Quick as Flash Gordon, I made copies of those breaking-news articles and had my lawyers express them off with cover letters to the Senate, IRS, SEC, and DOJ. The letters basically said, “Told ya, boys!” But the underlying message was “Even the freakin’ Brazilians are smarter than you boneheads.” This Brazilian sting operation on UBS and Credit Suisse was extremely similar to the tactics I’d suggested the DOJ employ in the United States (I guess the Brazilians watch too much TV as well!). Five days later I was walking up the steps of the Capitol building.
On November 13, Senator Carl Levin was busy. Translation: He wasn’t going to personally sit through my testimony, but would instead have it summarized by his staff. For the most part, big-time senators only preside over public hearings, which are often televised on C-SPAN. Otherwise they’d get nothing else done. Whether or not they ever really get anything done is a matter of opinion.
My testimony was to be held in a large boardroom across the way from Levin’s office. As I walked down those hallowed halls with Paul, both of us wearing respectable suits and ties and hauling the mother lode of Swiss secrets, I felt like I’d finally arrived at the Emerald City to see the Great Oz. A full two years had passed since I’d first discovered the Three-Page Memo and had sworn to implode that evil Swiss castle, and now I was hurtling toward the end zone. But I couldn’t help wondering if they were going to treat me like a slimy rat, the way the DOJ had. I was about to find out. We were greeted by a couple of young interns and politely escorted inside.
The boardroom was large, about twenty by thirty feet, with a long conference table as big as a Boston Whaler and portraits of scowling senators lining the baize green walls. At one end of the table sat a female stenographer, polished nails already poised above her machine’s keys. Across the table sat Robert “Bob” L. Roach, Senator Levin’s counsel and chief investigator—about forty-five, with a big square jaw, Roman nose, steel-rimmed glasses, and bristly brown hair going gray at the temples. On one side of Roach sat two “majority,” or Democrat, staffers, and on the other side two “minority” Republican staffers. The chairs on our side of the table were empty, but before we could sit down Roach stood up and right away the stenographer starting pecking.
“Mr. Birkenfeld,” he intoned, “please raise your right hand.”
I did so, while he asked, “Do you swear to tell the whole truth, nothing but the truth … ?”
I wanted to say, “You bet your ass I will,” but I just said, “I do.” I felt elated. It was all finally going to be on the record. And even better than that, Kevin Downing wasn’t going to hear any of it unless he begged for a transcript copy. Dumbass.
Bob Roach was polite and gracious, although fairly humorless, never cracking a smile. He thanked me for my appearance and there were nods all around the table. Copies of everything my attorneys had provided were set out in neat stacks before his committee staffers, and Paul and I had volumes more to distribute. That took awhile, and then I gave them an overview of who I was, my role in Swiss banking over the past ten years, and how I’d come to the decision to blow the whistle on a cult-like club from which no other “agent” had ever come in from the cold. They were all very attentive, as if I were spinning a tale of mystery and intrigue, which I was, except that every word of it was true.
Before them lay reams of documents: many in English, some in French or German, including UBS memoranda, PowerPoint presentations, internal accounting missives, and confidential spreadsheets (Document 1). These were smart folks, but they didn’t know much about the internal workings of secret Swiss banking, because no one before had ever revealed such details. This was their first day at school and I had to not only educate them on the basics, but then walk them through the connective tissue.
That first session with the Senate took nine hours, with a half-hour break for lunch. After the first hour, their brows were deeply creased and their eyes bugging out. These guys were government tax-issue experts who knew they’d been scammed for years, yet really had no idea how. But they looked at me as if they were the presidents of a blood bank that had been drained of its precious fluids over the course of decades, and here I was telling them the true tale of Dracula.
Some folks have claimed that Bradley Birkenfeld really didn’t know all that much, and that even without my whistle-blowing, secret Swiss banking would have collapsed on its own. Well, Bob Roach and the Senate would disagree. They were attentive as hell, and I suggest you be too, because this is the crux of my story, the sharp blast of my whistle.
I’m going to tell you now what I told them. Read it carefully so you don’t think I was just some rumormonger with a few breathless tales to tell. It was everything I’d learned, all the mud I’d slogged through for years. I gave it to them piece by piece, and they sat there stunned as if I were skinning a hippopotamus right there on their pristine, shiny mahogany table. I am footnoted multiple times throughout the US Senate reports of July 17 and 25, 2008. I am also recognized as the one person who provided the Senate Committee countless internal UBS documents and strategies.
First, I told them what UBS was doing, how they were doing it, and how long they’d concealed it. Then, I detailed the physical locations and operations of all the UBS private banking offices involved, in Geneva, Lugano, and Zurich. After that, I gave them a sheet as long as your arm with all the UBS private bankers involved—full names, phone numbers, email addresses, their UBS internal codes, and all the cities they’d worked in. Putting a nice bow on those bombshells, I then gave them the names of all the UBS senior executives involved in the US offshore business, supported by an internal UBS organization chart. I also connected the dots with the UBS offices and personnel in the United States, who were helping to facilitate and perpetuate this massive tax fraud against the US government.
