WASHINGTON, July 17, 2008
Congress Hears Offshore Tax Haven Secrets
Abuses Cost U.S. Taxpayers $100B Each Year, According To Senate Panel Report
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Swiss UBS Banker Martin Liechti is sworn in on Capitol Hill in Washington, July 17, 2008, before the Senate Homeland Security and Governmental Affairs subcommittee hearing looking into tax haven banks and compliance with federal tax laws. (AP Photo/Susan Walsh)
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A Senate panel probe into offshore tax shelters took aim specifically at the Swiss bank UBS. (AP)
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Lawmakers played a videotape of testimony by Henrich Kieber at a congressional hearing Thursday, in which he appeared only as a silhouette against a white screen with eyeglasses and a balding head apparent. Kieber, living under a new name in an undisclosed witness protection program, according to lawmakers, has never spoken publicly about his role in exposing tax shelters he says were used by Liechtenstein's LGT group.
In the videotaped interview with the congressional investigators, he described ruses that he saw while working at the bank, which he said were used to cover the tracks of money moved into accounts in Liechtenstein.
The video was played at a hearing in which the Senate Homeland Security and Governmental Affairs investigations subcommittee highlighted offshore tax abuses that they believe cost the U.S. government about $100 billion a year.
The hearing came a day after the panel released a 109-page report that took aim at LGT, owned by Liechtenstein's royal family, and Switzerland's UBS AG, one the world's largest wealth managers.
Mark Branson, chief financial officer of UBS' global wealth management, said at the hearing that the bank regrets "any compliance failures that may have occurred" and will now provide banking or security services to U.S. citizens only through companies licensed in the United States. He said the bank also is working with U.S. authorities to identify clients involved in U.S. tax fraud.
LGT refused to send a representative but said in a statement that it had cooperated by sending a senior official for a lengthy interview and providing all the documents requested by the panel.
Both LGT and UBS came under withering criticism from the lawmakers.
"Tax havens are engaged in economic warfare against the United States and honest, hardworking American taxpayers," said Democratic Sen. Carl Levin, chairman of the subcommittee. "Today we will look at two banks that relied on secrecy and deception to hide, not just the tax avoidance schemes of their clients but the actions they themselves took to facilitate U.S. tax evasion."
A U.S. federal judge ruled this month that the Internal Revenue Service, the federal tax-collection agency, could serve legal papers to UBS in an expanding probe of U.S. taxpayers who may have used overseas accounts to hide assets and avoid taxes. UBS has said it is cooperating with Swiss and American investigations and will disclose records involving U.S. clients who might have broken tax laws. It also has banned its Swiss bankers from traveling to the United States.
The IRS also has asked the Swiss government to help in its investigation.
Finance Ministry spokesman Jean-Michel Treyvaud said that Swiss tax authorities received the IRS' official request for "administrative assistance" on Thursday.
He said the request would now be analyzed, but he said nothing further.
The subcommittee report said that UBS bankers searched out wealthy U.S. clients and aggressively marketed services to taxpayers who otherwise would not have opened Swiss account. It said the bank's practices resulted in billions of dollars of U.S. taxpayer money in accounts that were not disclosed to the IRS. The report said UBS has estimated that it has 1,000 declared accounts in Switzerland for U.S. clients against 19,000 undeclared, with a combined value of $17.9 billion.
Investigations linked to LGT have been launched in a number of countries since German authorities obtained in February the CD-ROM of some 1,400 alleged tax cheats with accounts at the bank that Liechtenstein says Kieber leaked. Germany has since passed the file to other countries, including the United States.
In his videotaped testimony, Kieber described shell companies used as "high grade camouflage." Money was often transferred through bank-controlled legal entities registered in numerous countries with lax regulations, including Panama, the British Virgin Islands and Nigeria, he said.
Additional concealment was provided by fake transactions designed to make it look like clients had withdrawn cash from a bank, when in reality they were credited into a LGT account.
"The only purpose of all of this is to make it extremely complicated for law enforcement agencies to follow the trail," he said. "As each step serves as a filter to hide the track of the client's money.
He said that clients were advised how to avoid scrutiny, including not telling anyone including lawyers and family members about hidden money. Clients were also encouraged to use pay phones to contact bank representatives on cell phones from Switzerland and Austria and to use code words in communications.
LGT questions Kieber's objectivity and accuses him of stealing the information, according to Michael Robinson, a spokesman for the bank. It says that much of the information that Kieber has provided involves records going back to the 1970s and 1980s.
"LGT's practices were consistent with accepted industry standards of the time and do not reflect the way in which LGT conducts business today," he said.
© MMVIII The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.
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Michelle Obama tells how her role as the First Lady has changed her perspective.
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See all 51 CommentsThe guy wasn''t there uncovering anything, he was teaching them the proper way to structure their retirement plans in case the worst happens this fall...
You can stop with the party bashing. It''s more of a ''they that are in'' against ''them that are out'', and we are the out.
Get used to it.
I''m asking you Republicans.
You tell us to worship the markets, confide in their infinite wisdom, be in awe of their natural market forces and offer sacrifice.
Why if I''m sick and fell on hard times because my job got hollowed out by some hedge fun managed by Mitt Romney that I have to agree with the markets and die for the sake of the economy?
You would think a story about people not paying billions in tax would be a big story.
Posted by Flajoe1
A good way to start would be to find a list of RNC "Pioneer" donors who gave 250k+ to Junior''s election/re-election campaign. I''d figure a high percentage (75-80%) would have moved their excess earnings to Europe with a nod and a smile from their GOP friends.
I am sorry for the gaffe on the amount of missing Cash it was not 8 Billion after all.
It was 12 Billion.
The "footballs" of 100.00 bills they tossed around the office under Bremmer? Hummm wonder where it went.
Ain''t Capitalism Swell???......
Posted by ConDumbism
Vote for McCain and it will be worse than McSame = Bush. McCain has Phil Graham as his financial advisor. Phil Graham, a chairman of UBS Bank. Phil Graham the p*ig who calls working americans "whiners". Graham and the rest of these criminals will squeal like the little pi*gs they are in h*e*ll because "justice" Scalia and the right wing court will make certain that justice remains beneath them on this earth.
im afraid its all too true.
As Bush says, dictatorships are more efficient so long as he''s the dictator. Efficient at robbing the public to the benefit of organized crime.
Bush says not all poor people are killers... says Bush, just because a person is poor doesn''t necessarily make them a killer.
we will soon hear you Whine and grumble as the feds
take their 50% cut of the accounts youve certainly hidden from public view......
thanks for doing your part in reducing the deficit.
Posted by six-six-seis
I don''t have nearly that much faith in our "justice" system. Phil Graham, a chairman of UBS bank has a 19:1 chance of being one of the tax evading accounts. He''ll play dumb like Bill Frist when he played dumb to insider trading and got by with it.
Right wing sociopaths are in control.
You have to go after the clowns that run the Federal Reserve System, IMF, Bank of International Settlements, World Bank, W.T.O.
Go after these bandits shut them down, get the Europeans to shut down their monarchies and you will see this nightmare over.
Anything short of that is just embracing the New World Order !!!
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