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Jim Hightower
Jim Hightower
26 Nov 2014
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19 Nov 2014
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Foreign Banks Recruit U.S. Tax Cheats

Comment

Business stories can be arcane and boring, but here's one that could've come straight out of a crime thriller about an international bank heist. All of the classic plot elements are present: a Swiss bank, $18 billion in loot, code names, yachts, diamond smuggling, Caribbean hideaways, the royal family of Liechtenstein, shredded files, rat finks and, of course, the witness protection program.

Standard stuff. Only, these thieves are bankers.

In particular, they are senior executives at Geneva-based UBS, the world's largest manager of rich people's wealth. The bank specializes in confidentiality, creativity ... and tax cheating.

In a recent report, a Senate subcommittee details how UBS dispatched its bankers to zip codes of wealth all across our country, aggressively marketing secret Swiss bank accounts. As a special service to such special clients, the bank promised that these accounts would be "undeclared" — meaning that all deposits would be a little secret between depositor and banker, with no reporting of the stash to those bothersome IRS agents back in the United States. Subcommittee investigators calculate that 19,000 of America's upright citizens of wealth jumped at the deal, quietly depositing $17.9 billion.

How did these tax cheats avoid detection? It turns out that UBS truly is a full-service bank: It created fake corporations in the Bahamas and other tax havens for these clients, fraudulently claiming that the sham corporations owned the Swiss accounts, not the clients; the bankers gave code names to their rich depositors to conceal their identity, and clients were issued Swiss credit cards that were untraceable by U.S. authorities; rather than mailing account statements to customers, the information was held in Switzerland until each client could view them personally, after which the records were taken to "a big shredding room" and destroyed; and — the biggest service of all — UBS prepared falsified reports to the IRS that effectively shielded its clients' cache of cash from taxation.

Lest you think that this deceit was the work of a few rogue bankers, the Senate report makes clear that it was premeditated, top-down corporate policy.

"This was a massive machine," says Bradley Birkenfeld, a senior UBS banker who has now pled guilty for helping a billionaire real estate mogul in Florida hide $200 million in the UBS maze (he was also a bit of a dashing banker, having converted money from one American's Swiss account into diamonds, which he then smuggled to him in a tube of toothpaste).

Breaking the omerta of Swiss banking, Birkenfeld confesses that the trained hustlers that UBS sent to America were "incentivized" — i.e., paid large bonuses — to recruit new clients for the secret accounts. UBS even sponsored art shows, yacht races and other events to attract rich Americans into its web.

The Swiss giant is not the only one trawling America for eager cheaters. For example, the Senate report also highlights the tax-avoidance finagling done by LGT, a bank owned by Liechtenstein's royal family. One of its former employees has revealed so much that the feds have ensconced him in the witness protection program. It seems that Liechtenstein officials want to nail him for violating their secrecy laws.

A top UBS executive has now apologized for "any compliance failures" that might have happened. No, no, no! Sir, this is not a technicality. This is stealing. On a mass scale: The subcommittee estimates that such offshore tax fraud costs our public treasury $100 billion a year.

As a Woody Guthrie song says of outlaws, "Some'll rob you with a six-gun, some with a fountain pen." These bankers and billionaires are stealing money we need for health care, schools, infrastructure repairs and other essentials. Instead of letting them off with wrist-slapping fines, the whole gang should be jailed with other cold-blooded criminals.

To find out more about Jim Hightower, and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate web page at www.creators.com.

COPYRIGHT 2008 CREATORS SYNDICATE INC.



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