“I’d like to suggest,” I said. “No, actually, I insist that the DOJ, IRS, and SEC match those entire phone lists with Homeland Security.” I was offering up the same suggestions to them that I’d offered to the DOJ.
“Why is that, Mr. Birkenfeld?” Bob Roach asked.
“Because all UBS private bankers have had their passports scanned during previous visits to the States. You’re going to find some very interesting matches pop up.”
The staffers glanced at one another and scribbled notes. The stenographer kept hammering away.
“But let’s talk about assets for a bit,” I said as I shuffled some papers. “The total number of US accounts opened and maintained by UBS in Switzerland is nineteen thousand.”
You could have heard a fly sneeze in that boardroom.
“And,” I went on, “the total assets in those US accounts, acquired and invested by UBS in Switzerland, is $20 billion.”
Eyes blinked. One of the staffers wearing glasses took them off and wiped them, almost comically, as if that might help him hear me better.
“This does not even include offshore trusts and companies with bank accounts external to UBS, as well as the endless hidden treasures in thousands of safe-deposit boxes. Oh, and please note that the value of a Swiss franc, or CHF, is slightly higher than the dollar, so you might want to bump that figure up accordingly. Further, the total revenue on US secret accounts generated by UBS in Switzerland averages $200 million per year. That would be $2 billion in untaxed revenue over the last decade alone. I’m afraid I can’t give you the precise figures for prior decades, but you can safely assume that this has been going on since World War II.”
Did I have their attention yet? Let’s just say none of them looked at their watches—not once.
I had to “translate” the UBS internal accounting breakdown of assets and revenue by sector, class, and month. Then I hit them with a detailed list of the cities, hotels, length of stays, and frequency that UBS private bankers traveled to the United States, plus the number of existing and prospective client meetings that took place during those trips. You might be wondering how I had all this information compiled so perfectly. Well, just remember that I had tw
o years to do it, fueled by lots of pissed-offedness. Resourceful and relentless.
That took about three hours, and then we broke for lunch. Paul and I had sandwiches in the Senate commissary, where the committee staffers stayed away from me as if they were sequestered jurors and I was the state’s star witness, which was pretty much the situation. We came back in and Bob Roach reminded me that I was still under oath.
“I’m fully aware, sir,” I said, and then I swung back into the evidence. “Let’s talk about how UBS categorizes its US clients, and how they treat them according to their net worth. Key Clients are those with $25 million or more; High Net Worth Clients, $10 to $25 million. Core Clients are those holding $2 to $10 million, and Mass Affluent Clients have the smallest UBS accounts, of $2 to $3 million. They’re all conveniently placed in Portfolio Management mandates with a standard investment strategy of funds. Ironically, a majority of those funds are UBS products, created by the investment bank. Each of these clients is serviced according to his or her value, and the cost of such service is proportional. You might want to note that with 19,000 such accounts at the bank, every one of them falls into one of these categories.”
The amounts were staggering. I didn’t blame the staffers for loosening their ties. I carried on.
“Shall we discuss how UBS openly and shamelessly trained all of us private bankers to avoid scrutiny while here in the States?”
Nods all around. I selected my next sheaf of evidence, the UBS in-house training materials (Document 3).
“Here you can clearly see how the bank trained us on various techniques, such as when and how to indicate business or pleasure on US Customs forms. Please note in Paragraph 2 that our managers suggest frequently rotating hotel rooms to conceal our identities. You will see further down that our clients must be referred to using only code names, and that our business cards had to be reprinted with the title ‘Wealth Manager’ and ‘UBS’ removed. On the next page you’ll see the ironclad rule about us never carrying client portfolios on our persons, but instead having them FedExed over to the States to our hotels or local UBS offices. In the spy trade, those are called ‘dead drops.’ Below that you’ll find the specific techniques for encrypting client information on our PDAs, or ‘palm’ devices, as well as the bank’s purchase and distribution to us of IBM-encrypted laptops.”
I stopped for a moment and looked up. “By the way, I refused to carry any such encrypted devices.”
“And why was that, Mr. Birkenfeld?” Roach asked.
“I was a Swiss resident, working in full compliance with Swiss law, and I wasn’t going to behave like a criminal.”
“But you understood the clandestine nature of these techniques, and their purpose.”
“I understood fully,” I said. “No one was twisting my arm. My negative feelings about these issues bloomed later.”
That struck another chord and Roach nodded respectfully. I wasn’t one of those witnesses pretending “the devil made me do it.”
“I’d like to mention at this point,” I said, “that prior to this committee’s invitation to testify, and issuance of a subpoena so I could freely do so, I have made numerous attempts to bring this information to the Department of Justice.”
I let that one sink in for a long beat too. They had to know what a bunch of bureaucratic dumbasses were working over at Justice.
“Unfortunately, the DOJ refused to grant me immunity or issue me a subpoena, which made it impossible for me to reveal to them everything I’ve brought to you. As a matter of fact, I even offered to have myself electronically wired, work out of a special office at the Justice Department, and travel back and forth to Switzerland, meeting with Swiss bankers and clients in order to gather more information.”
