Bradley Birkenfeld, the man who revealed the tax fraud scandal at bank UBS, says he is the victim of a gross miscarriage of justice.This content was published on May 27, 2010 - 14:53
In an exclusive interview with swissinfo.ch, Birkenfeld talks about why he ended up behind bars, and denounces the corruption, which he says characterises relations between the banks and political circles.
The former UBS banker has been in jail in the United States since January 8. He is sitting out a 40-month sentence for conspiracy to defraud at the federal prison of Minersville in Pennsylvania.
Birkenfeld cooperated with a US investigation into wealthy Americans who used Swiss bank accounts to evade federal taxes. This interview is his first with a non-American medium since he began his term.
The US Department of Justice (DOJ) refused to comment on Birkenfeld’s accusations.
swissinfo.ch: You’ve been in jail since January. What’s your predominant feeling about that?
Bradley Birkenfeld: It’s an injustice. I’m handling it as best as could be expected, considering that I’m the most famous whistleblower in the United States who’s uncovered the biggest tax fraud in the history of the country.
swissinfo.ch: In your opinion, why are you in jail?
B.B.: Because of a gross miscarriage of justice. The Department of Justice is putting me in jail but none other is serving time in the UBS case. Now, the real question is: where was DOJ when illegal business was going on under their noses and for decades? It’s either that they were too incompetent to see it or unwilling to deal with it.
swissinfo.ch: Which is it?
B.B.: I think they are corrupt at DOJ. Martin Liechti [Birkenfeld’s former boss and UBS head of wealth management for American customers] was allowed to take the fifth amendment against self-incrimination when he testified in Congress and he was released after a brief time in jail and without ever being charged. As far as UBS [is concerned], the bank received $5 billion in TARP money [funds given by the US government to some financial institutions under the Troubled Asset Relief Program to address the credit crisis], it also got an agreement between the US and Swiss government that stops legal action but UBS has still given no names of clients and the bank was fined just 780 million.
I am also in jail because I made the Justice Department look bad. It took a whistleblower to uncover the biggest fraud case in US history while DOJ could not or would not uncover it.
swissinfo.ch: Why did you come forward and blow the whistle?
B.B.: Because it was wrong what was going on at UBS. I’d go back to what President Kennedy said: “ask not what your country can do for you, ask what you can do for your country “. I’ve delivered on that and I have even far exceeded that call.
swissinfo.ch: Did the fact that you participated in some aspects of the scheme to hide UBS client assets from US tax authorities hurt your case? This image of you transporting diamonds in tube of toothpaste seems to have stuck in people’s minds.
B.B.: It’s something that I should not have done. But the case we’re talking about involves 19,000 clients of UBS and $20 billion of fraud. I did not initiate or create this business. It started before I was born, in 1965, and before I started working for UBS, in 2001.
swissinfo.ch: Did the fact that the UBS list of American clients includes wealthy people have any impact on your case ?
B.B.: Absolutely! There are very rich and politically powerful people on that list. So far, DOJ has prosecuted 14 cases since February 2009. That comes to about one a month. At this rate, it would take them 400 years to prosecute the 4,500 accounts that the Swiss government has agreed to turn over to the US!
swissinfo.ch: Robert Wolf, chairman of UBS in the US, is close to President Obama. The White House has said that their relationship is not an issue because Wolf does not work at UBS headquarters in Switzerland. Has that relationship affected your case?
B.B.: You’d have to ask that question to Wolf but there is an appearance of impropriety there, considering that Wolf is employed and paid by UBS in Zurich and his overall compensation is directly linked to the bank’s business.
swissinfo.ch: On April 15, tax day in the US, you asked President Obama to pardon you or reduce your sentence to time served. Have you received a response?
B.B.: My request is under review. I have to say that the Obama Administration inherited the UBS problem from the Bush Administration. However, President Obama, being also an intelligent lawyer, would certainly understand the basis for my appeal.
swissinfo.ch: In asking for a commutation, are you recognising that you have committed a crime?
B.B.: I’ve already pleaded guilty to one count of conspiracy. But what about the bank’s executives and its 19,000 clients who committed crimes? You put in jail a whistleblower, a low-level guy who had been at UBS for only four years, while you let all bankers and their clients go free. To me, it sounds like political prostitution. And what kind of message does it send to potential whistleblowers worldwide?
swissinfo.ch: Has anything changed in the banking industry since you exposed UBS?
B.B.: Absolutely nothing has changed. As far as UBS is concerned, clients have had time so that they could move money to another bank, to another jurisdiction or give up their US citizenship.
The Department of Justice gave them plenty of leeway to avoid paying taxes and penalties. They are not thrown in jail either. And the reason why, is they are too many sensitive names among those 19,000 American clients of UBS.
Marie-Christine Bonzom in Washington, swissinfo.ch
Recruited by UBS in 2001 and resigned in 2005 among concerns about the legality of some of the bank’s activities with certain American accounts and transactions.
He blew the whistle in 2005 and alerted US authorities about the bank’s efforts to allegedly help wealthy Americans hide assets from US tax collectors.
His actions resulted in American justice authorities fining UBS $780 million and forcing the bank to hand over the names of 4,450 wealthy American clients to the Internal Revenue Service, a ruling that conflicts with Switzerland’s tradition of banking secrecy.
Swiss parliamentarians are to vote on whether the country should follow through with the agreement. The government says not doing so would greatly damage Switzerland’s reputation as a state that carries out its commitments, while some political parties want to use the issue to force financial sector reforms, particularly over banker bonuses and salaries.
In 2009 Birkenfeld was sentenced to jail for not cooperating enough with investigators looking into the case of American UBS client Igor Olenicoff, a real estate developer who filed tax returns that failed to declare his offshore accounts. He asked President Barack Obama for a pardon in April 2010. Investigators have said Birkenfeld’s information has been crucial to mounting their case.
Hero or villain?
On May 24, 2010, Bradley Birkenfeld was recognised by a coalition of NGOs called Make It Safe, including the American Civil Liberties Union (ACLU).
In 2009 he was named Person of the Year by the publisher of a group of tax magazines, books, databases and CDs called Tax Analysts.
A petition for his release has more than 25,000 signatures and support from at least 21 NGOs.
One leftwing editorialist of the New York Daily News felt that Barack Obama should have “put up a statue of Birkenfeld on Wall Street rather than put him in jail”.
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