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A Whistle-Blower Who Can Name Names of Swiss Bank Account Holders

August 8, 2013 by

“I am weak and alone,” Mr. Falciani said, as three round-the-clock bodyguards provided by the French government looked on with hard stares. The protection was needed, he insisted, because he faces constant risk as the sole key to decipher the encrypted data — five CD-ROMs containing a list of nearly 130,000 account holders that may be the biggest leak ever in the secretive world of Swiss banking.

But as he settled into a deserted bistro for a two-hour lunch, Mr. Falciani, a former computer technician who has been on the run since 2008, seemed oddly relaxed for a fugitive. And why not?

He is in high demand these days, having cast himself as a crusader against the murky world of Swiss banking and money laundering. Once dismissed by many European authorities, he and other whistle-blowers are now being courted as the region’s governments struggle to fill their coffers and to stem a populist uprising against tax evasion and corruption.

“It’s an economic war,” said Mr. Falciani, an angular man of 41 with a dark goatee who sometimes dons disguises, though on a muggy summer afternoon favored an innocuous beige tie and short-sleeved dress shirt. “In Switzerland, the banks are so organized that they are able to circumvent new rules and laws to continue to enable tax evasion.”

Critics, not least at his former employer HSBC, dismiss Mr. Falciani as a manipulator more dazzled by money than high ideals. The data he has leaked — some say sold — since 2008 has wreaked havoc within the banking world, as well as the moneyed and political classes of Europe.

Mr. Falciani’s information formed the basis for the now famous “Lagarde list” that has roiled Greek politics with its revelations of oligarchs and politicians who avoided taxes by stashing millions in Switzerland. His data is also credited with helping Spain collect 260 million euros ($345 million) in taxes and identify more than 650 tax evaders, including the president of Banco Santander.

In 2012, Mr. Falciani passed his information to American authorities. They, in turn, used the data to pursue an investigation into whether HSBC flouted controls on money laundering, eventually forcing a $1.92 billion settlement with the bank in December.

More than a few rich and powerful people await his next move. Mr. Falciani asserts that only a small portion of the data has been decrypted and used.

Since being released from jail this year after a Spanish judge denied a Swiss extradition request, Mr. Falciani, who is married and has a young daughter, has resurfaced in France. Authorities here have offered protection in exchange for Mr. Falciani giving testimony to local prosecutors who are investigating whether HSBC helped French clients dodge taxes.

“My main objective is to help authorities develop a defense,” Mr. Falciani said.

“We are under attack and losing a lot of tax money,” he said of the Swiss banking system. “If you have enemies who want to invade, laws are not enough and you need armies to build an economic defense.”

A native of Monaco who was educated in the south of France, Mr. Falciani once worked in obscurity at HSBC. In 2005, he was promoted and transferred to Geneva. The following year, he said he raised concerns to his bosses about security flaws in the Swiss computer system that could violate the privacy of depositors.

Ignored by his superiors, Mr. Falciani said he started collecting the information methodically, in an effort to prove the system was vulnerable. The bank denies that he ever alerted them and believes that he amassed the information over a two-year period.

Early on, Mr. Falciani said he got the brushoff from German bureaucrats who weren’t interested in his trove of data. His information was also shunned in France by the previous administration when “authorities tried to make evidence disappear and they didn’t want to know,” he said.

Then the European economy slumped and governments started to take notice.

In a report from the French National Assembly issued in July, the lawmaker Christian Eckert chided authorities for being slow to use Mr. Falciani’s list. According to Mr. Eckert, the information included 127,311 clients, including 6,313 from France who were suspected of tax evasion.

Article source: http://www.nytimes.com/2013/08/09/business/global/a-whistle-blower-who-can-name-names-of-swiss-bank-account-holders.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

DealBook: France Expands Tax-Evasion Inquiry Involving UBS

June 7, 2013 by Leave a Comment

The Swiss bank UBS in Zurich.Michael Buholzer/ReutersUBS said it was working with authorities in France to arrive at a resolution.

8:41 a.m. | Updated

PARIS – UBS, the biggest Swiss bank, is the target of a widening tax-evasion investigation in France, a spokeswoman for the Paris prosecutor’s office said on Friday, an indication that the lender’s problems with the French government are growing.