“That was a courageous offer, Mr. Birkenfeld,” said Roach. “I assume you chose the better part of valor and changed your mind.”
“No, sir. Kevin Downing at the DOJ rejected my offer out of hand. You’d have to ask him why.”
“We’ll do just that,” said one of the Republican staff members.
“Perhaps someone else will undertake that mission in the future,” I said. “To that end, you should know that UBS has two main off-site centers for annual conferences of all the UBS bankers from Zurich, Geneva, and Lugano. These meetings cover a range of topics from investment products, account pricing, marketing, client referrals, VIP events, and often have motivational speakers, which sort of amuses me because the vast sums of money involved are motivation enough. The two sites are the UBS Wolfsberg Castle complex outside Zurich and the Montreux Palace Hotel outside Geneva. When the meetings are in session, the sites are off-limits to anyone but UBS private bankers and executives. You’d have to have someone on the inside, like me.”
I smiled and shrugged apologetically. Clearly they weren’t going to get another American who’d worked in Swiss banking, at least not in this decade or the next. Then I distributed five copies of a colored tri-fold brochure. I’d held that one back for effect.
“This is the UBS ‘Fund Facts’ brochure,” I said. “The bank printed thousands of them quarterly, in German, French, English, and Italian, and those of us on the foreign investor desks carried them with us, handing them out to prospective clients. You’ll note that the brochures clearly market the sales of investment products, as well as the bank’s offer to advise these clients on an ongoing basis. I’m sure I don’t have to tell you that we UBS private bankers were not licensed to sell or advise US clients on investments. As a matter of fact, after our clients perused these materials, we openly instructed them to discuss these investments with us only if they were traveling outside the Continental United States. In other words, ‘find a clean pay phone.’”
At that point, the session was deep into the late afternoon. But I can tell you that no one looked like they wanted to leave. It was like they were snuggled in their beds with a nightlight on, unable to put down the latest John Grisham novel. I shuffled some more papers and smiled with some irony.
“Oh, this one’s the UBS in-house, very nicely printed, Counter-Surveillance Case Study booklet. We were trained on this, extensively, by the bank’s Security and Compliance personnel, which you might find ironic.”
Their eyes bugged out again, as they read about how we were to act like the German spies who’d been smuggled into the United States from submarines back in the 1940s.
“And now, please turn to the next document, this Three-Page Memo. This was a document called ‘Cross-Border Banking Policies,’ ostensibly issued in November 2004. You might be surprised, just as I was, to discover it contains extensive verbiage expressly forbidding us bankers to do exactly what the bank had been urging and training us to do for years on end.”
I gave them a minute to read through that backstabbing piece of shit that had set me on fire and brought me to this very place. Some of the staffers shook their heads and muttered to each other. I heard one of them whisper, “Do you believe this?”
“The next document,” I said, “is an updated ten-page version of the same set of policies, which once again contradicts the actual activities of UBS. This one was issued recently, in June 2007. I’m afraid I can’t tell you how I acquired it, but let’s just say I have many friends across various departments at UBS.”
After each of my distributions, there were slews of questions, with Roach often deferring to staff members who needed some help. “What does this figure mean, Mr. Birkenfeld?” “Could you please further define the term Net New Money?” “How did you choose which venues to attend in order to meet new clients?” Honestly, I reveled in coaching them all through the materials, because they were genuinely fascinated and grateful, unlike that dumbass Downing. The hours flew by and at long last Bob Roach looked at his watch. It was already past five p.m.
“Mr. Birkenfeld, you’ve given us so much valuable material that I think we’re going to have to do some serious studying and homework.” He looked around and got nods from his staff members. “We’ll have to
continue this at our next session. Is there anything else you’d like to provide as we wrap this up today?”
“Maybe just this,” I said as I took out multiple copies of something I’d held back. I stood up, passed them around, and sat down again. “Those are all the names of my clients at UBS, including all the North Americans. You’ll also find the details of their numbered accounts, asset holdings, offshore companies, and trusts I helped them establish to conceal their identities, and the progression of investments, with untaxed income in bold. Following my clients is an extensive list of clients serviced by my immediate boss, Christian Bovay, by his superior in Zurich, Martin Liechti, as well as those of Raoul Weil, a higher-ranking managing director of the entire operation worldwide. These are just a portion of the forty-five hundred accounts serviced in Geneva and of the nineteen thousand in total.”
Igor Olenicoff was at the top of that list, along with Abdul Aziz Abbas, and scores of other Americans or US residents who’d been evading taxes. I wasn’t happy about having to turn over some of those clients, like Olenicoff, but it wasn’t as if I could pick and choose. If I held anything back, I knew I’d be toast.
Eventually the committee would come to know all these clients intimately, as would the IRS. Most of those people would throw up their hands, admit their guilt, sign on to an amnesty program, pay their fines and back taxes, and thereby remain safe from any public revelations.
“Holy shit,” someone whispered after reading the name of a Hollywood celebrity.
“A small fish,” I said. “Only $20 million. Igor Olenicoff, my largest client, had $200 million in his portfolio.”
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