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A Swiss Banker's betrayal

Date and Time: 
Wednesday, September 1, 2010 - 11:00 - 11:30

Chat with the author of a dramatic yarn on how a rich American banker exposed the crimes of his billionaire clients.

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GlobalPost: WELCOME EVERYONE
GlobalPost: Welcome to GlobalPost's inaugural web chat.
GlobalPost:
Today we're "speaking" with journalist Michael Bronner, who recently
profiled Bradely Birkenfeld, a former UBS banker who blew the whistle on
the bank's multi-billion dollar scheme to (allegedly) help high net
worth American residents to defraud the US government from tax revenues.
GlobalPost: Just a few instructions before we start.
GlobalPost: First, you'll need to scroll down so that you can keep reading the conversation
GlobalPost: ASKING A QUESTION
GlobalPost: If you have a question for Michael, please message the GP-coordinator by pasting the following into the message box:
GlobalPost: "/msg GP-coordinator FOLLOWED BY YOUR MESSAGE."
GlobalPost: Any questions so far?
GlobalPost: OKAY, let's begin.
GlobalPost: We'll chat for 30 minutes or so.
Michael-Bronner: Thanks for having me on the chat!
GlobalPost: Let me mention before we proceed that we'd be delighted to have feedback from the audience after the chat
GlobalPost: Michael has an impressive resume. Here are the details:
GlobalPost: Michael
Bronner, a New York-based investigative journalist, previously worked
for the weekday edition of CBS News/60 Minutes. He has been a freelance
contributor to Vanity Fair since 2005. A screenwriter, producer and
director, he was also a co-producer on the Universal Pictures/Working
Title feature film “Green Zone” about Iraq and an associate producer on t
GlobalPost: an associate producer on the Oscar-nominated “United 93.”
GlobalPost: The series on GlobalPost was excellent, Michael
GlobalPost: You
start out the piece by describing the "client cards" - the little note
cards UBS uses to keep clients' account information. Why are these so
important?
Michael-Bronner: Thanks very much. There are so few outlets anymore for writers to write long, in-depth pieces.
Michael-Bronner: GlobalPost is one of the few!
Michael-Bronner: Ah, the client cards...
GlobalPost: Thanks. As a former investigative reporter, i can certainly relate to that
GlobalPost: Yes, the client cards.
Michael-Bronner: These are really the key - the lynchpin - the achilles heal of swiss secrecy
Michael-Bronner: Swiss
banks have so much security, but in the end, it all comes down to these
little notecards, 4x5, that contain all the client's secret information
GlobalPost: Like the local library, circa 1980
Michael-Bronner: They
have separate computer servers in secret locations to keep account
numbers separate from the clients' names, but they need a Secret Decoder
Ring somewhere...
GlobalPost: So they go low-tech, eh?
Michael-Bronner: These little notecards are it. The US DOJ would kill for a rack-full of these, and that's where Birkenfeld got into hot water...
Michael-Bronner: Exactly - just like a library card rack
GlobalPost: He essentially wouldn't give up his clients, is that what happened?
Michael-Bronner: He
was reluctant to, at the very least. He says he would have had the DOJ
given him a "friendly subpoena" compelling him to, so that he could say
to UBS, "See, I had no choice." But the DOJ wouldn't do it. It's a
mystery why not.
GlobalPost: You
wrote that UBS actually targeted American billionaires - but UBS is a
bank. Isn't that something you'd expect from a bank - going after big
clients?
Michael-Bronner: You
know, everyone assumes, including the DOJ, that Birkenfeld was
reluctant to give up his clients because of secret plotting to continue
the fraud with his high-value client Igor Olenicoff, but there could be
many other reasons. I don't know this at all, but it could be that he
signed up friends or family with accounts and didn't want to hurt
them...
Michael-Bronner: It's not accurate to assume it was for blatant wrongdoing
GlobalPost: That's very interesting. That would explain it.
GlobalPost: I would imagine, given how busy he was with his job, that his clients became his friends'
Michael-Bronner: Again, I don't know that for sure, but it's just to say there could be many other reasons.
Michael-Bronner: I think the relationship he had with Olenicoff was interesting.
Michael-Bronner: Olenicoff
- I talked to him maybe a dozen times - always referred to Birkenfeld
as "Bradley" and it's clear they were close (though they hate one
another now). Was he a father-figure? Did they simply hang out a lot?
Michael-Bronner: Birkenfeld
vacationed with Olenicoff and several of Olenicoff's friends on
Olenicoff's yacht at least twice, adventuring off the coast of Central
America. They must have been close.
