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:
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.
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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.
Where are those law and order types on these crimes????
It’s the weirdest thing, how small crimes like welfare fraud get the screams. The guys who shift oceans of money around the world to evade taxes, wouldn’t bother to pick up a welfare check off the sidewalk if it stuck to their shoe.
But, these crimes DO get prosecuted, witness this story — just too little and too late.
Some do.
Both the Bush and Obama administration gave UBS a big sloppy wet kiss rather than putting executives in jail.
Then about 15000 US tax evaders were eased through the immunity program (they did pay some hefty $$ to the feds and to their lawyers).
Lower tax rates = Less tax evasion
Higher tax rates = More tax evasion
Weaker tax enforcement = Less tax revenue
Stronger tax enforcement = More tax revenue
Plus, the enforcement ought to include shaming, in proportion to the amount of taxes owed to the nation it’s owed to.
Business uses government services far beyond the levels private citizens do. Yet they try their best to be “in the washroom” when the lunch tab arrives at the table. Freeloaders are freeloaders, no matter how wealthy they are — in fact, the wealth makes their shirking unforgivable.
Taxes are the price we all pay for the services that make our civilization work. Free riders are a core problem of the system, but slapping free riding gnats while ignoring the elephant clinging to the rear bumper is not … efficient.
I think if one believes most taxes are theft, then evasion is at least a psychological imperative or is permissioned without regard to tax rates. Evasion is a crime, paying taxes is the law….where are the law and order types when you need them on this issue?
There are a fair number of studies on tax evasion in different economies and different pressures, not just rates. Of course tax avoidance has a whole lot of studies for developed countries.
But simple correlation is not one of the sugestions.
Nor dom studies suggest why inviduals feel justified in breaking the law and resent punishment, and why many applaud breaking the law in this particular instance, and simultaneously harsh on others in other areas of life.
Some enjoy engaging in what is defined as criminal actions, and their peer group no doubt applauds them. Now, if ethics has simply no meaning in this century, then grab what you can. Apparently a significant portion of the public applauds the grab all you can ethos but they lack the nerve and intelligence to engage in it. This is one explanation why relatively poor people support the rich and find taxing them repelling.
The most interesting outcome of the cited case was it was the whistle blower that was buried in a cell. Much of what he wanted to tell the AUSA was rejected out of hand and apparently ignored. Whatever, the truth will never be known, and this matter is now only of passing interest to blogs.