Issue 01
OFFSHORE WASHINGTON HONEYPOT SCAM
It is well know by political operators within the US and elsewhere that it is easier to collect money for favors while in office. Upon leaving office promisors of payback have a short memory. In Washington political operatives spend the year before retirement consolidating their assiduously kept IOUs. Offshore banks have come in handily in the past providing an anonymous asset transference between benefactor and Washington political operator. Anonymous donors to US presidential libraries are presently one of the most controversial subjects within Washington. There is always a need to fund the hubris oriented presidential libraries and Swiss banks are infamous for facilitating anonymous gifts, especially to presidential foundations. Of any country, oligarchs of Saudi Arabia and Mexico have the most offshore deposits in Switzerland. We do know Saudi Arabian princes are prolific anonymous Washington givers, especially to presidential libraries. Other Washington political operatives also have used the same procedure with variations so they can live comfortably upon retirement from office. We do not know if this is the reason UBS and other offshore international banks have had such success in receiving Washington “kiss and a wink” reprimands for committing crimes against US taxpayers. UBS has been the most brazen, causing the ire of US competitors. President elect Obama has personally promised serious and vigorous investigations of UBS alleged criminality against US taxpayers. This will be one of the apparent first tests for his Administration. If he does not act forcefully against UBS, US citizens will immediately know that he is part of the same old “go along get along” Washington scenario.
UBS PATTERN OF ALLEGED MALFEASANCE
There is a pattern of questionable conduct within the hierarchy of UBS whereby UBS gets caught committing some major malfeasance towards their employees, clients, stockholders or US taxpayers. They then retire the CEO and cut the underlings loose to defend themselves in a court of law. It is then business as usual until the scenario recurs.
FIRST CHAIRMAN OF MERGED UBS LEAVES UNDER A CLOUD
Wikipedia reports: “The first chairman of UBS merged bank had to step down in October 1998 due to the Long Term Capital Management crisis … Long Term Capital Management was found to have entered into certain tax avoidance transactions. … general counsel responsible for setting up leasing transactions associated with disallowed losses, stated ‘For our CHIPS III entity let’s use a name unrelated to CBB. It makes it just a bit harder for the IRS to link all the deals together.’ … Myron Scholes (officer) wrote: ‘If we are careful, most likely we will never have to pay long-term capital gains on the ‘loan’ from the Government.’ … Federal Reserve Bank … organized a bailout … actions raised concerns among some market observers that it could create a moral hazard.’’ A1 We wonder how comprehensive the advice UBS hierarchy gives on US tax avoidance schemes.
UBS CEO STEPS DOWN
Wikipedia reports: “During the third quarter of 2007. Peter Wuffli stepped down as CEO of the firm amid significant write-downs related to subprime banking exposure (CDO's/derivatives) in the United States. More than US$13 billion in mezzanine debt and more than US$20 billion in total subprime exposure were written off, forcing UBS to cut its dividend or increase capital in order to protect UBS's traditionally high tier 1 capital ratio, seen by investors as a key to its credibility as the world's largest wealth management company.” A2 UBS hierarchy goes beyond incompetence into a realm of deliberate malfeasance, perhaps to cover their incompetence.
ANOTHER CHAIRMAN OF UBS “STEPS DOWN"
Wikipedia reports: “On April 1st, 2008 UBS announced that it was writing down a further $19 billion on its investments in American subprime and other mortgages, as part of an unexpected SFr12 billion projected loss in the first quarter. The Swiss bank also said it would call on its shareholders to supply SFr15 billion in additional funds to shore up its depleted reserves of capital. That means shareholders face dilution, and UBS's sovereign-wealth backers may add to the potential losses (albeit paper ones) they have suffered since December.” A3 Euroweek comments: “Ospel as a leader who filled positions at UBS with his friends and admirers, reporting that dissention was not allowed.” A4 Euromoney comments: “Ospel maintained that bankers should always keep a low public profile, leaving a high-profile lifestyle to the politicians. He also stressed intellectual honesty as the attribute most important to him in an employee which seems the opposite of the UBS culture since its inception.” A5 We do not know if there was any prosecution of the resigned UBS Chairman Ospel by the US, Swiss or any other government. In penance, Marcel Ospel, architect of the UBS merger in 1998, said he would step down as chairman, to be replaced by Peter Kurer, the bank’s general counsel.
