Spitfire List Web site and blog of anti-fascist researcher and radio personality Dave Emory.

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FTR #688 Darkness in the Vaults

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Intro­duc­tion: Tak­ing an inves­tiga­tive look into the deep­est, most secure “vaults” of inter­na­tion­al finance and intrigue, this pro­gram sets forth the chill­ing odyssey of indi­vid­u­als who have run afoul of insti­tu­tions secret­ing bil­lions of dol­lars in gold loot­ed by the Axis in World War II. The “Bot­tom Line”–no gam­bit goes unused, and no prin­ci­ples or statutes go unbro­ken in the ongo­ing, suc­cess­ful quest to keep this vast wealth under the con­trol of the pri­vate and gov­ern­men­tal inter­ests that con­trol it, and con­tin­ue to prof­it from its pos­ses­sion.

Of par­tic­u­lar inter­est for our pur­pos­es are the Union Bank of Switzer­land and Citibank, both recip­i­ents of bil­lions of dol­lars in U.S. tax­pay­er bailouts, despite the king­ly sums of “Black Gold” from WWII con­trolled by those insti­tu­tions.

The pro­gram opens with analy­sis of the rela­tion­ship between Union Bank of Switzer­land, the Nazi I.G. Far­ben chem­i­cal car­tel and the Bor­mann cap­i­tal net­work, eco­nom­ic com­po­nent of a Third Reich gone under­ground and per­pet­u­at­ed Mafia-like through its con­nec­tions to deci­sive­ly pow­er­ful eco­nom­ic and polit­i­cal inter­ests.

Note that UBS has helped cap­i­tal­ize the Thyssen indus­tri­al group with pro­found his­tor­i­cal, polit­i­cal and com­mer­cial links to the Bush fam­i­ly, as well as the Under­ground Reich.

After not­ing a major Swiss bank’s advice to its clients to sell off all U.S. assets, the pro­gram reviews the fact that UBS has been a pri­ma­ry focal point of U.S. efforts to effect trans­paren­cy for the pur­pose of track­ing tax cheaters with accounts in that bank.

The bal­ance of the pro­gram derives from the remark­able book Gold War­riors by Ster­ling and Peg­gy Sea­grave.

Much of the pro­gram focus­es on attempts by the heirs of OSS and CIA offi­cer Sev­eri­no San­ta Romana to recov­er bil­lions of dol­lars from accounts that he had set up pri­vate­ly and in con­junc­tion with the CIA and oth­er gov­ern­ment agen­cies. Draw­ing on vast sums of gold secret­ed by the Japan­ese in the Philip­pines dur­ing World War II and recov­ered by U.S. mil­i­tary and intel­li­gence inter­ests after the war, these astro­nom­i­cal accounts were used to finance covert oper­a­tions dur­ing the Cold War, as well as to buy and sus­tain polit­i­cal favors through­out much of the world’s pow­er struc­ture.

Jour­nal­is­tic and polit­i­cal illu­mi­na­tion of the dynam­ics of the clan­des­tine pow­er deriv­ing from these accounts would shake the world to its foun­da­tions. Pre­vent­ing the light of day from pen­e­trat­ing the “Dark­ness in the Vaults” man­dat­ed the unnerv­ing machi­na­tions used to pre­serve the secre­cy sur­round­ing these enor­mous fonts of eco­nom­ic and polit­i­cal pow­er.

When attempt­ing to recov­er an account at UBS val­ued at $192 bil­lion (when gold was $300 hun­dred dol­lars an ounce!), San­ta Romana’s heirs were warned that UBS and/or the Swiss gov­ern­ment might well have them killed!

Con­front­ed with irrefutable evi­dence of many bil­lions in San­ta Romana’s gold in its cof­fers, Citibank (again, like UBS and oth­er ben­e­fi­cia­ries of loot­ed war gold accounts, the recip­i­ent of U.S. bailout funds), Citibank sim­ply trans­ferred the funds off­shore, where they were beyond the legal reach of San­ty’s heirs and their attor­neys!

In appo­si­tion to the sto­ry of the threats deliv­ered to San­ty’s heirs, the authors cite the har­row­ing expe­ri­ence of UBS employ­ee Christophe Meili, who broke the sto­ry of Holo­caust vic­tims’ unclaimed funds in Swiss bank accounts. Meili and his fam­i­ly got numer­ous death threats, and he was labeled the tool of a “Jew­ish Con­spir­a­cy” by the head of UBS, his employ­er!

Ter­ri­fy­ing irreg­u­lar­i­ties also befell Aus­tralian bro­ker Peter John­ston and W.R. “Cot­ton” Jones, both of whom under­took inves­ti­ga­tions of gold cer­tifi­cates held by oth­ers. John­ston was arrest­ed on the grounds that a UBS gold cer­tifi­cate of which he held a pho­to­copy might be a fake!

“Cot­ton” Jones was con­front­ed and threat­ened by three Secret Ser­vice Agents when he pur­sued a law­ful inves­ti­ga­tion of a UBS finan­cial instru­ment on behalf of a client!

Pro­gram High­lights Include: The var­i­ous devices by which banks dis­guise the gen­uine nature of gold cer­tifi­cates and oth­er finan­cial instru­ments so that they can be selec­tive­ly labeled as fraud­u­lent; the kid­nap­ping and ter­ror­iz­ing of Ben Aragones, the client on whose behalf Jones under­took his inves­ti­ga­tion; review of the role of “off­shore” in pre­serv­ing bank­ing and cor­po­rate secre­cy and ille­gal­i­ty; review of the gen­e­sis of San­ta Romana’s gold recov­er­ies and the ori­gins of Gold­en Lily, the Black Eagle Trust and oth­er finan­cial enti­ties deriv­ing from loot­ed WWII gold.

1. The pro­gram opens with analy­sis of the rela­tion­ship between Union Bank of Switzer­land, the Nazi I.G. Far­ben chem­i­cal car­tel and the Bor­mann cap­i­tal net­work, eco­nom­ic com­po­nent of a Third Reich gone under­ground and per­pet­u­at­ed Mafia-like through its con­nec­tions to deci­sive­ly pow­er­ful eco­nom­ic and polit­i­cal inter­ests.

Note that UBS has helped cap­i­tal­ize the Thyssen indus­tri­al group with pro­found his­tor­i­cal, polit­i­cal and com­mer­cial links to the Bush fam­i­ly, as well as the Under­ground Reich.

In 1948 a suit was to be filed by cer­tain minor­i­ty stock­hold­ers of Inter­han­del against the attor­ney gen­er­al of the Unit­ed States, as suc­ces­sor to the wartime Alien Prop­er­ty Cus­to­di­an, and the U.S. Trea­sury, for the return of 89 per­cent of GAF, of a val­ue of $100 mil­lion plus $1.8 mil­lion seized in cash in 1942. Inter­han­del, through its Amer­i­can attor­neys, first filed an admin­is­tra­tive claim, which was denied. The suit then went to the Dis­trict Court for the Dis­trict of Colum­bia, then to the Supreme Court, and back to Dis­trict Court. The Swiss claim was based
on the argu­ment that Inter­han­del was a Swiss cor­po­ra­tion, that it was not nor had it ever been an ene­my of the Unit­ed States, and that it owned the shares in ques­tion. The Amer­i­can gov­ern­ment rebut­tal was that Inter­han­del was the result of a con­spir­a­cy between the pri­vate bank of H. Sturzeneg­ger, for­mer­ly E.Greutert & Cie., and I.G. Far­benin­dus­trie of Ger­many and oth­ers “to con­ceal, cam­ou­flage, and cloak the own­er­ship, con­trol, and com­bi­na­tion by I.G. Far­ben of prop­er­ties and inter­ests in many coun­tries of the world, includ­ing the U.S.”

