Why aren’t the law and order types excited?

by Linda Beale
crossposted with Ataxingmatter

More On UBS and Whistleblower Bradley Birkenfeld

The Washington correspondent for Feature Story News, Daniel Ryntjes, interviewed Bradley Birkenfeld in jail recently. You can find the audio interview and other items on the UBS banking secrecy case, at this link.

Birkenfeld says that most of the US clients were “sophisticated investors” who traveled to Switzerland expressly to set up secret accounts and take advantage of the anonymity in a bank that had been operating this business for decades: they didn’t need to talk about that motive, because everyone knew that was what the service was all about. He notes that the bankers didn’t provide the tax advice, but there were lawyers and trust officers who handled that part of the deals, including setting up Hong Kong or Singapore corporations and otherwise.

Birkenfeld, as a director at UBS with signatory power at the bank, had a base salary of about 160 thousand Swiss francs and bonuses that ultimately landed him just under a million dollars a year for his banking work. Birkenfeld claims that he saw a document not provided to employees that raised questions about the legality and ethicality of the bank’s activity in having bankers travel to the US to meet with US clients. While the activity may have been legal in Switzerland, he asked the bank to explain the issues in the US. He claimed to see a pattern in which “the bank was trying to distance itself and have a corporate cover for itself, but not for its employees.” Meanwhile, it was “compensating, training, encouraging” the employees to do those activities. When the bank declined to answer his queries, he sought outside advice and was told to resign, which he did. In his exit interview (with human resources and other officials), he argued that he should get an answer to those questions.

While on leave, he wrote the bank stating his concern about violations. An investigation commenced, which he saw as a cover-up. Based on this, he traveled to the US and met clandestinely with the DOJ, SEC, IRS and the Senate permanent subcommittee on investigations to testify about the bank’s activities, “out of pure principle”, he says. So he took on the largest bank in the world about the “largest in US history” tax scandal, and now says he wonders why the DOJ had not acted on this issue beforehand. He also thinks that he shouldn’t have gone to the DOJ, since he ultimately was prosecuted after sharing, he claims, information with them about the bank. He says the DOJ is “incompetent”, and using the KPMG case as the example, in which the judge concluded that failure to provide financial support for expensive legal counsel was a violation of the tax evasion promoting defendants’ constitutional rights to counsel. (I find that conclusion highly dubious, but it is the result of the case.)

Birkenfeld sees himself as the victim–the only person in prison after the exposure of UBS. The interviewer notes that he was, in fact, breaking the law for the four years that he worked at UBS pursuing these criminal acts. He notes that there are thousands of Americans who took advantage of the UBS practice who are NOT in jail, and he is not satisfied with the job done by DOJ with the information provided. He notes that the “kingpin” knew all 25,000 clients, but the DOJ failed to extract all of those names because of the deal they made with UBS for a mere 4500. They gave the “kingpin” immunity and he pled the Fifth at the Senate, then they released him in August 2008 while the Senate was on recess. Birkenfeld had a long prison sentence, and no other person in the scandal, so Birkenfeld thinks this will discourage whistleblowers from exposing these kinds of criminal acts in the future. They have prosecuted very few of the names they got early on, so he notes it will take them a long time to prosecute the additional 4500 names.

There is more to the interview, and more in the other links. Enjoy. [hat tip to Daniel Ryntjes]