Jailed whistleblower urges new drive against UBS

Ben Kostyack

Published On: April 14th, 2010

Reuters, Friday April 16 2010

(Contains language in paragraph 5 that some readers may find offensive)

By Tom Brown

MIAMI, April 16 (Reuters) – Bradley Birkenfeld, who helped expose widespread tax evasion involving wealthy American clients of UBS AG said on Friday U.S. authorities should launch a sweeping new crackdown on the Swiss bank.

More than 60 UBS bankers should be indicted for their role in the secret offshore business, he said, adding that a “kingpin” in the tax evasion scheme had inexplicably been allowed to escape arrest.

Arguing that a previous investigation of the bank was hampered by incompetence and political cover-ups, Birkenfeld said a U.S. legal settlement with UBS should be tossed out immediately so the bank can be hit with much stiffer penalties and fines.

“They dropped the ball on this totally,” said Birkenfeld, referring to the U.S. Department of Justice.

“Pardon the expression, but they should have some balls here,” he told Reuters. He spoke in a telephone interview from a prison in Minersville, Pennsylvania, where he began serving a 40-month sentence in January.

Birkenfeld, an American and former UBS banker, pleaded guilty in June 2008 to conspiring to defraud the United States by helping a billionaire real estate developer hide $200 million from U.S. tax authorities.

Birkenfeld’s attorneys made a clemency appeal on his behalf to President Barack Obama on Thursday. Whether or not his sentence is commuted, Birkenfeld said he expects to collect a sizable reward from the Internal Revenue Service.

“The public good I’ve done for the Treasury far exceeds the one-count indictment against me,” he said.

As the central informant in the U.S. case against UBS, Birkenfeld could potentially be in line to receive up to 30 percent of the money the IRS recovers from its U.S. tax cheats.

UBS paid $780 million last year and admitted criminal wrongdoing to settle a U.S. lawsuit against it in which it acknowledged it aided Americans in evading taxes.

As part of a subsequent deal, UBS and the United States settled the civil leg of the case with a promise to hand over 4,450 client names within a year.

A Swiss court ruling has thrown that settlement into doubt, however, and Birkenfeld said U.S. authorities had erred by failing to follow through on his advice that they go after a total of 19,000 accounts held by American clients.

“POLITICAL COVER-UP”

“They should immediately null and void the agreement with UBS,” said Birkenfeld, who noted that less than 300 UBS client names have been turned over to the IRS and Justice Department so far.

“They should fine the bank properly and demand all 19,000 accounts,” he said.

“As of today they have, what? 14 indictments,” Birkenfeld said, making the point that a relatively low number had been charged in the Justice Department’s investigation so far.

Birkenfeld himself is the only individual to have been sentenced to substantial prison time.

“Where are all the people that are politically connected in Washington that had accounts at UBS?” Birkenfeld asked. “I’m telling you this is a political cover-up. Why is it that the whistleblower is the only guy in jail? I mean this is insanity,” he said.

UBS declined to comment on Birkenfeld’s comments.

But in support of his allegation of a cover-up, Birkenfeld noted that U.S. authorities had detained Martin Liechti, then Zurich-based head UBS’s cross-border business, while he was visiting Miami in April 2008.

In his role as an informant, Birkenfeld said he had called for Liechti’s arrest because he knew who all the bank’s key U.S. clients were. Liechti was held only briefly and never charged.

The Justice Department has declined to comment on Liechti.

“Why would you let the kingpin who knew all the key clients of UBS go?” Birkenfeld asked in the interview. “They lost all their leverage.”

Stephen Kohn, executive director of the National Whistleblowers Center in Washington and one of Birkenfeld’s lead attorneys, said 66 people were on the list of current or former UBS bankers Birkenfeld was now encouraging the Justice Department to indict.

They had all been affiliated with the bank’s offices in Zurich, Geneva and Lugano, said Kohn, who said the list was not yet being made public. In addition to Birkenfeld himself, only one UBS executive, former global head of wealth management Raoul Weil, has been indicted as part of the U.S. probe.

“The political influence of UBS is massive,” Kohn said, when asked about the bank’s ties in Washington. “They’ve purposely put in high place politicians or former politicians.” (Editing by Pascal Fletcher) * Most commented