As the case dragged through the U.S. courts, Schmitz would have Inter­han­del cos­meti­cized even more. Charles de Loes, past pres­i­dent of the Swiss Bankers Asso­ci­a­tion, would be elect­ed chair­man, and the gen­er­al man­ag­er of each of the Big Three banks would be appoint­ed to the board. They would agree to this because the hon­or of Swiss bank­ing and its prin­ci­ple of bank­ing secre­cy would be at stake. In addi­tion, 25 per­cent of Inter­han­del stock would be reg­is­tered in the name of Union Bank, whose man­ag­er, Dr. Alfred Schae­fer, was of known integri­ty. The Swiss believed the asso­ci­a­tion of such a man of high bank­ing repute at Inter­han­del would impress Amer­i­can gov­ern­ment author­i­ties. But the Ger­man con­nec­tion would still be there. Not only Her­mann Schmitz, but also the bank­ing con­nec­tion of Union Bank of Switzer­land, Dr. Schaefer’s bank, and Deutsche Bank, which act­ed in con­cert on so many deals involv­ing not only I.G. Far­ben but also big Ruhr indus­tri­al­ists such as Thyssen A.G., the largest steel­mak­er in Ger­many. In Jan­u­ary 1978 these two lead banks, act­ing through the UBS-DBCor­po­ra­tion, an Amer­i­can firm of the Union Bank of Switzer­land and the Deutsche Bank of Ger­many, would be the finan­cial advi­sors for Thyssen A.G. in its $275 mil­lion cash takeover of the Budd Com­pa­ny of Troy, Michi­gan, a lead­ing U.S. man­u­fac­tur­er of auto com­po­nents, truck trail­ers, and rail cars. UBSDB Cor­po­ra­tion would also say that the West Ger­man com­pa­nies it rep­re­sent­ed were show­ing a “very sub­stan­tial inter­est in all sorts of Amer­i­can ven­tures, includ­ing merg­ers and acqui­si­tion.” . . .

(Mar­tin Bor­mann: Nazi in Exile; Paul Man­ning; Copy­right 1981 [HC]; Lyle Stu­art Inc.; ISBN 0–8184-0309–8; pp. 160–161.)

2. A major Swiss bank has instruct­ed its clients to sell U.S. assets or leave the bank.

Wegelin & Co., Switzerland’s old­est bank, is telling wealthy clients to sell their U.S. assets, or switch banks, because of con­cerns new rules will sad­dle investors with tax oblig­a­tions in the world’s biggest econ­o­my.

U.S. pro­pos­als to extend report­ing require­ments for banks whose clients buy Amer­i­can stocks and bonds cou­pled with estate tax lia­bil­i­ties that may be inher­it­ed by the heirs of peo­ple who have such hold­ings prompt­ed the advice from the St. Gallen, Switzer­land-based bank, said Man­ag­ing Part­ner Kon­rad Humm­ler.

“We came to the con­clu­sion that it’s a threat to our clients,” Humm­ler, who is also pres­i­dent of the Swiss Pri­vate Bankers Asso­ci­a­tion, said in an inter­view yes­ter­day dur­ing a con­fer­ence in Zurich. “It’s also a threat to us as a bank because as a cus­to­di­an we are an execu­tor to the estate. We find this aspect dis­com­fort­ing, so we rec­om­mend sell­ing all Amer­i­can secu­ri­ties what­so­ev­er.”

Humm­ler said he plans to raise the sub­ject today at a meet­ing of the Pri­vate Bankers Asso­ci­a­tion, which counts Pictet & Cie., Lom­bard Odi­er & Cie. and Mirabaud & Cie. among its mem­bers. Swiss banks, which man­age $2 tril­lion, or 27 per­cent, of the world’s pri­vate­ly held off­shore wealth, are strug­gling to pro­tect bank secre­cy after the gov­ern­ment agreed to hand over the names of 4,450 UBS AG clients to U.S. tax author­i­ties.

Humm­ler said he wouldn’t ask oth­er asso­ci­a­tion mem­bers to fol­low Wegelin’s lead. Wegelin, found­ed in 1741, man­ages more than 20 bil­lion Swiss francs ($18.7 bil­lion) in client assets.

“Every mem­ber is free to decide and act on their own,” he said.

HSBC Stud­ies

Alexan­dre Zeller, head of HSBC Hold­ings Plc’s pri­vate bank in Switzer­land, said his com­pa­ny is still study­ing the new rules for qual­i­fied inter­me­di­aries and will do every­thing it can to com­ply with them.

“Often in these agree­ments you have to under­stand how this will be applied, and it would be pre­ma­ture, espe­cial­ly for an inter­na­tion­al bank, to take such a deci­sion,” he said today, refer­ring to Wegelin’s posi­tion. “It’s not on the agen­da for the moment.”

The U.S. has pro­posed increas­ing report­ing and over­sight require­ments for so-called qual­i­fied inter­me­di­aries — for­eign banks that with­hold tax­es on behalf of the Inter­nal Rev­enue Ser­vice. In addi­tion, new rules may mean that peo­ple who spend lim­it­ed peri­ods of time in the U.S. acquire tax oblig­a­tions, includ­ing estate tax­es, cre­at­ing an unac­cept­able risk for Wegelin’s clients, Humm­ler said.

If a client decides to keep his U.S. invest­ments, “then final­ly he has to change banks,” Humm­ler said.

“We’re talk­ing about prob­a­bil­i­ties,” Humm­ler said. “My respon­si­bil­i­ty toward clients has to include any kind of prob­a­bil­i­ty, and if I see a real threat then we have to act.”

U.S. Alter­na­tives

Wegelin is find­ing alter­na­tive ways of invest­ing in the U.S. that won’t impose report­ing require­ments on the bank or tax lia­bil­i­ties on clients, Humm­ler said.

“The good thing is that in today’s world you can build up U.S. expo­sure in equi­ties and as well in bonds through deriv­a­tives and index funds and so on, so we are switch­ing to a Euro­pean-made Amer­i­can expo­sure.”

Ger­many and France have also sought to weak­en Swiss secre­cy laws as they crack down on tax evaders.

The French gov­ern­ment, which signed a dou­ble-tax­a­tion treaty with Switzer­land on Aug. 27, obtained the names of 3,000 peo­ple sus­pect­ed of tax fraud and hold­ing accounts at three Swiss banks, French Bud­get Min­is­ter Eric Woerth, said Aug. 30 in an inter­view with the news­pa­per Jour­nal du Dimanche.

“It’s not cred­i­ble,” Humm­ler said. “The U.S. had a hard time get­ting these 4,450 names, then the French come and say we have 3,000? I can­not believe it, but they’re try­ing it on.”

“Old­est Swiss Bank Tells Clients to Sell U.S. Assets or Leave” by War­ren Giles; www.bloomberg.com; 9/2/2009.

3. UBS has been the pri­ma­ry focal point of U.S. efforts to effect trans­paren­cy for the pur­pose of track­ing tax cheaters with accounts in that bank.

The Unit­ed States is to con­tin­ue its law­suit against Switzer­land’s largest bank, UBS, to try to force it to iden­ti­fy thou­sands of US clients with con­fi­den­tial UBS accounts.

The Jus­tice Depart­ment said in a brief filed with a Mia­mi court on Tues­day that it was press­ing ahead with its case to reveal infor­ma­tion about 52,000 Amer­i­cans sus­pect­ed of using the bank to hide near­ly $15 bil­lion (SFr16.3 bil­lion) in assets and evade US tax­es.

It reject­ed argu­ments from UBS and the Swiss gov­ern­ment that had tried to have the case dis­missed. A court hear­ing is sched­uled for July 13.

Despite media spec­u­la­tion about a pos­si­ble set­tle­ment of the five-month-old case, the Jus­tice Depart­ment said it was seek­ing to enforce tax com­pli­ance with the full weight of US law.

“The Unit­ed States has a strong nation­al inter­est in mak­ing sure that all US tax­pay­ers com­ply with the tax laws, includ­ing dis­clos­ing their off­shore accounts, and pay­ing all the tax­es they owe,” the depart­ment said in the brief.

“The Unit­ed States has proven its case for enforce­ment. The court should order UBS to com­ply in full,” it added.

UBS has con­sis­tent­ly said that enforce­ment of the US sum­mons would require the bank to vio­late Swiss leg­is­la­tion on bank­ing secre­cy and was incon­sis­tent with US-Swiss treaties.

The Swiss author­i­ties have also said the US case vio­lat­ed the sov­er­eign­ty of anoth­er state and should there­fore not be pur­sued.

UBS spokes­woman Kari­na Byrne said the bank was “open to an appro­pri­ate solu­tion” to avoid going to court, but said no set­tle­ment had yet been reached.

Both lawyers and ana­lysts have been scep­ti­cal about reports that the US would drop the case against UBS with­out major Swiss con­ces­sions, in view of the cur­rent momen­tum against tax havens.