Michael-Bronner: The photos make it seem that way.
GlobalPost: Yes, those are great photos, from the yacht.
Michael-Bronner: The photos are included in the GP piece.
Michael-Bronner: Right.
Michael-Bronner: Olenicoff gave those to me to use.
GlobalPost: Where did they come from? Did Birkenfeld provide them?
GlobalPost: You type too fast.
Michael-Bronner: Ha!
GlobalPost: We've
heard about dictators and drug dealers having secret Swiss accounts for
years. Why haven't the IRS and the Justice Department been able to bust
a Swiss bank before?
Michael-Bronner: They've never had a Bradley Birkenfeld, is the short answer!
Michael-Bronner: Swiss
secrecy is so tight, they've never been able to penetrate "the vault."
That's why insiders are so important. That's why Congress passed laws
allowing for whistleblower rewards.
Michael-Bronner: It's really a sad thing that things went so wrong in this case, though the DOJ still got the biggest tax case ever.
GlobalPost: It's odd, with Birkenfeld as an example, you'd think that the DoJ has just made life much more difficult for themselves.
Michael-Bronner: It's almost unheard of for the DOJ to prosecute a whistleblower. Birkenfeld must have really pissed them off!
GlobalPost: He stood to make gobs of money from a DoJ reward. Do you that's what motivated him?
GlobalPost: He
might have also wanted to get back at UBS, which appeared willing to
throw him under the bus for doing work that they had apparently
sanctioned.
Michael-Bronner: That's
a logical notion - that any potential whistleblower would be afraid to
come in now, seeing what happened to Birkenfeld. But I've heard there
are several potential informants still in the wings. The DOJ is
investigating the other big Swiss banks, we've heard.
Michael-Bronner: Birkenfeld
is definitely one to get worked up about wrongdoing (though not
necessarily his own!). It's too simple to assume he was in it only for
the money. He really, really wanted to screw UBS, and took huge personal
risks to do so.
Michael-Bronner: I
think he really did, at some level, want to make things right and
expose massive fraud, which UBS perpetrated for years against the US
government and US taxpayers.
GlobalPost: Although he was willing to make himself rich by engaging in that fraud.
Michael-Bronner: That
said, he's still going for a reward, and the irony is that it could be
huge, given all the money that's been recovered (and continues to be
recovered) through the settlement and the voluntary disclosure program
IRS launched. In which UBS clients could come in from the cold and
confess, paying huge fines to avoid jail.
GlobalPost: LET ME REMIND YOU, If you have a question for Michael, please message the GP-coordinator by pasting the following into the message box:
GlobalPost: "/msg GP-coordinator FOLLOWED BY YOUR MESSAGE."
GlobalPost: Okay?
Michael-Bronner: Let's mix it up - send questions!
GlobalPost: So Birkenfeld's lawyers are still trying to get him a piece of the money that the Department of Justice recovered, correct?
Michael-Bronner: His most current lawyers are, yes. They are deeply steeped in the whistleblower legislation push.
Michael-Bronner: From the National Whistleblowers Center
GlobalPost: What was Birkenfeld like as a person?
Michael-Bronner: I
liked him. He's a knock-around guy, and lived a life of adventure while
at UBS, traveling around the world to meet with clients in exotic
locations, living it up. Unfortunately it was all part of a criminal
enterprise.
GlobalPost: To succeed at his work he surely had to have some charm.
Michael-Bronner: As much as he tried to do the right thing by turning evidence for the DOJ, he still has trouble admitting his role.
GlobalPost: Interesting.
Michael-Bronner: He
has plenty of charm, though when he doesn't want to answer a question,
it's clear he's being evasive, which is chum in the water for a
reporter.
GP-Coordinator: Michael, we have just received a great question from a GP reader:
GlobalPost: okay, we have a question from the audience.
Michael-Bronner: Excellent!
GP-Coordinator: NYC-reader: Do you think this is a natural out come of years of de-regulation?
Michael-Bronner: Hmm...
GlobalPost: Swiss banks have been engaging in this business for a long time.
Michael-Bronner: I
think deregulation has a lot more to do with the housing crisis and
banking crisis in the US now. The Swiss have had their prized secrecy
for a hundred years.
Michael-Bronner: That's why they have the reputation as the banker of dictators, narco-traffickers and mafioso!
Michael-Bronner: That's nothing new.
GlobalPost: What was it like interviewing Birkenfeld in prison? I imagine he's not in with murderers.