A French judge on Thursday placed UBS AG, the Swiss parent company, under formal investigation on suspicion that it illegally sold banking services to French citizens that helped them to set up secret accounts abroad, according to Agnès Thibault-Lecuivre, the spokeswoman for the Paris prosecutor’s office. The Swiss bank also was identified as an ‘‘assisted witness,’’ a less serious status, in a concurrent investigation of suspected money laundering and tax evasion, she said.

The expanded inquiry comes just a week after the bank’s local subsidiary, UBS France, was put under formal investigation on similar suspicions. In the French legal system, a formal investigation, sometimes compared to an indictment in the American system, can drag on for years, and does not necessarily lead to charges or trial. An assisted witness is required to answer prosecutors’ questions with a lawyer present, but is thought less likely to ultimately face charges.

Yves Kaufmann Lobato, a UBS spokesman in Zurich, sought to play down the significance of the latest development, noting that the investigation had been the subject of news reports since early last year.

‘‘We will continue working with the authorities in France within the applicable legal framework to arrive at a resolution to this matter,’’ he added, citing a bank statement.

The investigators are examining the question of whether bankers from the Swiss parent company broke a French law against “illicit solicitation” by actively approaching potential clients in France.

According to a report on Friday in the French newspaper Le Monde, UBS bankers regularly sought to ingratiate themselves into networks of affluent people, mingling at sporting events and concerts in order to seek out possible clients for tax evasion. At least 353 French citizens suspected of evading taxes through UBS have been identified, and the French government has sought administrative assistance from the Swiss government in four cases, the newspaper reported, without citing its source.

Mario Tuor, a spokesman for the Swiss Federal Finance Ministry in Bern, declined to comment on the case, saying the details were confidential.

The expanded French investigation comes amid a broad push in the United States and Europe to stop offshore banks from aiding tax cheats. Switzerland – where the secrecy laws punish banks for revealing client data – has been in an uncomfortable spotlight. In France, President François Hollande has made a crackdown on tax evasion a top priority after his former budget minister, Jérôme Cahuzac, was found to have set up secret Swiss and Singapore accounts to hide some of his wealth.

UBS itself has been under international scrutiny since 2008, when the United States Justice Department threatened to indict it for conspiracy to defraud the Internal Revenue Service. UBS eventually agreed to pay a $780 million fine to avoid prosecution, and turned over data on 4,450 client accounts held by suspected American tax evaders.

Obama administration officials followed that case with a broad push to expose all the American accounts hidden behind Swiss banking secrecy laws. With about a dozen Swiss lenders facing the possibility of indictment in the United States, the Swiss government agreed last month on a framework for banks to hand over information on American clients, a deal it hoped would permanently end the threat of United States prosecution. That agreement still must be approved by the Swiss legislature.

UBS said on Friday that it ‘‘fully supports the strategy of Switzerland to limit itself to the management of declared assets.’’

‘‘We believe that Switzerland and the countries of the E.U. need to find a solution for the past,’’ according to a statement from the bank. ‘‘This is an industry issue that UBS has taken significant steps to resolve since 2009. UBS does not tolerate any activities intended to help its clients circumvent their tax obligations.’’

Article source: http://dealbook.nytimes.com/2013/06/07/ubs-under-investigation-for-tax-evasion-in-france/?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

DealBook: HSBC Expected to Settle Case on Laundering for $1.9 Billion

December 10, 2012 by Leave a Comment

HSBC headquarters in London.Toby Melville/ReutersHSBC headquarters in London.

Federal and state authorities plan to announce a record $1.9 billion settlement with HSBC on Tuesday, a major victory in the government’s broad crackdown on money laundering at banks.

The settlement with HSBC stems from accusations that the British banking giant transferred billions of dollars on behalf of sanctioned nations like Iran and enabled Mexican drug cartels to launder money through the American financial system, according to officials briefed on the matter. The deal, which will force the bank to forfeit more than $1.2 billion and pay additional penalties, is the largest to emerge from an investigation that has spanned several years and involved multiple government agencies.

The settlement on Tuesday is expected to include a deal with the Manhattan district attorney’s office and a deferred prosecution agreement with the Justice Department, according the officials. The Treasury Department is also expected to join the settlement.

Since January 2009, the Justice and Treasury Departments and Manhattan prosecutors have charged six foreign banks, including Credit Suisse and Barclays. In June, ING Bank reached a $619 million settlement to resolve claims that it had transferred billions of dollars in the United States for Cuba and Iran.