“Based on our rep­re­sen­ta­tion of many UBS cas­es, it is clear in our minds that the gov­ern­ment is going to pur­sue vig­or­ous­ly its objec­tives of trans­paren­cy and lim­it­ing tax haven abuse,” lawyer William Sharp, who rep­re­sents US clients of UBS told the Reuters news agency.

UBS and Bern have argued that any exchange of infor­ma­tion should be han­dled through exist­ing legal treaties rather than in the courts.

But the Jus­tice Depart­ment has appeared unre­lent­ing.

“Although Swiss inter­ests in bank secre­cy may also be impor­tant, the court must con­sid­er those inter­ests in the con­text of UBS’s con­duct, where for at least sev­en years the bank active­ly helped tens of thou­sands of Amer­i­cans break US laws and evade hun­dreds of mil­lions of dol­lars in US tax­es,” the depart­ment said.

“The vital nation­al inter­est of the Unit­ed States in fight­ing attempts by US tax­pay­ers to avoid and evade their tax oblig­a­tions out­weighs the gen­er­al Swiss inter­est in main­tain­ing the secre­cy of its bank­ing rela­tion­ships, espe­cial­ly for those for­eign law­break­ers,” it added.

In its brief, the Jus­tice Depart­ment said that UBS had acknowl­edged that its bankers com­mit­ted “very seri­ous crimes on US soil” and had there­fore sub­ject­ed the bank to the full juris­dic­tion of US law.

“Swiss bank­ing secre­cy is not an impen­e­tra­ble wall,” the doc­u­ment said.

In a posi­tion paper on the case on Wednes­day, the Swiss Bankers Asso­ci­a­tion (SBA) said it was “dis­ap­point­ed” that the US gov­ern­ment had failed to address spe­cif­ic argu­ments deliv­ered by the SBA and oth­er orga­ni­za­tions in a brief deliv­ered in May.

The brief had argued that when the US and anoth­er coun­try entered a treaty that estab­lished an agreed process for obtain­ing admin­is­tra­tive assis­tance in tax mat­ters, the treaty process should be hon­oured, par­tic­u­lar­ly if the alter­na­tive was, as in the present case, to impose US law on a Swiss bank in a way that would require the bank to vio­late Swiss law.

The SBA said it con­tin­ued to believe the dis­pute should be resolved through gov­ern­ment-to-gov­ern­ment nego­ti­a­tions and not through lit­i­ga­tion.

In anoth­er reac­tion, Swiss Finance Min­is­ter Hans-Rudolf Merz said the US deci­sion to pur­sue the case came as no sur­prise. How­ev­er, he told jour­nal­ists in Bern that he did not rule out an out-of-court set­tle­ment between the par­ties.

“U.S. Demands UBS Com­ply in Tax Eva­sion Case”; www.swissinfo.ch; 7/1/2009.

4. Much of the pro­gram focus­es on attempts by the heirs of Sev­eri­no San­ta Romana to recov­er bil­lions of dol­lars from accounts that he had set up pri­vate­ly and in con­junc­tion with the CIA and oth­er gov­ern­ment agen­cies.

” . . .When he died, San­ty left to four­teen heirs a for­tune esti­mat­ed by their attor­neys to be worth over $50-bil­lion. All their efforts to recov­er his assets from banks have been blocked or, more often, evad­ed.

The three main heirs were San­ty’s cor­po­rate accoun­tant, Tar­ciana Rodriguez, act­ing for the estate; his com­mon-law wife, Luz Ram­bano; and his adult daugh­ter, Flordeliza. After a few false starts, they turned for help to the famous San Fran­cis­co lawyer Melvin Bel­li, New York attor­ney Eleanor Jack­son Piel, for­mer CIA deputy direc­tor Ray Cline, and one of Amer­i­ca’s best-known bankers, Citibank CEO John Reed. Also engaged in these efforts were Flori­da lob­by­ist George Depon­tis, for­mer Bahamas supreme court jus­tice Sir Leonard Knowles, and Wash­ing­ton attor­ney Robert A. Ack­er­man.

Because of the size of San­ty’s estate, and its secre­tive nature, Luz, Tar­ciana, and Flordeliza seem to have had every con­ceiv­able obsta­cle put in their path. The U.S. gov­ern­ment, and Amer­i­can banks, would like San­ty’s assets to remain where they are. So would the Swiss gov­ern­ment and Swiss banks, banks in Hong Kong, and in oth­er finan­cial cen­ters. In a few more years, every­body con­nect­ed to San­ty will be dead, so cus­tody of his cash and bul­lion will remain in the banks, like Holo­caust gold.

For Wash­ing­ton, stonewalling is imper­a­tive not only because of the gigan­tic assets involved, but to block attor­neys from pur­su­ing dis­cov­ery (as in the Schlei case), which could reveal far more than San­ty’s finan­cial data. Poten­tial­ly, dis­cov­ery could result in dis­clo­sure of the whole sub­ject of covert war-gold recov­er­ies, the Black Eagle Trust, diver­sion to cor­rupt pur­pos­es of secret funds like the M‑Fund. This could dam­age rep­u­ta­tions and careers, and make unavoid­able an inves­ti­ga­tion by the Gen­er­al Account­ing Office of Con­gress. Pres­i­dent Ford had addressed a sim­i­lar prob­lem in 1975 when he set up the Rock­e­feller Com­mis­sion to paci­fy inter­est in the CIA Fam­i­ly Jew­els affair, remark­ing that he did not want infor­ma­tion get­ting out that could black­en the rep­u­ta­tion of every U.S. pres­i­dent since Tru­man.

Iron­i­cal­ly, San­ty’s heirs were only inter­est­ed in end­ing their pover­ty, not in expos­ing cor­rup­tion, so it would have made sense to pla­cate them with gen­er­ous set­tle­ments in return for signed agree­ments nev­er to raise the mat­ter again. Yet both banks and gov­ern­ments have remained dogged­ly opaque and obsti­nate in block­ing the heirs‑a sure sign that they have much to hide.

Although the three prin­ci­pal heirs showed these banks pro­bat­ed wills, pass­books, bank state­ments, receipts, all the nec­es­sary pass­words, code-words, and secret account num­bers, pro­vid­ed to them by San­ty, the response was the same. With four excep­tions, the banks flat­ly denied hav­ing such accounts, whether the account in ques­tion was a sage-deposit box, or a huge gold bul­lion deposit. . . .

(Gold Warriors-America’s Secret Recov­ery of Yamashita’s Gold; by Ster­ling Sea­grave and Peg­gy Sea­grave; Ver­so [HC]; Copy­right 2003 by Ster­ling Sea­grave and Peg­gy Sea­grave; ISBN 1–85984-542–8; p. 222.)

5. Note that UBS was among the banks that active­ly rebuffed the law­ful efforts of San­ta Roman’s heirs to recov­er his estate.

For exam­ple, accord­ing to the Union Banque Suisse doc­u­ments repro­duced on our CDs, San­ty’s biggest sin­gle account there was 20,000 met­ric tons of gold bul­lion. This is the account on which the title-hold­er was mag­i­cal­ly changed at the moment of San­ty’s death, from his Crown Com­mod­i­ty Hold­ings to Major Gen­er­al Edward G. Lands­dale [sic], bear­ing in mind that spelling errors made by Swiss banks are part of delib­er­ate authen­tic­i­ty codes. One pos­si­bil­i­ty is that on this mon­ster account San­ty was mere­ly a straw man, being replaced by anoth­er straw man: Lans­dale. We might ask, who else but a gov­ern­ment would have suf­fi­cient lever­age to make such a change at the biggest bank in Switzer­land? Had UBS alone made the change, they are unlike­ly to have cho­sen the eccen­tric Lans­dale as the new title­hold­er. How­ev­er, by 1974, Lans­dale had been out of gov­ern­ment for a decade, and was one of the found­ing fathers of The Enter­prise net­work, and an inti­mate col­league of some of Amer­i­ca’s wealth­i­est con­ser­v­a­tive moguls. If Lans­dale and San­ty always had shared con­trol of this big UBS account, Lans­dale might have been able to have UBS trans­fer title to his name, where­after it could be accessed by his cir­cle. The U.S. gov­ern­ment may not have been involved.

