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Series: Banks and the « too big to be convicted » doctrine (part 7)

Major banks are massively organizing tax evasion internationally

Another example of ‘Too Big to Jail’: the evasion and international tax fraud organized by leading Swiss Bank UBS.

UBS (Union des Banques Suisses) who had to be rescued from bankruptcy in October 2008 by a massive injection of public money in Switzerland is involved in the scandal of Libor, in the handling of market exchange (UBS is the subject of a thorough investigation of the part of the authorities both in the United States than in the UK, Hong Kong and Switzerland) and in the mis-selling of mortgage products structured to the United States. UBS, HSBC and Credit Switzerland |1. in particular, also specialises in the organisation on a systemic scale of tax evasion by the wealthy of the United States, Europe and elsewhere.2|.

by Eric Toussaint

May 11, 2014 « approximately 120 loads of Swiss business would be present illegally in France to solicit large hexagonal fortunes, which is strictly prohibited by law but directed, according to Antoine Peillon, informed by the parent company in Switzerland. Each commercial is equipped with a document, the manual of Private Banking, ‘real guide in tax evasion’» |3. The testimony of a former employee of UBS, published in January 2014, reinforces the accusations by Antoine Peillon. « The testimony of a former Swiss bank employee, filed with justice and collected by Le Parisien-today ‘ hui in France (January 21 edition), shows that the biggest Swiss banks, which from 2012 under judicial investigation in France, would have established a well system broken in to encourage the French to defraud the taxman. Guillaume Daïeff and Serge Tournaire.the Parisian financial judges in charge of the case, suspect the Union of Swiss banks (UBS) have implemented an extensive system of illegal canvassing of french customers, encouraging them to open accounts not reported in Switzerland in the early 2000s. » |4|.

A few weeks later, in February 2014, appeared in book form another testimony in support of UBS, he is a former employee of UBS in France to organize social activities to customers. ‘Was to bring together the Chargés d’affaires of UBS with their future customers, preferably wealthy, those 50 million €. As you do not seduce a millionaire with a simple coffee, events were to be prestigious. Golf tournament, regatta sailing, night at the opera followed by a dinner at chef… nothing was too beautiful to attract these fortunes.(…) At each event, Swiss business expenses were present in very large numbers. From Lausanne, Geneva, Basel, Zurich, they had for mission to convince the targets, screened by us, to submit their wealth at home. Each year, at the request of Zurich headquarters, we were doing the balance sheet: how many new clients? How much fresh money? The golden rule was that an event should be profitable.’ |5. Given the scandal produced by multiple revelations and the judicial proceedings in France, UBS has banned from April 2014, a portion of its wealth managers travel to France.6|.

While French justice is slow and shy, that nothing is happening in Belgium (yet UBS did the same type of fraudulent transactions in France and elsewhere), UBS is about to come to an agreement with the German authorities. In fact, UBS is negotiating with German justice the amount of the fine that will be imposed for helping taxpayers to escape the taxman. There is talk of a fine of EUR 200 million that will allow it to escape conviction.7. UBS is accused of aiding German clients to hide their fortunes via foundations and trusts to the Liechtenstein. According to the Prosecutor’s office in Bochum who conducted the investigation and led several raids against subsidiaries of UBS in Germany, the funds in question reach about 20 billion €. If the fine is actually 200 million €, this will mean that UBS gets by paying the equivalent of 1% of the defrauded amounts. UBS is the third Swiss Bank fined by the German authorities. Bank Julius Bär and Credit Switzerland respectively paid 50 million € and 149 million €. As for the other examples, UBS avoided so far any real conviction. It must just to deal with scandals that tarnish its image and fines, all in all, quite minor. It must also change its financial strategy but it continues without that its leaders have been worried and not be threatened in its freedom to carry on banking business.

