and German authorities have purchased additional information on secret bank accounts, which led to German raids on Credit Suisse’s German branches in mid-July of this year. This will provide still more information in months to come.

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