Thursday, 26 April 2012

Paper: UBS head calls tax flap 'economic war'

22, 2012 RSS Feed Print
GENEVA (AP) — Switzerland's tax disputes with the United States and some European nations are "an economic war" putting 20,000 jobs at risk, the CEO of Swiss banking giant UBS AG has been quoted as saying.

Switzerland has recently tried to shed its image as a tax haven, signing deals with the United States, Germany and Britain to provide greater assistance to foreign tax authorities seeking information on their citizens' accounts in the Alpine nation.

But the tax agreements have drawn fire from Switzerland's nationalist People's Party, which won more than a quarter of the vote in last year's general election, with some lawmakers saying they will try to block the treaties through referendums.

Sergio Ermotti, who was appointed CEO of Switzerland's largest bank in November in the wake of a trading scandal, says Switzerland now is "stuck in the middle of economic warfare" and its opponents' goal is to weaken UBS and the next biggest bank, Credit Suisse, according to Zurich Sunday newspaper SonntagsZeitung.

U.S. authorities in particular have dealt Switzerland and its banks several serious blows over the past few years, resulting in several significant concessions to Swiss banking secrecy. Investigations against at least 11 banks, including Credit Suisse, are still pending, on suspicion they too helped Americans hide money abroad, following the successful case against UBS AG, which had to pay a $780 million fine and hand over 4,450 clients' files to Washington in 2010.

Since then, an amnesty program and the arrest of several Swiss bankers have given U.S. authorities ample ammunition to pursue some of the country's other banks.

But Switzerland has insisted throughout its negotiations with other governments that it won't accept any automatic transfer of information on foreign account holders — ensuring that a semblance of its banking secrecy remains in place.

"For us this is an economic war," Ermotti was quoted as saying. "Since 2008, Switzerland has been attacked."

The banks' rivals seek a share of their combined foreign assets of 2.2 trillion Swiss francs ($2.42 trillion), forcing UBS to cut costs and imperiling 20,000 jobs, Ermotti also was quoted in the Sunday paper as saying.

Last month, Switzerland's oldest bank, Wegelin & Co, announced it was selling most of its business after it was indicted in the U.S. for conspiring to help American clients hide more than $1.2 billion from the Internal Revenue Service.

Talks to resolve the long-running U.S.-Swiss tax spat over how to pursue suspected tax evaders recently suffered a blow when a Swiss court blocked the handover of one unnamed bank client's data to U.S. authorities.

The Federal Administrative Court ruled that a 1996 treaty between Switzerland and the United States doesn't allow the U.S. Internal Revenue Service to request the account details of potential tax cheats without clear evidence of fraudulent intent.

Germany has said its state coffers could increase by some €10 billion ($13 billion) next year after Switzerland agreed to a new tough bilateral tax evasion treaty. The agreement signed by officials from both countries in Switzerland earlier this month seeks to end a long-running dispute over German tax evaders who keep their money in Swiss bank accounts.

Switzerland also has agreed to increase the charge it levies on British taxpayers' Swiss bank accounts after London demanded the same treatment as Germany. Switzerland had offered Germany a higher rate in an attempt to win over the country's opposition Social Democrats.

Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Wednesday, 25 April 2012

Hot money trail from Sabah to Swiss banks


 Luke Rintod | April 25, 2012

The latest report in a Swiss weekly linking Musa Aman to the billions stashed away in bank vaults in Switzerland is fodder for gleeful supporters of Umno vice-president Shafie Apdal, who sees himself as the next Sabah chief minister.

KOTA KINABALU: Fear and euphoria reign in Umno Sabah over renewed allegations of money-laundering by Sabah Chief Minister Musa Aman. The trail is said to lead from the forests of Sabah to the bank vaults in Hong Kong and on to Switzerland.

Politicians on both sides of the political divide are either rubbing their hands in anticipation or getting ready to edge away from potential trouble that has been floating in the online media for years but has gained new life with further revelations by news portal Sarawak Report (SR).

While word has spread in the online media and blogs that the evidence appears to show something is stinking in the various cash transactions purportedly made by Musa through various proxies, few politicians on either side of the fence have come out to demand an investigation.

But it is also certain that those in various Sabah Umno and Barisan Nasional camps who want Musa to give way to their own favourite, are sharpening their knives in the off-chance that this new twist will dim Musa’s chance of being retained as chief minister by Prime Minister Najib Tun Razak.

A senior local Umno leader, who wished to remain anonymous, told FMT that those siding with Umno vice-president Shafie Apdal are quite happy with what is going on in the money-laundering saga.

“You know what I mean… the other day when a news report came out about Shafie’s alleged liaison with an actress, Musa’s boys were smiling. This is politics… it’s all about going up the ladder and pulling down the other,” he said.

