Key witness, Liechti, testifies in UBS tax evasion trial in Florida
(Reuters) – A key witness in the federal tax evasion trial of a top Swiss bank executive took the stand on Thursday to testify against his former boss, Raoul Weil, who is accused of conspiring to conceal up to $20 billion in U.S. taxpayers’ assets in secret offshore accounts.
The former head of the wealth management division for the Americas at UBS , Martin Liechti, began testifying on Wednesday against Weil, 54, the highest-ranking foreign banker to be charged in the U.S. government’s legal campaign to stamp out offshore tax evasion.
Several of Weil’s former colleagues have already revealed the lengths to which UBS bankers went to avoid being caught, including using a computerized card game to mask secret, hidden laptop hard drives or handing over to a client thousands of dollar bills in interest, wrapped in a newspaper.
The trial of Weil, a Swiss citizen, is closely watched because it comes as UBS and other Swiss banks struggle to put behind them their pasts as willing accomplices to tax evasion and outright tax fraud.
Though UBS cleared up its problems with U.S. government authorities in 2009, it faces pressure in Europe, a far larger private banking market for Swiss banks.
Over two hours on Wednesday, Liechti described how he and Weil rose up the ranks of the Zurich-based banking giant to hold lofty executive positions at UBS. He also recounted how he, Weil, and other high-ranking UBS executives first learned more than a decade ago about the criminal liability they faced if the U.S. government found out they were helping American clients cheat on their taxes.
After UBS acquired U.S. brokerage firm Paine Webber to increase its presence in America, Liechti said he feared an investigation by the Securities and Exchange Commission would expose the bank’s clients who did not disclose their Swiss accounts to the IRS. “It made the situation problematic and it was known to everybody,” Liechti said under questioning by prosecutor Mark Daly.
Liechti ended his first day of testimony by telling the jury about the 2002 closings of client booking centers in the Cayman Islands and the Bahamas because both had signed U.S. agreements to exchange bank client information.
He also said the IRS had begun cracking down on credit card companies Visa Inc and MasterCard Inc to reveal the identities of card holders with offshore accounts. “It made the business unsustainable,” Liechti said. “A customer who has not disclosed income could be revealed.”
Liechti said Weil, who oversaw the Caribbean operations, was aware of the problem and signed off on his plan to move client assets out of the islands to Switzerland.
“Everyone realized the threat was real and something had to be done,” he said. (Additional reporting by Katharina Bart in Zurich editing by David Adams and Matthew Lewis)
