11/15/2008

Corruption: Laundromat Royale By Lucy Komisar

UBS branch in ZurichIt sounded like the plot of an action thriller. A U.S. Senate subcommittee held hearings Thursday on how UBS/Switzerland, the world’s largest private bank, and LGT (Liechtenstein Global Trust), owned by the royal family of that micro-tax-haven state, organised complex tax evasion schemes for U.S. clients, and used spy-type tactics to avoid being detected.

LGT bankers allegedly used code names and public phones instead of making calls that could be traced. UBS agents carried encrypted laptops and business cards that didn’t mention they were in the “wealth management” division. According to testimony and records, both banks took care to disguise their activities because moving and hiding the money of tax evaders and other criminals is very lucrative, bringing hundreds of millions of dollars in profits.

The Senate Permanent Subcommittee on Investigations had impeccable inside sources. One was Heinrich Kieber, who worked for LGT for two years, collected 12,000 pages of incriminating documents, including 1,400 names, on DVDs, and made them available to eight western countries, including the U.S. He is now in a witness protection programme with a secret identity and new name, hiding from a Liechtenstein international arrest warrant and 10-million-dollar bounty.

The other was Bradley Birkenfeld, a former UBS banker who was arrested for helping a U.S. real estate mogul cheat on taxes and agreed to talk to get a lighter punishment.

Kieber appeared via a videotape that disguised his voice and appearance; it was the first time he has talked to the public. In 2002, Kieber had been assigned to scan and index all the documents of LGT Trust. As he read them, he was appalled. He said LGT helped not only tax evaders but facilitated corruption, links to dictators, and business deals to avoid a U.S. embargo.

He described how the system worked. He said LGT set up foundations and other entities into which clients transferred securities and cash (now over 99 billion dollars) and also real estate, paintings, and even patents. To block paper trails, it established “special purpose vehicles” (SPVs), either bank accounts or shell companies that owned and controlled accounts and were never registered in Liechtenstein, but in Panama, the British Virgin Islands, or sometimes Nigeria.

Kieber explained that LGT would transfer a client’s assets out of the U.S. through a country such as Canada, which would not raise tax authority suspicions. Then it would move through countries with weak or non-existing compliance laws and then through a Swiss bank such as the Banca del Gottardo in Lugano.

He said, “This bank, in turn, has reciprocal rights to use the LGT Bank for its own customers.” Banca del Gottardo is notorious, originally a subsidiary of Italy’s Banco Ambrosiano, known as “the Vatican bank”, which collapsed in 1982 after its CEO, Roberto Calvi, moved multi-millions offshore. Calvi was found hanging from Blackfriars Bridge in London.

Kieber explained, “For an additional layer of concealment, either the Swiss bank or the LGT Bank often perform a fake cash-out transaction to make it look like the monies have been paid out in cash over the counter where in fact they have been transferred into the concentration account of the LGT Bank.” (A concentration account comingles funds from numerous depositors.) At the same time, an equal amount would be credited to the client’s SPV account.

He said, “The only purpose of all this is to make it extremely complicated for law enforcement agencies to follow the trail, as each step serves as a filtre to hide the track of the client’s money.”
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1 comment:

Mark said...

Well said.

Meanwhile there is an international warrant for Heinrich Kieber. For more info, click here.

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