At $300 an ounce, this account would be worth $192-bil­lion dol­lars, a lot more than the net worth of Bill Gates. Is this sum believ­able? Yes, if it is a covert U.S. Gov­ern­ment account con­tain­ing a mass of black gold. Just as no seri­ous coun­ter­feit­er makes sil­ly spelling mis­takes, no con­man in his right mind would dream up an account so big. Recall that the jury in the Rox­as Gold Bud­dha case saw con­vinc­ing evi­dence that $1.63-trillion in gold was sold by Mar­cos through his Aus­tralian bro­kers.

Doc­u­ments we repro­duce on our CDs bear­ing the sig­na­tures of a num­ber of top Swiss bankers show that UBS has oth­er accounts, includ­ing gold bul­lion and plat­inum, which are even larg­er. Such giant accounts are not out of the ques­tion for immense­ly wealthy men like King Fahd of Sau­di Ara­bia, whose fam­i­ly have been bank­ing bul­lion in Switzer­land for decades. Accord­ing to Gem­i­ni Con­sult­ing world­wide pri­vate bank assets were $4.3 tril­lion in 1986, and were clos­ing in on $14-tril­lion in 2000. So this account at UBS is not impos­si­ble.

UBS doc­u­ments show that Crown Com­mod­i­ty Hold­ings was a sub­sidiary of San­ty’s Crown Enter­pris­es. The group rep­re­sen­ta­tive was Alfre­do P. Ramos, an exec­u­tive of San­ty’s com­pa­ny Diaz & Poir­rotte Enter­pris­es, reg­is­tered in Mona­co. Ramos states in an affi­davit that ‘I know the late Don Sev­eri­no Gar­cia Sta. Romana, Romana Poir­rotte or Jose Anto­nio Diaz, under the code ‘From Father My Old Man . . .  that once the work has begun, don’t leave until it’s done, be labor great or small, do it well or not at all’,” This homi­ly, as we’ve seen, is one that San­ty learned from Lans­dale in 1945. It is the same homi­ly San­ty quot­ed in his holo­graph­ic will. It is used as a code phrase con­sis­tent­ly in San­ty’s bank accounts. Such recur­rences, over half a cen­tu­ry, are not acci­den­tal. . . .

Ibid.; pp. 222–223.

6. Many of the largest and most impor­tant banks were repos­i­to­ries of San­ta Romana gold accounts and these banks all rebuffed San­ta Romana’s heirs.

Note that, at the afore­men­tioned UBS (like Citibank, a recip­i­ent of U.S. bailout funds after the finan­cial col­lapse of 2008), a vice-pres­i­dent of the insti­tu­tion warned San­ta Roman’s daugh­ter that the bank and/or the Swiss gov­ern­ment itself might have her killed if she pressed her case.

. . . Accord­ing to video­taped inter­views with Tar­ciana, imme­di­ate­ly after San­ty’s death Lans­dale also was involved in the mys­te­ri­ous move­ment of gold bul­lion from San­ty’s accounts at Citibank Mani­la to Citibank New York, pos­si­bly done to get the assets out of the Philip­pines before Mar­cos could attach them. Because the accounts were in San­ty’s names, such trans­fers would appear to be ille­gal with­out autho­riza­tion form a rec­og­nized trustee of his estate, or some­one hold­ing his pow­er of attor­ney, for whom was Lans­dale act­ing?

Once these assets left the Philip­pines, they joined oth­er bul­lion and cash accounts that doc­u­ments show San­ty already had in Amer­i­ca at Citibank, Chase, Wells Far­go, Hanover Bank, and oth­er banks.

Soon after his death, San­ty’s holo­graph­ic will was pro­bat­ed in Mani­la, and Tar­ciana, Luz and Flo­re­deliza were named by the court as legit­i­mate heirs. Luz went to Amer­i­ca hop­ing to gain access to the accounts at Citibank in Man­hat­tan. There she enlist­ed the help of attor­ney Eleanor Jack­son Piel, giv­ing her Let­ters of Admin­is­tra­tion issued by the Philip­pine court. These had to be rec­og­nized by New York courts. Piel pro­ceed­ed in Sur­ro­gate’s Court for the issuance of Ancil­lary Let­ters of Admin­is­tra­tion, which would give Luz right of access to his accounts at Citibank, Chase, and Hanover. This took time.

While Luz pressed her case else­where, Piel wrote let­ters to the head offices of all the banks con­cerned, ask­ing about the San­ta Romana accounts. Not a sin­gle bank replied.

Luz flew to Switzer­land, vis­it­ing UBS in Gene­va with two Amer­i­can friends. Accord­ing to one of the Amer­i­cans, Jim Brown: “I sat with Luz and anoth­er Amer­i­can . . . while she gave a vice-pres­i­dent then told Luz “he would­n’t rec­om­mend her try­ing to claim this account rep­re­sent­ed, they would not be beyond hav­ing her killed first. He also went to tell her, that he would­n’t rec­om­mend hir­ing any Swiss attor­neys, because the bank would sim­ply buy them off.”

Ibid.; pp. 223–224.

7. In appo­si­tion to the sto­ry of the threats deliv­ered to San­ty’s heirs, the authors cite the har­row­ing expe­ri­ence of UBS employ­ee Christophe Meili, who broke the sto­ry of Holo­caust vic­tims’ unclaimed funds in Swiss bank accounts.

We might scoff at the notion that a UBS vice pres­i­dent would make mur­der threats, but what of Christophe Meili? A stu­dent work­ing nights as a secu­ri­ty guard at UBS in Zurich, in Jan­u­ary 1997 he dis­cov­ered very old doc­u­ments and books wait­ing to be shred­ded. They con­cerned assets of depos­i­tors who died in Nazi con­cen­tra­tion camps. ordered banks not to destroy archival mate­r­i­al. He took some doc­u­ments and gave them to the Hebrew Con­gre­ga­tion of Zurich. When asked lat­er why he did it, Meili replied that he had recent­ly seen the movie Schindler’s List.

“I knew I had to do some­thing.”

A month lat­er, when the doc­u­ments were made pub­lic by oth­ers, Meili was fired from his $18,000 job at UBS. Robert Stud­er, Pres­i­dent of UBS, insin­u­at­ed that Meili was financed by an inter­na­tion­al Jew­ish con­spir­a­cy. “This issue of so-called unclaimed Jew­ish mon­ey in Swiss banks rears its head again and again. For us, it is no issue at all. The prob­lem was thor­ough­ly dis­cussed after the Sec­ond World War and we con­sci­en­tious­ly inves­ti­gat­ed then what mon­ey in our bank might have belonged to Holo­caust vic­tims because we want­ed to set­tle the ques­tion once and for all. For us the case is closed.”

Much as the State Depart­ment insists the 1951 San Fran­cis­co Peace Treaty closed the door on com­pen­sa­tion and repa­ra­tions for Japan’s war vic­tims. Much as Wash­ing­ton and the Mar­coses insist­ed the Yamashita Gold sto­ry was only a myth.

UBS passed off the shred­der inci­dent as ‘unfor­tu­nate’ say­ing, “no one in our senior man­age­ment would ever have approved such a deci­sion.” Robert Stud­er was removed from all offi­cial duties, but remained the bank’s Hon­orary Chair­man. Meili received over ‘100 death threats, and threats to his wife and chil­dren. They fled to Amer­i­ca, where they were giv­en asy­lum. Meili tes­ti­fied before U.S. Con­gres­sion­al com­mit­tees inves­ti­gat­ing the hid­ing of Nazi assets by Swiss banks. Sen­a­tor Antho­ny D‑Amato called Christophe Meili an inter­na­tion­al hero. “The crim­i­nals are the ones who ordered the shred­ding of the doc­u­ments.”

Ibid.; pp. 224–225.

8. Ulti­mate­ly San­ty’s daugh­ter Flordeliza was com­plete­ly rebufed by UBS and the wiz­ards of Swiss finance.

Scared and deflat­ed, Luz returned to the Philip­pines. Three years lat­er she and Brown went back to Switzer­land to approach a dif­fer­ent bank. This time, Brown told us they were suc­cess­ful in recov­er­ing the accu­mu­lat­ed inter­est from one of San­ty’s accounts, but the bank would not release the bul­lion itself. Anoth­er source told us Luz kept this recov­ery secret, feel­ing that she had been stonewalled so long that it would be absurd to for­feit any of it in tax­es.