His nonchalant remark hides the fact that the money-laundering case against Musa is far more serious. It also has a bearing on public perceptions of his capability to manage Sabah’s affairs, especially with the general election looming.

The detailed tell-tale marks – supported by bank slips, names on bank accounts and flow of money being “laundered” – tracked to several countries and continents are exposed by SR. And now with disclosures by a Swiss weekly, it will be difficult to hide the truth from the public, said political observers.

Surprised and shaken by the stack of details pouring out, Musa has insisted that he is not involved and it is all old innuendo dredged up by his enemies.

Swiss report links Musa

Well before this detailed exposé by London-based journalist Clare Rewcastle-Brown, Musa was widely reported to have said that he did not know Michael Chia, the man caught in Hong Kong with S$16 million cash four years ago.

In leaked investigation papers, however, Chia reportedly told the Hong Kong authorities that the money belong to Musa.

Last Sunday, a Switzerland national weekly, Sonntagszeitung, published an article on the on-going investigation on Musa, quoting spokespersons of the office of the Swiss attorney-general confirming for the first time that Switzerland has given legal assistance to Hong Kong in the money-laundering case against Musa and Swiss banking giant UBS.

In the article, Musa was mentioned as Sabah chief minister and also the older brother of Malaysia’s Foreign Minister Anifah. That’s already a black eye for Malaysia even before the whole truth is fully revealed.

In return, popular blogger London-based Raja Petra Kamarudin or RPK in his MalaysiaToday blog picked up the Swiss report and got it translated to English, making it one of his all time good hits for the day.

The Zurich-based weekly said spokespersons for the attorney-general office and the Swiss Federal Office of Justice also revealed that files on the case were transmitted to Hong Kong authorities on March 31 last year.

UBS headquarters in Zurich, however, refused to comment on the matter. UBS said that in all markets it was operating in, the bank complied with the regulatory and legal framework.

The Malaysian media reported last week that Musa was being investigated by Hong Kong’s Independent Commission Against Corruption (ICAC) for having laundered over US$90 million of timber corruption money through UBS bank accounts in Hong Kong and Switzerland.

According to the reveal-all SR, Malaysian prosecutors refused to cooperate with Hong Kong in the matter because Attorney-General Abdul Gani Patail, who is from Tawau, Sabah, is a relative and a close political ally of Musa.

It was alleged that in return for the kickbacks, Musa, who has overall say of the state’s timber resources as chief minister, granted concessions to log tropical hardwoods in forest reserves.

Logging concessions revealed

Ironically in February 2007, Malaysia, Indonesia and Brunei committed to protect the Borneo rainforest in the trilateral “Heart of Borneo” declaration.

Swiss writer, Guido Schaetti, in his article said that about the same time, politicians concluded yet other deals and one of them was Musa who allegedly distributed logging concessions to timber companies, allowing them to log even protected areas and received millions in bribes for it.

According to the article, the money then flew through several accounts of UBS in Hong Kong.

It was discovered that those involved operated a network of front companies and nominees, in order to cover the money trail, wrote Schaetti.

Local loggers paid the kickbacks through third party companies into the accounts of Musa’s proxies, allegedly local lawyer Richard Barnes and Chia.

From there, the money was distributed to financial vehicles in the Caribbean and again collected in Hong Kong. Finally, the money allegedly ended up on Musa’s account with UBS in Zurich.

The widely-read Swiss weekly further revealed that in May 2008, the investigators found US$29.6 million in a UBS-account in Hong Kong run by Barnes. In total, more than US$90 million were reported to have flown through the account.

Musa was thought to be the beneficiary. The kickback system was exposed four years ago when Chia was caught in Hong Kong with S$16 million cash. The Hong Kong prosecutors sent their report to Malaysia.

That was the end of the line. Gani refused to investigate.

In the SR article, it was revealed that “big” money was also regularly banked into the accounts of Musa’s two sons in Australia.

On Asian websites, the facts can be read in all the details. On a UBS payment slip, which the Sonntagszeitung has seen, even the purpose of the payment is given: “Deposit for logging concession”.

Who’s money is it?
Lukas Straumann, director of the Bruno Manser Fund (BMF), meanwhile accused the bank of heavy breaches of its due diligence duties.

“The documents are proving that funds from the criminal logging of rainforests have been laundered by UBS employees for years. It is shocking that the bank claims not to have been in the know,” noted BMF.

The UBS takes no position on the case, because the identification of customer names would injure its famed banking secrecy. However since 9/11, it’s been much harder to hide “hot” money.

Musa has been fingered but has denied he is involved in any way. So whose money is it? From where did all those hundreds of millions dollars come from?

Surely state financial authorities and those in the state Cabinet are aware what’s going on in their backyard?
Even if they don’t, they are nevertheless collectively responsible and will be held accountable.