Corruption: Swiss Banks To Reveal Secret Accounts



Nigerians with secret Swiss bank accounts may have to look elsewhere to stash their loot as previously inaccessible accounts in Switzerland are to be turned over to the American Government.

This followed an agreement by UBS, a Swiss bank, to pay $780 million and hand in secret Swiss bank records to settle allegations it conspired to defraud the United States Government of taxes owed by thousands of American clients.

Sources at the Justice Department said another part of the deal is for the Swiss authorities to also turn over the accounts of several people under investigation for financial irregularities, including Nigerian officials.

Government officials in Nigeria have for years found a safe haven in Swiss banks, among them the late Head of State, Sani Abacha.

Part of the millions of Dollars Abacha siphoned to Switzerland has been repatriated to Nigeria by the Swiss authorities.

Officials said the deal struck in a federal court in Fort Lauderdale, Florida, mandates UBS to immediately turn over to the U.S.Government account information for U.S.customers of the bank’s cross-border business.

In doing so, the federal authorities have struck a big crack in Switzerland’s trademark bank account secrecy.

"The Swiss are saying that this is the end of Swiss banking as they knew it," Jack Blum, an offshore tax specialist stated.

"Nobody will trust the security of the Swiss bank account again."

UBS will pay $780 million in fines, penalties, interest, and restitution for conspiring to create sham accounts to hide the assets of American clients.

"We accept full responsibility for these improper activities," Peter Kurer, Chairman of Swiss-based UBS AG, said in a statement.

Kurer added that the bank is determined to abide by the terms of the deal with U.S.criminal and securities officials.

Client confidentiality, to which UBS remains committed, was never designed to protect fraudulent acts or the identity of those clients, who, with the active assistance of bank personnel, misused the confidentiality protections, he stressed.

Approximately 17,000 American clients concealed their UBS accounts from the Internal Revenue Service (IRS), the agency, hiding assets of roughly $20 billion in total, American officials said.

According to U.S.officials, when an acquisition in 2000 of a brought UBS a host of new American clients, the bank set about to evade new reporting requirements for those clients.

To do so, UBS executives helped payers open new accounts in the names of sham entities.

Prosecutors contend that UBS executives used encrypted software and other counter surveillance techniques to prevent anyone from detecting that they were actively marketing such Swiss bank secrecy, and tax evasion, to American taxpayers.

The clients, in turn, filed false tax returns that omitted the income they earned in their Swiss accounts.

Federal officials said they have pulled aside a veil of secrecy that hid a corrupt international banking practice.

"This was not a mere compliance oversight, but rather a knowing crime motivated by greed and disrespect for the law," explained Alexander Acosta, for southern Florida.

IRS Commissioner, Doug Shulman, warned payers hiding money overseas that it is time to come clean.

"People who have hidden unreported income offshore need to get right with their government.They should come forward and take advantage of our voluntary disclosure process," he counselled.

Democratic Senator Carl Levin has estimated that abusive tax shelters and hidden offshore accounts cost the U.S.Government nearly $100 billion a year in lost tax revenue.

Prosecutors still are hunting for UBS Executive, Raoul Weil, who was indicted in November last year on charges he conspired to defraud the government with his management of the bank’s cross-border business.

In June last year, former UBS banker, Bradley Birkenfeld, pleaded guilty to a similar charge.

If UBS fails to turn over clients’information, or stops co-operating with the authorities, prosecutors could re-file charges against the bank.

Under the deal, UBS also will stop engaging in the type of cross-border banking business that got it into trouble.