Mean­while, Tar­ciana, San­ty’s cor­po­rate trea­sur­er-tried to access his accounts at HSBC in Hong Kong. Fol­low­ing the advice of attor­ney Artemio Lobrin who had been San­ty’s tax con­sul­tant, she asked HSBC to ver­i­fy the exis­tence of the accounts men­tioned in San­ty’s holo­graph­ic will. After show­ing them all the nec­es­sary codes, pass­words, and doc­u­ments, a bank offi­cer told her the accounts had not matured, were there­fore inac­ces­si­ble, and to come back in 1988.

In turn, Flordeliza sought access to San­ty’s accounts at the Hong Kong branch of San­wa Bank. She had a pass­book show­ing large cash deposits to that branch in March 1973. At first San­wa denied it has a branch in Hong Kong in 1973. Then, despite all the doc­u­men­ta­tion, they claimed they had no client called San­ta Romana or any of his pseu­do­nyms.

When Cory Aquino became pres­i­dent, her staff asked Aus­tralian finan­cial expert Peter Nel­son for help. He was shown com­put­er sheets and forty pass­ports bear­ing San­ty’s pho­to. “The pass­ports matched details on the numer­ous bank accounts. . . Most trans­fers had orig­i­nat­ed in Hong Kong before being moved to oth­er parts of the world. I added up the amounts men­tal­ly as I went along and lost count at around forty bil­lion dol­lars! I was shown pho­tos of crates and some of these were open. I of course could not vouch for this bul­lion but there were cer­tifi­cates to match.”

The Aquino aides explained that San­ty had left the major­i­ty of his estate to his daugh­ter, which would make Flordeliza one of the rich­est women on earth, but when she tried to present the pro­bat­ed will to banks, she was told to prove that the man in the pho­to on all the pass­ports with all the dif­fer­ent names was in fact her father.

Mean­while the banks would sit prof­itably on the mon­ey.

Nel­son said: ” I told my Fil­ipino friends there was a way out. If [Flordeliza] agreed to hand the mon­ey back to the gov­ern­ment in the Philip­pines for a find­er’s fee of say give per­cent, that would give her more mon­ey than [she] could spend in a life­time and the gov­ern­ment would lend their weight in push­ing for its return. They thanked me and I flew back to Syd­ney.” Noth­ing came of it, and Flordeliza stayed poor.

Ibid.; p.225.

9. Citibank was among the most promi­nent of the banks that frus­trat­ed San­ty’s heirs. After being con­front­ed with irrefutable evi­dence of the pres­ence of bil­lions of dol­lars in gold in its accounts, Citibank trans­ferred the gold off­shore, where it could not be touched. (For more about the insid­i­ous oper­a­tions of “off­shore finance,” exam­ine the work of the remark­able Lucy Komis­ar.)

Note, in this con­text, that Citibank was the recip­i­ent of bil­lions in bailout funds fol­low­ing the finan­cial col­lapse of 2008, as were UBS and oth­er banks involved in the insid­i­ous machi­na­tions that denied San­ty’s heirs his estate.

Ulti­mate­ly, all efforts fixed on Citibank, where John Reed was chair­man and CEO. Under Reed’s direc­tion, Citibank became rich­ly involved in off­shore pri­vate bank­ing. With off­shore deposits worth over $100-bil­lion it was ranked third after UBS and with $580-bil­lion and Cred­it Suisse with $292-bil­lion. By shift­ing mon­ey from coun­try to coun­try, off­shore assets are pro­tect­ed from lit­i­ga­tion by cred­i­tors, ex-spous­es, or heirs. Except for cas­es involv­ing mon­ey laun­der­ing, secu­ri­ties fraud or nar­cotics, most for­eign courts will not rec­og­nize a U.S. court order. So a claimant must fight for access through courts in a nation where the account is held, only to dis­cov­er the mon­ey already has been moved to anoth­er juris­dic­tion. This is key to what fol­lows.

In Decem­ber 1990, Tar­ciana went to Citibank’s head office in Man­hat­tan, with a friend act­ing as finan­cial advi­sor and wit­ness. “We were tak­en in to see John Reed,’ her friend said. “When we showed him our doc­u­ments, pass­words and code-phras­es, the mag­ni­tude of it sud­den­ly hit Reed. He went white, and pan­icked. You could see it in his face. He left the con­fer­ence room in a hur­ry. A few min­utes lat­er he returned with sev­er­al Citibank lawyers.” They told Tar­ciana to come back the fol­low­ing day.

“When we walked into the con­fer­ence room the next day,” Tar­ciana’s friend recount­ed, “we found Reed sit­ting there with twen­ty lawyers. They told us these accounts did not exist.”

Again Tar­ciana and her friend went away. On inspi­ra­tion, they flew to Albany where they vis­it­ed the New York State Tax Office. In its pub­lic records archive, they obtained a list of all the accounts San­ty had at Citibank and oth­er banks in New York State under his own name and alias­es, and his com­pa­ny names. (Repro­duced on our CDs.) They also dis­cov­ered that all state and fed­er­al tax­es had been waived on inter­est gen­er­at­ed by these very big accounts, a curi­ous exemp­tion.

Return­ing to Citibank, they were con­front­ed once again by Reed and his pha­lanx of attor­neys. Tar­ciana and her friend showed them a copy of the New York State tax records list, demon­strat­ing that the bank had lied, and the accounts did exist. Accord­ing to San­ty’s own records and doc­u­ments Tar­ciana had with her, Citibank held 4,700 met­ric tons of gold bul­lion belong­ing to San­ty’s estate. No longer deny­ing they had the accounts, the attor­neys’ bland­ly told the two women to bring in ‘the real par­ty’. They refused to iden­ti­fy whom they meant-pos­si­bly San­ty’s corpse. They also said Tar­ciana need­ed ‘legal’ papers, which she already had shown them. They said Citibank want­ed a state­ment from the Philip­pine gov­ern­ment that it would not hold them respon­si­ble for releas­ing the mon­ey (again implic­it­ly acknowl­edg­ing the bank did hold the assets.) This inferred that the funds might be claimed by Mani­la as gold stolen by Mar­cos, although the accounts were set up by San­ty long before Mar­cos came to pow­er. The attor­neys also said they want­ed a waiv­er from Imel­da Mar­cos, imply­ing that the Mar­cos fam­i­ly might make claims (real or imag­i­nary) to some of San­ty’s assets. Final­ly, they said they also need­ed a waiv­er from the U.S. Embassy in Mani­la, appar­ent­ly mean­ing a waiv­er from the U.S. Gov­ern­ment. All this dou­bletalk was clear­ly to fend off Tar­ciana while the bank decid­ed what to do next. That did not take long.

The solu­tion was sim­ple: Citibank would move all San­ty’s assets off­shore, from Citibank New York to Cititrust in the Bahamas. This would have the effect of putting the bul­lion out­side the juris­dic­tion of New York courts, block­ing any law­suits con­tem­plat­ed by the heirs. Legal­ly, such assets could not be moved out of New York juris­dic­tion with­out autho­riza­tion of the account hold­er or his heirs, or assigns (mean­ing Tar­ciana as cor­po­rate trea­sur­er). But if the gold were moved off­shore with­out the knowl­edge of the account hold­er or his heirs, the bur­den would be upon them to recov­er it. Large ship­ments of gold bul­lion also can­not take place with­out the knowl­edge and approval of the U.S. Trea­sury Depart­ment and the Fed­er­al Reserve. Nor could the bul­lion enter Nas­sau with­out approval of the Bahami­an author­i­ties. But there appear to have been ways to get around such obsta­cles, per­haps by attribut­ing own­er­ship of the gold to Citibank itself, which some attor­neys might argue qual­i­fies as ‘wrong­ful con­ver­sion.’ . . .

Ibid.; pp. 225–227.

10. Man­i­fest­ing a fright­en­ing sim­i­lar­i­ty to the gam­bits used to frus­trate San­ty’s heirs is the expe­ri­ence of Aus­tralian bro­ker Peter John­ston, who also attempt­ed to nego­ti­ate a UBS gold cer­tifi­cate.