ANOTHER UBS CHAIRMAN LEAVES UBS UNDER ANOTHER CLOUD
On November 12, 2008, UBS confirmed that Raoul Weil, Chairman and CEO of UBS Global Wealth Management and Business Banking and member of the Group Executive Board, has been indicted by a Federal grand jury in the Southern District of Florida in connection with the ongoing investigation of UBS's US cross-border business by the US Department of Justice. ABC News reports: “Despite a federal criminal investigation of its alleged role in helping wealthy Americans hide billions of dollars from the IRS, Swiss bank UBS returned this year as the main sponsor of one of the great gatherings of the super-rich, the Art Basel exhibition in Miami. … The show opened one month after a federal grand jury in Florida indicted the head of UBS's worldwide wealth management business, Raoul Weil, for his alleged role in helping thousands of Americans hide their money in secret accounts set up by UBS. Weil, based at UBS headquarters in Zurich, has relinquished his role at UBS. According to the indictment, UBS bankers ‘solicited new business from existing and prospective United States clients at Art Basel Miami Beach.’ ‘They sent their salespeople here. They have encrypted computers. They smuggled assets out of the country to help those people conceal what they should have paid the IRS,’ said Jack Blum, a Washington tax lawyer and consultant to the IRS. ‘So the question is, why should a bank like that be allowed to continue in business?’ said Blum of UBS.” A6 This is the most blatant US tax avoidance offence to date allegedly committed by UBS. The Basel Art Show sponsored by UBS is going on in Miami as we write. It is said Basel is more about partying and UBS salesmen pressing the flesh with US wealthy than art.
Raoul Weil
UBS MISREPRESENTS THE TRUTH, AGAIN
ABC News reports: “The bank (UBS) says it no longer accepts U.S. money in secret accounts and is cooperating with federal officials. Federal prosecutors paint a different picture, saying the bank has yet to turn over the names of an estimated 20,000 wealthy Americans for whom UBS set up secret off-shore accounts. The bank says it has provided the names to the Swiss government, which must decide whether to provide the names to U.S. investigators.” A7 If the UBS CEO is allowed to go free we wonder what UBS did in Washington, which has gone unreported. Can UBS be trusted ever again by clients after giving the Federal prosecutors names of their US offshore clients?
Peter Kurer
The present chairman of UBS is Peter Kurer who chairs both the Corporate Responsibility and Strategy Committees. Investment News reports: “ ‘We can't pretend there has been no reputational (not a word) damage. Experience says it goes away after two or three years,’ Mr. Kurer told the Financial Times last month.” A8 We can only wonder what Kurer says while chairing corporate responsibility meeting.
UBS TROUBLE AT THE TOP CONTINUES
Investment News reports: “UBS has written off nearly $38 billion in subprime-related losses since the beginning of 2007 … The bank's risk management procedures have generated a steady stream of criticism since the beginning of the year, culminating in the fractious ouster of chairman Marcel Ospel, who was replaced last month by the bank's general counsel, Peter Kurer.” A9 How much can UBS write off without causing the ire of some of their more questionable and odious clients? Is there a chance some will meet the same end as Edmond Safra or Roberto Calvi for an example to others? Is there a chance one of the UBS hierarchy will end up hanging underneath Blackfriars Bridge?
SHOULD UBS BE BROKEN UP?
Wall Street Journal reports: “There were many ‘boos and hisses’ upon the announcement of Kurer's appointment.” A10 Many within international banking and governmental revenue collection have said UBS should be broken up. They believe UBS is awkwardly out of control. Coincidentally, this is causing unwanted media attention to otherwise secretive endeavors.
UBS BANKER COPS A PLEA AS A UBS INFORMER
ABC News reports: “UBS, the world's largest wealth manager, hid as much as $17.9 billion for 19,000 Americans who didn't declare assets to the Internal Revenue Service, the Senate Permanent Subcommittee on Investigations said in a report released in Washington late yesterday. … Senate investigators got help from former UBS banker Bradley Birkenfeld, 43, who pleaded guilty June 19 to helping California billionaire Igor Olenicoff evade taxes.” A11 Again, we believe some of the more dangerous UBS clients would like to see an example set by allowing a UBS boss to make the “supreme sacrifice”.
Dear Readers:
International banking is the apogee of business and political interaction throughout the world. International bankers set the guidelines for business and governmental cultures in all countries. They are supposedly the guardians of institutional ethics and decorum. If international bankers do not abide by their worldly mandate other institutions will follow their example. The present world dilemma is directly attributable to international bankers like UBS gaming the system. We will give citations and facts in backing up each and every reported incident. We will give the international banks cited every opportunity to defend their positions.
We are members of the Washington National Press Club and London Press Club. One of our members was honored as a Fellow of the Royal Society and was recently invited to dine with the Royal Society President Prince Phillip at Buckingham Palace. We are also sponsors of the august Committee for the Protection of Journalists.
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