On Monday, federal and state authorities announced a $327 million settlement with Standard Chartered. The British bank, which in August agreed to a larger settlement with New York’s top banking regulator, admitted to processing thousands of transactions for Iranian and Sudanese clients through its American subsidiaries. To avoid having Iranian transactions detected by Treasury Department computer filters, Standard Chartered deliberately removed names and other identifying information, according to the authorities.

“You can’t do it, it’s against the law and today Standard Chartered is being held to account,” Lanny A. Breuer, head of the Justice Department’s criminal division, said in an interview.

The settlement with HSBC, the giant British firm, will help the bank put to rest a wide-ranging federal investigation that has loomed for years.

HSBC stood out, even among the scores of other foreign banks accused of flouting United States sanctions to transfer billions of dollars on behalf of rogue nations, according to several law enforcement officials with knowledge of the investigation. Prosecutors found that the bank had facilitated money laundering by Mexican drug cartels and had moved tainted money for Saudi Arabian banks tied to terrorist organizations.

In July, HSBC was thrust into the spotlight after the Senate Permanent Subcommittee on Investigations said the bank, from 2001 to 2010, “exposed the U.S. financial system to money laundering and terrorist financing risks.”

“We are cooperating with authorities in ongoing investigations,” said Rob Sherman, a spokesman for the bank. He added “the nature of any conversations is confidential.”

Article source: http://dealbook.nytimes.com/2012/12/10/hsbc-said-to-near-1-9-billion-settlement-over-money-laundering/?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

Troubled Poker Site May Be Bought by French Entrepreneur

September 30, 2011 by Leave a Comment

Full Tilt Poker players may yet be able to cash out.

The embattled poker site said Friday that it had signed an agreement to be acquired by the investment company of George Tapie, a prominent French entrepreneur.

Under the agreement, Groupe Bernard Tapie would repay Full Tilt Poker players the hundreds of millions of dollars they have been unable to collect since the company was indicted in April by the Justice Department.

At the time, federal prosecutors accused the site, and two other offshore poker houses, of fraud and money laundering. Prosecutors shut down access to the sites for Americans.

Then, earlier this month, prosecutors separately filed civil charges against Full Tilt, asserting that the site’s owners and managers had siphoned off hundreds of millions of dollars that were supposed to be held in the accounts of individual players.

Under the terms of the agreement between Groupe Bernard Tapie and the management of Full Tilt, the acquisition deal would not go through unless there is a resolution to the civil suit.

Barry Boss, a lawyer for the corporate entities behind Full Tilt, stressed that the agreement announced Friday was merely a prelude to a formal acquisition, pending resolution of the civil suit.

Nevertheless, he said, “It’s a significant development and one that definitely gives a renewed since of optimism that the players will get paid.”

The Justice Department declined comment, and a representative of Groupe Bernard Tapie could not be reached for comment. Mr. Tapie’s son Laurent said in an interview with the Web site iGamingFrance that the company would be talking to the Justice Department next week. He said that there were no plans to change the site’s name, but that a change of management would be in store if the deal goes through.

Bernard Tapie is a flamboyant French businessman and a friend of President Nicolas Sarkozy. Previously a socialist minister, Mr. Tapie changed party loyalties in 2007 to support Mr. Sarkozy. He has made his fortune by purchasing distressed and bankrupt entities.

The involvement of a French businessman adds yet another geographic front to the complicated international saga of Full Tilt, which has been pursued by American prosecutors and is based in Ireland.

Earlier this week, Full Tilt had its operating license revoked by the Alderney Gambling Control Commission, which is based on the Irish Channel island of Alderney, where Full Tilt is registered.

Mr. Boss said the commission ruled that Full Tilt had not been up front with gaming authorities about the amount of cash it had on hand to pay back players. According to prosecutors in the United States, Full Tilt told players that it kept their funds in secure accounts, even as management was lining its pockets with those funds.

The prosecutors say Full Tilt owners and managers paid themselves $440 million since April 2007 but, as of March of this year, owed players $390 million.

In revoking the license, the Alderney Gambling Control Commission left room for a new owner to come in and re-establish a license, according to Mr. Boss.

Article source: http://feeds.nytimes.com/click.phdo?i=3c2f74f7577b4e76ead31dd1690fe383

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