Take the bizarre case of Aus­tralian bro­ker Peter John­ston, who was asked by a client to nego­ti­ate a UBS gold cer­tifi­cate in Europe. While trav­el­ing, John­ston did not want to car­ry the cer­tifi­cate, so he left it in ‘safe Cus­tody’ with the Lon­don branch of Aus­trali­a’s West­pac Bank. He often lodged such cer­tifi­cates with West­pac to attest to its being gen­uine. Yet the branch man­ag­er felt ‘uneasy,’ and with­out ask­ing John­ston faxed copies to UBS in Switzer­land, ask­ing if it was gen­uine. With­out ever exam­in­ing the orig­i­nal, UBS ‘infor­mal­ly’ declared it a forgery. It is UBS pol­i­cy to call all such doc­u­ments forg­eries but to avoid doing so for­mal­ly by Test­ed Telex because that is equiv­a­lent to sworn tes­ti­mo­ny in a court of law. An infor­mal opin­ion casts doubt, while avoid­ing lia­bil­i­ty. UBS does that to rou­tine­ly scare away peo­ple hop­ing to nego­ti­ate gold cer­tifi­cates. Nor­mal­ly the City of Lon­don Fraud Squad would refuse to pur­sue a charge based on an infor­mal opin­ion, but this time the Fraud Squad set up a sting, and when John­son walked in to the West­pac office on March 6, 1995, he was arrest­ed and charged with attempt­ed fraud-because the cer­tifi­cate might be pho­ny and John­ston might try in the future to nego­ti­ate it. Amaz­ing­ly, John­ston was con­vict­ed on this spe­cious charge and lan­guished in prison for 18 months. At no time did UBS actu­al­ly estab­lish that the cer­tifi­cate was a forgery, only say­ing it was not issued by UBS in Zurich. This was a bla­tant dodge, because UBS gold bul­lion deals are not done in Zurich but by their sub­sidiary, War­burg Dil­lion Read, at Glat­tburg near Zurich air­port. In short, John­ston appears to have been false­ly impris­oned on false tes­ti­mo­ny, for some­thing he did not attempt to do. There are many sim­i­lar­i­ties to the Schlei case.

Ibid.; pp. 231–232.

11. Next, the broad­cast sets forth some of the ways in which finan­cial insti­tu­tions and gov­ern­ments col­lab­o­rate devise ways of dis­cred­it­ing own­ers of finan­cial instru­ments held by those who are “not insid­ers” and can be thus intim­i­dat­ed or worse.

An expert on gold cer­tifi­cates, Wolf­gang Jentsch, explains that these instru­ments “may take many forms and quite pos­si­bly will not be in the bank­ing form. They are by their very nature pri­vate bank­ing doc­u­ments, and will not be in the pub­lic domain. . . the larg­er the amount con­cerned, the clos­er becomes the cir­cle of those who know. . . it is rare that the main struc­ture of the bank itself would ever know of their exis­tence. . . The own­er of the funds . . . would be giv­en a num­ber of oth­er doc­u­ments in order to secure the cer­tifi­cate. He would be giv­en a let­ter which would pro­vide the details of only those per­sons who would be able to ver­i­fy the exis­tence of the cer­tifi­cates and he would be giv­en cod­ed secu­ri­ty num­bers.” Jentsch said cod­ing typ­i­cal­ly includes “what would appear to be severe spelling or gram­mat­i­cal errors . . .” Such errors enable the bank, when it wish­es, to denounce the cer­tifi­cate as coun­ter­feit.

In this chap­ter, we have seen how San­ty’s heirs pre­sent­ed all the nec­es­sary doc­u­men­ta­tion and codes, but still were stonewalled. We saw in Chap­ter Nine that Japan’s Min­istry of Finance delib­er­ate­ly con­trived the “57s” to look dif­fer­ent from ordi­nary Japan­ese gov­ern­ment bonds so they could be denounced as forg­eries, allow­ing the Min­istry to dodge pay­ment. That UBS, Citibank and oth­er banks might do the same must come as no sur­prise. When a client dies, it mat­ters lit­tle whether he was an inmate at Buchen­wald or pres­i­dent of Indone­sia-the bank will do all it can to retain the gold. Here is an exam­ple of what John Ken­neth Gal­braith meant when he said, “The study of mon­ey, above all oth­er fields in eco­nom­ics, is one in which com­plex­i­ty is used to dis­guise truth or to evade truth, not to reveal it.”

Ibid.; p. 232.

12. Also ter­ri­fy­ing­ly instruc­tive is the case of W.R. “Cot­ton” Jones, whose efforts at aid­ing with the nego­ti­a­tion of gold cer­tifi­cates result­ed in his being threat­ened by the U.S. Secret Ser­vice.

Against this back­ground, it is reveal­ing to see how quick­ly the U.S. Secret Ser­vice rush­es to the aide of a Swiss bank, when a cus­tomer walks in ask­ing if a gold cer­tifi­cate is gen­uine.

In march 1996, Fil­ipino attor­ney Ben Aragones met retired Wall Street bro­ker W.R. ‘Cot­ton Jones.’ Aragones told Cot­ton how he had been arrest­ed by Swiss author­i­ties for try­ing to nego­ti­ate a gold cer­tifi­cate, spent three months in jail, and was for­bid­den to return. On anoth­er trip to Zurich, he said he and his wife were kid­napped and ter­ror­ized. He was told that UBS did this to scare him off for­ev­er.

Cot­ton, being a roman­tic, offered to test the water by see­ing if the New York branch of Swiss Bank Cor­po­ra­tion would tell him whether one of Ben’s cer­tifi­cates was real. Cot­ton would not try to nego­ti­ate the ‘cert’, which could be dan­ger­ous. If he only took a nota­rized pho­to­copy, the orig­i­nal would not be con­fis­cat­ed. To be cau­tious, he chose the cert with the small­est denom­i­na­tion, only $25-mil­lion.

“On March 20, 1886,” he told us, “I walked into the Swiss Bank Cor­po­ra­tion in New York City and asked that the bank ver­i­fy and authen­ti­cate a $25-mil­lion Cer­tifi­cate of Deposit issued by their bank and bear­ing the Fed­er­al Reserve Seal.” They asked him to leave it for exam­i­na­tion and come back in two days. When he returned on March 22, three men pos­ing as bank offi­cers demand­ed the orig­i­nal and made threat­en­ing nois­es. When Cot­ton tried to snatch his pho­to­copy back, all three men jumped and iden­ti­fied them­selves as U.S. Secret Ser­vice Agents, dis­play­ing badges and ID cards. They blocked his way and said if he forced the issue he would be assault­ing a Fed­er­al Agent.

“I kept deny­ing and still deny that I ever knew whether the doc­u­ments were valid or not. They told me I would be in jail twen­ty-two years . . . that I had bet­ter coop­er­ate with them so it would go eas­i­er on me.”

After nine­ty min­utes of bul­ly­ing, Cot­ton was tak­en down­town and issued two U.S. Dis­trict Court Grand Jury sub­poe­nas and ordered to be in Secret Ser­vice Agent Tom Atkin­son’s office at 10 a.m. Mon­day. When Cot­ton appeared, he suf­fered more brow­beat­ing. Yet not once did any­one call the cer­tifi­cate false. He was told to appear before the Grand Jury the next day.

Cot­ton arrived on time, only to be informed that his pres­ence was unnec­es­sary....”

Ibid.; pp. 231–233.


9 comments for “FTR #688 Darkness in the Vaults”

  1. So what is the lat­est on the Phillip­ine gold sto­ry?

    Posted by Andrew | July 8, 2010, 9:49 am
  2. Qual­i­ty as ever Dave.

    Inter­est­ing arti­cle about Ger­man finan­cial behav­iour by for­mer Brit PM Gor­don Brown...


    Posted by GermanyWatch | August 24, 2011, 4:46 am
  3. [...] been safe-housed in the Philip­pines, for an  esti­mat­ed val­ue, in 1942 dol­lars, of 100 bil­lions. In FTR #688, Dave Emory explores this fas­ci­nat­ing case about glob­al econ­o­my, war crime and high finance. Even [...]

    Posted by The Golden Lily and the Lys d’Or: Hey crooks, give us back our wealth! | lys-dor.com | August 31, 2011, 10:20 am
  4. how this asset that intend­ed for flordeliza can claim if flordeliza already gon, past away?

    Posted by jun | July 21, 2012, 3:15 am
  5. flordeliza died in poor a months ago, no sin­gle bar of gold she even can­not claim,

    Posted by jun | July 21, 2012, 3:18 am
  6. If ate lisa past away my wife Car­menci­ta sta romana Lutel­la the legal daugh­ter of Sev­eri­no Sta Romana con­tin­ue and admin­is­tered all assets and bank accounts to claim.