Michael-Bronner: The
prison is in rural Pennsylvania. It was rainy and cold when I went,
pretty darn depressing. But Birkenfeld remains fueled by anger! He's so
pissed off at getting screwed, as he sees it. To sit there for so long
maintaining that anger must mean there's something to it!
GlobalPost: It will be interesting to see what he'll do when he gets out.
GlobalPost: Does he have internet access?
GlobalPost: Looks like we lost Michael.
GlobalPost: He's back!
Michael-Bronner: Sorry I got knocked off!
GlobalPost: Welcome back. Phew.
GlobalPost: Michael is answering that last question.
GlobalPost: And it looks like we might have time for one last one from the audience.
GlobalPost: Any takers?
Michael-Bronner: I
was saying that Birkenfeld is being sued by his biggest client, Igor
Olenicoff, so he'll have to deal with that when he gets out. But he may
also "have" to deal with a big whistleblower reward!
GlobalPost: Wow, his life could really change, in either direction.
GlobalPost: Did you get a sense of whether he has any money left?
Michael-Bronner: Getting out of jail will surely be a nice change.
GlobalPost: And does he have family?
Michael-Bronner: He
has a very supportive family. His brother has been solidly in his
corner, and seems almost as pissed off as Brad. His father is a highly
regarded brain surgeon in the Boston area. His family seems quite solid.
GlobalPost: Lucky for him.
Michael-Bronner: As for money, I'm sure he'll be fine, though I don't think he has much left from his working life.
GlobalPost: And lucky for the US Government that they were able to recover so much money from this.
Michael-Bronner: Well,
you make your own luck. And if they can tempt whistleblowers in the
future, they'll have an inside window into major criminality they would
never be able to otherwise penetrate.
GlobalPost: Okay, it looks like we have one more question from the audience, then we'll have to wrap for the day.
GP-Coordinator: Here it is Michael:
GP-Coordinator: NYC-reader: Could I ask, If Swiss is no longer the place where will people hide their money now?
GlobalPost: Good question.
GlobalPost: As they say in the US military, is this whack-a-mole?
Michael-Bronner: There
will always be this kind of tax evasion - people have too much to
"lose" for there not to be - and my guess is that it will simply
migrate.
GlobalPost: Will people just move their money back to the Bahamas?
Michael-Bronner: To Asia.
Michael-Bronner: This is already happening.
Michael-Bronner: I'm told.
GP-Coordinator: Lender:
What is the next safest place to keep money now that the swiss are out
of the game. Where are the untapped financial oil fields
Michael-Bronner: Well, I keep my billions in...
GlobalPost: Ha!
Michael-Bronner: I think Asia is where most people are moving.
GlobalPost: Macau?
GlobalPost: Definitely countries with strong secrecy laws...
Michael-Bronner: Well,
Macau is one - though it's not working so well for the North Koreans
(the US Treasury Dept. froze a bunch of their assets).
Michael-Bronner: But if you're not lighting off little nukes, maybe they'll leave you be for now...
GlobalPost: Great. Well, I think we're out of time.
GlobalPost: Thanks to everyone for joining us today.
Michael-Bronner: Thanks a lot for having me on this. It was fun!
GlobalPost: We'll post this on the GP membership website.
GlobalPost: And many thanks to Michael for joining us.
GlobalPost: I'll open up the chat room so that anyone can chat...
GlobalPost: I think you should all be able to comment now.
GlobalPost: Unless that didn't work...
GlobalPost: let me try again.
Lender: Michael
I worry that asian govs aren't stable, they coudl seeze you money and
you'd have no recourse, that would never happen with the swiss.
Lender: So is asia really a safe bet?
Michael-Bronner: You're looking to open a secret account...?
Lender: I'm looking to understand a changing playing field
Lender: So I can play to win
GlobalPost: Well...
GlobalPost: I think Michael's research focused on Swiss banking.
Michael-Bronner: I
think Switzerland is done in terms of high-rollers trusting them. The
Swiss say their system was never designed to protect criminality, but I
think it's going to change a lot.
GlobalPost: Any other questions? Michael needs to go to the airport
Lender: I agree
Michael-Bronner: I have to go to the airport! See you all later. -MB
GlobalPost: Thanks again Michael.
GlobalPost: Over and out.
Lender: Thanks for the great insight
GP-Coordinator: Thanks Michael!
Michael-Bronner: 10-4
NYC-reader: Thanks
GlobalPost: You're welcome!