What happened to the United States with UBS confirms the doctrine of « Too Big to Jail ». The case dates back to 2008 when the authorities of the United States begin a statement against UBS accused of organizing a network of tax evasion. UBS managed the fortune of approximately 5 000 North American citizens avoid paying taxes in the United States. Their fortune was placed in Switzerland (after transiting in some cases by other tax havens to scramble the traces). To carry out their investigation, U.S. authorities received information that they had, in 2007, Bradley Birkenfeld a former UBS official specializing in tax evasion.

Bradley Birkenfeld, whistleblower or simple informer?

Bradley Birkenfeld is an American citizen, he started to work in the banking sector in 1991 in a Boston Bank, State Street (13e Bank in the United States).8. He made contact with the FBI in 1994 to denounce the illegal practices of the Bank which he then leaves without that it has been the subject of lawsuits. In 1996, he was hired in the United States as Manager of fortune by Credit Switzerland (2e Swiss Bank), and then in 1998, he spent at Barclays (2e British Bank). In 2001, he joined UBS bringing wealthy clients. He moved to Geneva where he took part in the Organization of the network of tax evasion regarding the United States. He does this under the responsibility of Raoul Weil, one of the patrons of UBS. He left the Bank in 2005 had, he said, become aware of the seriousness of the activities to which he was actively involved. Note that what he was doing for UBS did nothing illegal under the laws of the Switzerland. In 2007, he decided to contact the Ministry of Justice of the United States to denounce the illegal activities of UBS and take advantage of a law that since 2006, protects and rewards those who denounce the tax a fraud.9. Indeed, a whistleblowers (IRS Whistleblower Office) office was created within the administration for the collection of taxes (theInternal Revenue Service, IRS). The homepage of the official website begins with these two sentences:  » the office of whistleblowers from the IRS pays those who launch the alert against those who don’t pay taxes as they are due | .10|. «If the whistleblowers office makes use of the information provided by the whistleblower, it can give it up to 30% of the additional fees, penalties or other amounts it collects » |11. The information that it communicates to the IRS and the justice department allow these two organizations to mount a folder in concrete against UBS. The severity of the activities of UBS under the law of the United States is such that it was necessary to remove the Bank Bank license but, as it happens a little later with HSBC and other major banks, the authorities of Washington will confine themselves to require the payment of a fine (780 million $ in February 2009 in addition to 200 million $ a little later). The United States also get the Bank communicates to them a list of 4 450 names of citizens of the United States who have stashed their wealth in Switzerland through UBS. To get there, Washington has, at times, employee of important means of pressure: the threat to withdraw the license of the Bank and the momentary arrest of some leaders of the Bank, as Raoul Weil appearing in trial in 2014.12|.

Meanwhile, Bradley Birkenfeld, whistleblower, has first paid dearly for his collaboration with the authorities of the United States: he is arrested in May 2008 and brought to justice. In August 2009, he was sentenced to 40 months in prison for his involvement in the illegal activities of UBS. Note that during his indictment B. Birkenfeld, the Attorney acknowledged that without the collaboration of Bradley Birkenfeld the Ministry of justice and the IRS would not have been able to gather all the information that helped get caught UBS. B. Birkenfeld began serving his sentence in January 2010. From his prison, Bradley Birkenfeld appealed to president Barack Obama, he has also introduced a request for review of his case to the Attorney-general Eric Holding and eventually be able to get out of jail after 31 months, early August 2012. What the international press has especially learned, this is what happened to Bradley Birkenfeld after his release from prison to know that the IRS finally paid him $ 104 million $ as reward for the denunciation of the illegal activities of UBS. Indeed, the IRS considered finally that Bradley Birkenfeld was entitled to a percentage of fees and fines that could be collected from wealthy individuals identified through the denunciation.13|.

It is not possible here to enter into the analysis of the exact motivations of Bradley Birkenfeld, is this a White Knight, a whistleblower or a simple jailhouse and bounty hunter? What is important is to make the following observation: the Bank which conducts serious illegal activities as well as those who direct it and planning his misdeeds, benefit from impunity. The Bank must pay at most of indulgences (forgiveness, a fine).