    Posted by Leonardo E.Lutella | August 29, 2012, 9:30 pm
  7. @Dave: The sign on the UBS ban­ner looks like the papal key sym­bol. But instead of hav­ing two keys and a “tiare”, for­give the French, there are three keys. What does it mean?

    Posted by Claude | August 29, 2012, 10:38 pm
  8. There’s always the cost of doing busi­ness that has to be paid, although it might take a cen­tu­ry before the bill arrives:

    Cred­it Suisse fined $2.5 bil­lion after plead­ing guilty to U.S. tax charge

    By Katha­ri­na Bart, Karen Freifeld and Aruna Viswanatha

    WASHINGTON/NEW YORK/ZURICH Tue May 20, 2014 6:46am EDT

    (Reuters) — Cred­it Suisse has agreed to pay a $2.5 bil­lion fine to author­i­ties in the Unit­ed States for help­ing Amer­i­cans evade tax­es after becom­ing the largest bank in 20 years to plead guilty to a U.S. crim­i­nal charge.

    The bank’s guilty plea resolves its long-run­ning dis­pute with the Unit­ed States over tax eva­sion, but could have impli­ca­tions for the clients and coun­ter­par­ties that do busi­ness with the group.

    Cred­it Suisse said it had not seen a mate­r­i­al impact in the past few weeks on its busi­ness, and that clients faced no legal obsta­cles from doing busi­ness with it despite the guilty plea.

    Switzer­land’s sec­ond largest bank escaped what could have been the worst out­come for its busi­ness — its top man­age­ment stayed in place and it will not have to hand over client data, pro­tect­ed by Swiss secre­cy laws. And the New York state bank reg­u­la­tor decid­ed not to revoke the bank’s license in the state.

    U.S. pros­e­cu­tors said the bank helped clients deceive U.S. tax author­i­ties by con­ceal­ing assets in ille­gal, unde­clared bank accounts, in a con­spir­a­cy that spanned decades, and in one case began more than a cen­tu­ry ago.

    “This case shows that no finan­cial insti­tu­tion, no mat­ter its size or glob­al reach, is above the law,” Attor­ney Gen­er­al Eric Hold­er said at a news con­fer­ence in Wash­ing­ton.

    “We deeply regret the past mis­con­duct that led to this set­tle­ment,” Cred­it Suisse CEO Brady Dougan said on Tues­day.

    The Jus­tice Depart­ment has not often pur­sued such con­vic­tions of finan­cial com­pa­nies, espe­cial­ly large ones that could become desta­bi­lized fol­low­ing an indict­ment. But U.S. politi­cians have pushed for tougher pun­ish­ment for big banks in response to the 2007–2009 finan­cial cri­sis.


    So Cred­it Suisse gets a $2.5 bil­lion fine and no oth­er real penal­ties for over a cen­tu­ry of tax-eva­sion? This will no doubt send a pow­er­ful mes­sage to the rest of the finan­cial com­mu­ni­ty: keep up the good work and stop wor­ry­ing!

    Posted by Pterrafractyl | May 20, 2014, 10:46 am
  9. There’s gold in them thar hills! Err...them thar moun­tains. And a whole lot of it came from India:

    Swiss gold exports to India rise to Rs 1‑trillion in 2014
    PTI Berne/New Del­hi Last Updat­ed: Decem­ber 15, 2014 | 11:33 IST

    Amid con­cerns of bul­lion trade being used for rout­ing of black mon­ey, Switzer­land’s gold exports to India have risen fur­ther and is fast approach­ing Rs one-tril­lion mark for the entire 2014.

    The Swiss gold exports to India stood at over 2.8 bil­lion Swiss francs (over Rs 18,000 crore) in Octo­ber, up from about 2.2 bil­lion Swiss francs in the pre­vi­ous month, shows the lat­est data from the Swiss Cus­toms Admin­is­tra­tion.

    This has tak­en the total Swiss gold exports to India since Jan­u­ary this year to 14.2 bil­lion Swiss francs (near­ly Rs 93,000 crore), as per the data com­piled by Switzer­land’s cross-bor­der trade mon­i­tor­ing agency.

    This surge in gold ship­ments has made India the largest des­ti­na­tion for the yel­low met­al exports from Switzer­land.

    There are con­cerns that gold trade could be a pos­si­ble route for laun­der­ing of unac­count­ed wealth, sus­pect­ed to be stashed by Indi­ans in Swiss banks, although there has been no offi­cial word from either coun­tries so far in this regard.

    The Supreme Court-con­sti­tut­ed SIT, how­ev­er, said in its lat­est report on black mon­ey that a ded­i­cat­ed insti­tu­tion­al mech­a­nism needs to be put in place to exam­ine “mis­match between export/import data with cor­re­spond­ing import/export data of oth­er coun­tries on at least a quar­ter­ly, if not a month­ly basis.”

    The SIT said that this sug­ges­tion has been made by the Finan­cial Action Task Force (FATF), while cit­ing the Data Analy­sis and Research for Trade Trans­paren­cy Sys­tem adopt­ed by US, to con­trol over/under invoic­ing to some extent.

    “It is estab­lished since years that over invoic­ing or under invoic­ing is known method for stash­ing black mon­ey out­side the coun­try. Main ques­tion is how to con­trol this mal­a­dy.

    “If there is prop­er vig­i­lance to a large extent by the Cus­toms Depart­ment, mis-invoic­ing can be con­trolled because, nowa­days, price of var­i­ous goods/machineries is known in the inter­na­tion­al mar­kets.

    “For this, data is also pub­lished and is avail­able on com­put­er at any point of time. Hence, it was sug­gest­ed that in a Bill of Export/shipping Bills, an entry should be includ­ed, name­ly, what is the inter­na­tion­al mar­ket price of the goods/machineries which were sought to be export­ed,” the SIT said.

    The gov­ern­ment has informed the SIT that this sug­ges­tion is already under con­sid­er­a­tion and is like­ly to be imple­ment­ed with­in a short time.

    As per the data from the Indi­an gov­ern­ment, gold imports jumped 280 per cent to $ 4.17 bil­lion in Octo­ber. In Sep­tem­ber as well, gold imports increased man­i­fold to $ 3.75 bil­lion. This means Switzer­land alone account­ed for 60–70 per cent of the gold that came to India dur­ing these months.


    While indus­try watch­ers attribute the surge dur­ing Octo­ber and Sep­tem­ber part­ly to increased demand for yel­low met­al dur­ing Diwali and oth­er fes­ti­vals in India, the sud­den spike is also being seen sus­pi­cious­ly in the back­drop of gold being used for ‘lay­er­ing’ pur­pos­es to move funds from Swiss banks amid grow­ing scruti­ny for sus­pect­ed black mon­ey.

    Accord­ing to bank­ing indus­try sources, banks oper­at­ing in Switzer­land, includ­ing those head­quar­tered in the Alpine nation and the Swiss units of oth­er Euro­pean banks, have turned wary about deal­ing with their Indi­an clients in the wake of a grow­ing scruti­ny of such accounts.

    A num­ber of Swiss banks, includ­ing three with sig­nif­i­cant glob­al pres­ence, have begun telling their Indi­an clients to sign under­tak­ings that are aimed at ‘derisk­ing’ the bank­ing insti­tu­tions from poten­tial risks aris­ing out of reg­u­la­to­ry actions against the bank cus­tomers by for­eign gov­ern­ments.

    Some banks are also telling their clients to close their accounts if they are not ready to take such risks, or if they have appre­hen­sions about such accounts not being com­pli­ant to reg­u­la­to­ry require­ments in their home coun­tries.

    Through these ‘derisk­ing’ under­tak­ings, the cus­tomer agrees to take respon­si­bil­i­ty for any pos­si­ble reg­u­la­to­ry or admin­is­tra­tive com­pli­ance with inter­na­tion­al norms.

    A new strat­e­gy of ‘lay­er­ing’ through gold and dia­mond trade came to light ear­li­er this year at Swiss banks to thwart any attempt for iden­ti­fi­ca­tion of real ben­e­fi­cia­ry own­ers of funds entrust­ed with them, gov­ern­ment and bank­ing sources have said.

