UBS whistle-blower says bank has ‘global’ issue with tax evaders

In many ways, the tide of public opinion has turned against bankers. Globally, they face more regulation and scrutiny, and many practices long considered just another day in the office are coming under fire. The latest series of scandals to hit global banks has to do with their role in helping the wealthy avoid taxation. Thousands of Americans have found themselves the subject of taxman scrutiny over the last few months, and now it seems that the sweep for tax dodgers is going to go global. – FD

Copyright 2015 Bloomberg.

Fabio Benedetti-Valentini

(Bloomberg) — The former UBS Group AG banker whose cooperation with the U.S. helped expose tax evasion by thousands of Americans says the Swiss bank used similar practices elsewhere and he’s eager to help European governments.

“It’s not a U.S. issue, it’s not a French issue, it’s a global issue. UBS is the problem,” Bradley Birkenfeld said in an interview the day after testifying in a French investigation into similar allegations against UBS. “They’ve been doing it in every market: the Greek market, the Spanish market, the Italian market, the Scandinavian market, the German — I can go on and on, you get the picture.”

The French charged the world’s largest manager of money for the rich last year with laundering the proceeds of tax fraud and ordered the Zurich-based bank to pay 1.1 billion euros ($1.2 billion) to cover a potential penalty should the criminal probe result in a guilty finding. The judge leading the probe asked Birkenfeld to come to Paris to testify as a witness, according to a U.S. court decision authorizing the trip.

Birkenfeld’s testimony in the U.S. case helped secure a $780 million settlement with the bank in 2009. He went to prison for his role and is still on probation. In the interview with Bloomberg News, he said that during his years at UBS in Switzerland, he often spoke with colleagues who worked with French clients and understands how they operated.

French Probe

“A witness who actively lobbied to get invited, needed to receive special permission to travel due to his court-ordered supervisory release, and never worked in the business in question, should have limited credibility,” UBS said in an e- mailed statement.

On the French case, the bank said, “the matter remains in a formal investigation phase, there is nothing more to add at this point.” Previously, the bank said the French probe has become a “highly politicized process” and that it’s “taken significant and broad steps to ensure tax compliance of our clients and will continue to do so.”

The U.S.-born banker flew to Paris last week and met with investigators led by judge Guillaume Daieff on Feb. 27, he said. In an interview the next day at a hotel near the Arc de Triomphe, Birkenfeld recounted his time at UBS in Switzerland, where he worked from 2001 to 2006. He declined to go into specifics about the judges’ questions.

‘Boys’ Club’

He was part of a team that catered to 19,000 U.S. wealthy clients with about $20 billion in assets, he said. As a director, Birkenfeld said he “made good money for the bank and my clients” during his years at UBS.

He said that while he focused on North America, he spoke with his colleagues handling Europeans. UBS managed even more assets from Switzerland for French clients than for Americans, Birkenfeld said.

While he said in the Feb. 28 interview that he doesn’t deny he was “part of it,” Birkenfeld said he wants to use his knowledge of Geneva’s private banking “little boys’ club” to foster public awareness and fight financial misdeeds.

Birkenfeld pleaded guilty to conspiracy for his role in the U.S. case and was sentenced to 40 months in prison. After his release, he received a $104 million whistle-blower award from the Internal Revenue Service.

Since UBS handed over account names to the U.S., at least 50,000 U.S. taxpayers have avoided prosecution by disclosing offshore accounts to the IRS, generating more than $7 billion in taxes, interest and penalties.

Birkenfeld said he’s ready to help other authorities as he is with the French, “free of charge.” He is already cooperating with two that he declined to identify.

Birkenfeld turned 50 the day before meeting the judges. He now lives in New Hampshire, and it was his first trip to Europe since 2008.