Those who expose the illegal activities of the Bank do so at their own risk. In the case of UBS, Credit Switzerland, of HSBC Switzerland… they are condemned (see the case of Hervé Falciani in L’affaire UBS Switzerland) in the eyes of the Swiss law and the Swiss authorities themselves are not private to the severity of the law against them. In the case of the United States, their situation is more complex. In some cases, they may get a reward but nevertheless risk prison. Since the UBS case / Bradley Birkenfeld, it seems that bankers received the Government of the United States that he avoids financially encourage whistleblowers candidates. To follow.


It must put an end to banking secrecy. Banks must be required to communicate all information about their leaders, their various entities, their clients, the activities they perform and transactions they make on behalf of their customers and for themselves. Similarly, the accounts of the banks must also be legible and understandable. The lifting of bank secrecy must become a minimum democratic imperative for all countries. In practice this means that the banks must keep at the disposal of the tax administration:
•a list of names recipients of interest, dividends, capital gains and other income;
•information on openings, changes and closure of bank accounts to establish a national directory of bank accounts;
•all entries and exits of capital with the identification of the payer.

Must be banned banks to carry out any transaction with a tax haven. The non-respect of the prohibition must be very heavy sanctions until the withdrawal of the banking license and payment of heavy fines (a fine equivalent to the amount of the carried out transaction). The judiciary and the public prosecutor must be encouraged to continue in a systematic way of Bank leaders who are responsible for crimes and financial crimes. You must remove the banking license to institutions that do not comply with the prohibitions and found guilty of malpractice.

Because capitalists have demonstrated how they were able to commit crimes and take risks (which they refuse to accept the consequences) for the sole purpose of increasing their profits, because their activities periodically cause a heavy cost for society, because the society we want to build must be guided by the search for the common goodjustice social and the reconstitution of a balanced relationship between humans and the other components of nature, it is necessary to socialize the banking sector. As proposed by Frédéric Lordon, it comes to achieve « a full de-privatization of the banking sector ».14|.

|1. Financial Times, «  » Credit Switzerland tax probe deepens « , 16 April 2014. » See also: « Credit Switzerland may pay US$ 1.6 b in tax probe », may 6, 2014, http://www.stuff.co.nz/business/world/10014963/Credit-Suisse-may-pay-US-1-6b-in-tax-probe

|2. See in particular the valuable book of Antoine Peillon, these 600 billion missing in the France, the threshold, 2012, 187 pages. See the literature review published in economic Alternatives : « these 600 billion missing in the France. Investigation in the heart of tax evasion », —enquete-au-coeur-de-l-evasion-fiscale_fr_art_1143_58595.html http://www.alternatives-economiques.fr/ces-600-milliards-qui-manquent-a-la-france see also: ‘ the great evasion: a (Productions, 2013 Nilaya) Patrick Benquet doc’, accessed may 9, 2014, http://www.publicsenat.fr/La_grande_evasion_fiscale_documentaire_public_senat

|3. Economic alternatives, « these 600 billion missing in the France. Investigation in the heart of tax evasion », April 2012, —enquete-au-coeur-de-l-evasion-fiscale_fr_art_1143_58595.html http://www.alternatives-economiques.fr/ces-600-milliards-qui-manquent-a-la-france

|4. Le Monde, ‘advisers at UBS were the mule between the France and the Switzerland’, January 21, 2014, http://www.lemonde.fr/economie/article/2014/01/21/des-conseillers-d-ubs-faisaient-la-mule-en-transportant-eux-memes-ces-sommes-de-l-autre-cote-des-alpes_4351540_3234.html

|5. Excerpt from the interview published by Le Parisien, February 6, 2014, http://www.leparisien.fr/espace-premium/actu/le-livre-qui-derange-les-banquiers-suisses-06-02-2014-3563661.php see the book: Stéphanie Gibaud, women who really too, knew the Cherche-Midi, 221 pages, €17. In the aforementioned interview, she said: ‘in the small world of private banking, I am now blacklisted, the CV I send end up systematically in the trash. UBS, I launched a procedure for harassment before the Labour Court and waiting for the criminal justice that it establish the truth. My book, I hope, will enlighten the judges over certain practices and me will help rebuild me.’