    There is a grow­ing sus­pi­cion that a por­tion of gold and dia­mond trade is being used to route funds from Swiss banks to India and oth­er des­ti­na­tions.

    ‘Lay­er­ing’ is a key stage in mon­ey laun­der­ing and involves mov­ing illic­it funds around finan­cial sys­tem through a com­plex series of deals to com­pli­cate the paper trail.

    This lay­er­ing typ­i­cal­ly takes place between the first stage — place­ment of black mon­ey in the finan­cial sys­tem either in cash vaults, or through a series of cash or sham finan­cial trans­ac­tions — and before the final ‘inte­gra­tion’ stage when mon­ey is put back into the finan­cial sys­tem through var­i­ous trans­ac­tions for the ben­e­fit of its final recip­i­ent.

    There has been a huge polit­i­cal uproar over coun­try’s black mon­ey alleged­ly stashed in Swiss banks and the new gov­ern­ment has said it is com­mit­ted to tack­ling this men­ace.

    As per Swiss Nation­al Bank’s lat­est data, the total mon­ey held by Indi­ans in Swiss banks stood at over Rs 14,000 crore as on Decem­ber 2013, up by near­ly 42 per cent from a year ago.

    It’ll be inter­est­ing to see what the Modi gov­ern­ment does about all that “black mon­ey” gold now that it’s led to a polit­i­cal uproar. Espe­cial­ly since, as Mod­i’s Finance Min­is­ter Arun Jait­ley point­ed out, the Indi­an gov­ern­ment has no oblig­a­tion to release the list of iden­ti­fied “black mon­ey” account hold­ers unless they’re pros­e­cut­ed. So if we don’t hear about more of the names on that list it pre­sum­ably means noth­ing hap­pened:

    The Times of India
    Arun Jait­ley on black mon­ey: 427 for­eign bank account hold­ers iden­ti­fied
    PTI | Nov 26, 2014, 08.43PM IST

    NEW DELHI: Iden­ti­ty of 427 account hold­ers abroad has been estab­lished and 250 of them have admit­ted to hav­ing accounts, finance min­is­ter Arun Jait­ley revealed on Wednes­day while assert­ing that the gov­ern­ment is on the right track in bring­ing back illic­it mon­ey stashed abroad.

    Reply­ing to a debate on black mon­ey in the Rajya Sab­ha, he said the gov­ern­ment will “pro-active­ly chase” those hav­ing black mon­ey and will not rest till the last account is iden­ti­fied.

    Bring­ing back black mon­ey stashed abroad is a pro­ce­dure which will take time, he said while respond­ing to attack by oppo­si­tion which ques­tioned non-ful­fill­ment of the poll promise of BJP lead­ers of get­ting the illic­it mon­ey back in 100 days.


    Spelling out the steps being tak­en by the gov­ern­ment, Jait­ley referred to the HSBC list of 627 account hold­ers received by the gov­ern­ment and said iden­ti­ty of 427 of them has been estab­lished. 250 of them have admit­ted to hav­ing accounts, mak­ing the gov­ern­men­t’s task eas­i­er, he added.

    Reply­ing to oppo­si­tion crit­i­cism, he said, “We have done more in 100 days than what oth­er gov­ern­ments had done.”

    The con­fi­den­tial­i­ty clause pre­vents dis­clo­sure of names of for­eign account hold­ers unless pros­e­cu­tion is launched against them in a court of law, he not­ed.

    Jait­ley said more pros­e­cu­tions are going to be filed in the com­ing weeks with regard to peo­ple fig­ur­ing in the HSBC list, who are sus­pect­ed to have illic­it accounts there.

    “We are on a learn­ing curve... The gov­ern­ment is going to be on the right track even if it takes extra time,” the finance min­is­ter said and sug­gest­ed that the gov­ern­ment was even will­ing to change laws if required to bring back black mon­ey.

    Talk­ing about the 427 accounts iden­ti­fied, he said the gov­ern­ment is in the process of their assess­ment and notices are being sent to them.

    “We will be extreme­ly pro-active in chas­ing these peo­ple. It is a pro­ce­dure that will take time but we will have fool­proof pro­ce­dure,” the finance min­is­ter said.

    Respond­ing to ques­tions over what had been done to bring back black mon­ey, he said in the very first meet­ing of the Modi Cab­i­net in May, a deci­sion was tak­en to set up a spe­cial inves­ti­ga­tion team (SIT), a pro­pos­al regard­ing which had been pend­ing since July 2011.

    The gov­ern­ment, he added, has hand­ed over all the doc­u­ments relat­ing to black mon­ey to the SIT which will be sub­mit­ting its sec­ond report to the Supreme Court by the end of this month.

    On demand for dis­clo­sure of names of account hold­ers, he said, “the ques­tion is not whether to dis­close the name but how and when to dis­close them”.

    He, fur­ther, said that pre­ma­ture dis­clo­sure of names would help the account hold­ers as it would prompt coun­tries to refrain from pro­vid­ing infor­ma­tion..

    The gov­ern­ment will not fol­low “sui­ci­dal” course by dis­clos­ing the names, Jait­ley said, adding it could only be a “one-day thrill”.

    “We have to dis­close the names in a very pru­dent and thought­ful man­ner,” he said.

    India has 92 Dou­ble Tax­a­tion Avoid­ance Agree­ments (DTAAs) with var­i­ous juris­dic­tions and except one with Roma­nia, all have con­fi­den­tial­i­ty claus­es, Jait­ley said.


    Jait­ley said the gov­ern­ment has held dis­cus­sions with Switzer­land for shar­ing of infor­ma­tion on Indi­ans hav­ing ille­gal accounts in Swiss banks.

    So it sounds like the Indi­an gov­ern­ment is gath­er­ing names, although the nam­ing of account hold­er names is still an open ques­tion. It’s one of many open ques­tions, like whether or not the account hold­ers are big fish or small:

    What Whis­tle-Blow­er Herve Fal­ciani Told Indi­an Black Mon­ey Inves­ti­ga­tors
    All India | Report­ed by Noop­ur Tiwari, Edit­ed by Abhi­nav Bhatt | Updat­ed: Decem­ber 18, 2014 23:14 IST

    Paris: Indi­an inves­ti­ga­tors have met in France with whis­tle-blow­er Herve Fal­ciani, respon­si­ble for the world’s biggest-ever breach of bank­ing secre­cy. In 2008, Mr Fal­ciani was an employ­ee of HSBC in Gene­va when he leaked data relat­ed to more than 100,000 bank accounts, which includ­ed some held by Indi­ans.

    Mr Fal­ciani told NDTV today that he has pro­posed what he described as “a larg­er over­haul” of Indi­a’s black mon­ey inves­ti­ga­tion. “Look­ing for names only leads to ‘small fish’,” he said, “names should be the end point not the start­ing point of any inves­ti­ga­tion.”

    He said he can do for India what he has done for oth­er coun­tries like France and Bel­gium — find “new ways of under­stand­ing off­shore bank­ing because when we deal with cor­rup­tion, when we deal with black mon­ey it’s not only about a local prob­lem, it’s wider than that.” His assis­tance has led to oth­er coun­tries indict­ing HSBC’s Swiss arm in Gene­va for aid­ing tax eva­sion and mon­ey laun­der­ing by offer­ing ways to wealthy clients to hide assets.

    Mr Fal­ciani, 42, was con­tact­ed by Indi­an offi­cials last month for help after he appeared on NDTV and claimed that Del­hi had access to “less than 1%” of data that could help it track down how mon­ey was being hid­den by Indi­ans in for­eign banks. In 2011, France shared with India a list of over 600 Indi­an accounts that alleged­ly held illic­it accounts at HSBC’s Pri­vate arm in its Gene­va branch.

    NDTV’s sources say India will assess Mr. Fal­cian­i’s offer and if approved, will send him a pro­pos­al.


    Mr Fal­ciani was indict­ed for indus­tri­al espi­onage by Switzer­land last week. He said he had “no choice” but to break bank­ing secre­cy laws to report “mis­con­duct”. (Fal­ciani Indict­ed for Data Theft by Switzer­land)

    “Look­ing for names only leads to ‘small fish’...names should be the end point not the start­ing point of any inves­ti­ga­tion.”

    Posted by Pterrafractyl | December 18, 2014, 9:00 pm

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