|6. Le Parisien, ‘ Tax Evasion: the Bank UBS prohibits its employees to go to France’, may 1, 2014,

|7. Tribune de Genève, « UBS negotiates his fine with the German tax authorities », February 25, 2014, http://www.tdg.ch/economie/ubs-negocie-amende-allemagne/story/26256689 the title of the article is very significant.

|8. Two fairly complete biographical sources: the wikipedia biography of Bradley Birkenfeld (in English, one in french is however lapidary): http://en.wikipedia.org/wiki/Bradley_Birkenfeld (accessed March 3, 2004) and David Voreacos, ‘Banker Who Blew Whistle Over Tax Cheats Seeks forgiveness’, Bloomberg, June 24, 2010, http://www.bloomberg.com/news/2010-06-24/ubs-banker-who-blew-whistle-on-swiss-secrecy-over-tax-cheats-seeks-pardon.html

|9. He also makes contact with the Sub-Commission of the Senate dealing with the offences of the banks under the chairmanship of Senator Carl Levin and he presented his testimony in 2007. This is the same Sub-Commission which dealt later the HSBC case. See the official site of the Sub-Commission: http://www.hsgac.senate.gov/subcommittees/investigations

|10. In this case, we should rather talk about Snitching Office.

|11. ‘IRS Whistleblower Office.’ See the official IRS site: http://www.irs.gov/uac/Whistleblower-Informant-Award , accessed March 3, 2014. « The IRS Whistleblower Office country money to people who blow the whistle on persons who fail to pay the tax that they owe. » If the IRS uses information provided by the whistleblower, it can award the whistleblower up to 30 percent of the additional tax, penalty and other amounts it collects.’

|12| Zachary Fagenson and Reuters, ‘Ex – UBS bank executive pleads not guilty in tax fraud case’, 7 January 2014,

|13. See on the site of the Geneva daily Le Temps, the copy of the decision of IRS Whistleblower Office: http://www.letemps.ch/rw/Le_Temps/Quotidien/2012/09/11/Economie/ImagesWeb/birkenfeld-determination-letter.pdf

|14. Frédéric Lordon, ‘The staggering passivity of « financial re-regulation » ‘, in changing economy, appalled economists, the links that release, 2011, p. 242.

After UBS, HSBC. The Swiss subsidiary of the Bank, HSBC Private Bank asset management, went into review in Paris for « illicit sales » and « laundering of tax evasion. According to information from the world, the indictment date Tuesday, November 18. This is a crucial step in the work of judges Renaud Van Ruymbeke and Charlotte Bilger instruction, investigating since April 2013 to establish if the Bank held any informed massive tax fraud by his wealthy clients to the Switzerland. A week before, it was in Belgium that the Bank had been placed under investigation.

According to Le Monde, HSBC will have to pay a deposit of EUR 50 million. The Bank confirmed having daily…

Hervé Falciani is in France for a few days, after having been chosen almost a year in Spain. On the eve of his hearing behind closed doors by the National Assembly, former computer programmer from HSBC Bank told Mediapart its first hearings by the judges of the financial Pole, how he had tried in vain to meet Jérôme Cahuzac and especially how the Switzerland attempted to negotiate his silence

Several personalities acknowledged during interviews with Mediapart held undeclared HSBC accounts. Among them: Jacques Dessange, Michel Piccoli and Jeanne Moreau. Investigators have also collected many items on the assets off-shore of footballer Christophe Dugarry and former prefect Jean-Charles Marchiani.

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