The Wall Street Journal's hatchet jobbing of Hillary Clinton last week left me wondering who would buy a story with so many apparent contradictions? Most readers probably didn't continue past the first five paragraphs of the piece, thinking they had all they needed to know.
The story, sketched out by the Journal, claims that Hillary Clinton, newly sworn-in as Secretary of State in 2009, went out of her way to do a favor for Switzerland’s largest bank, and that the favor was returned with donations to the Clinton Foundation and speaking fees for Bill.
Remember, this isn't Matt Taibbi writing an exposé for Rolling Stone. It isn't Occupy Wall Street protesting the cozy relationship between politicians and banksters. It's the Wall Street Journal feigning concern with a cheesy spoof of an exposé.
The Journal's disclaimer comes in the sixth paragraph:
|“There is no evidence of any link between Mrs. Clinton’s involvement in the case and the bank’s donations to the Bill, Hillary and Chelsea Clinton Foundation, or its hiring of Mr. Clinton.”
They know how much shit they’re shoveling.
Buried in the 32nd paragraph, readers learn that the “unusual intervention,” mentioned in the 3rd paragraph, wasn’t an intervention at all. The settlement wasn't a favor from Clinton to let the bank off the hook. The settlement was arranged by the Justice Department and the IRS. They signed the agreement. Clinton had the privilege of announcing it during a visit by Switzerland's Foreign Minister.
The Wall Street Journal hit piece doesn’t mention the Foreign Account Tax Compliance Act (FATCA), at all.
FATCA is the legacy we have from the UBS case. It was passed in March 2010 and it went into effect July 1 2014. FATCA requires foreign financial institutions in participant countries, to report all income paid to American account holders, thus ending tax haven practices in over 70 jurisdictions around the world including Switzerland, the Cayman Islands, Bermuda, Liechtenstein, Luxembourg, etc.
The Wall Street Journal's hatchet job piece is based on an unrealistic premise. An "unusual intervention" by Clinton would have disrupted the considerable efforts that were already proceeding:
- The IRS sent its John Doe Summons to UBS for the names of its American clients in July 2008.
- Senator Carl Levin chaired Permanent Subcommittee On Investigations hearings on July 17, 2008, July 25, 2008, with witnesses from UBS and March 4, 2009. with witnesses from the IRS.
- The Department of Justice announced that UBS had entered into a Deferred Prosecution Agreement on February 18, 2009.
Clinton travelled to Geneva to meet the Swiss Foreign Minister on March 6, 2009.
Here’s a chronology of events related to the UBS case.
July 17, 2008
July 25, 2008
Senate Hearing 110-614
TAX HAVEN BANKS AND U.S. TAX COMPLIANCE
PERMANENT SUBCOMMITTEE ON INVESTIGATIONS
Carl Levin, Chair
At the July 2008 hearings, Mark Branson, the witness testifying for UBS, admitted that the bank conspired with its clients to evade taxes.
OPENING STATEMENT OF SENATOR LEVIN
TESTIMONY OF MARK BRANSON, CHIEF FINANCIAL OFFICER
|"Today we will look at two banks that relied on secrecy and deception to hide not just the tax avoidance schemes of their clients, but the actions that they themselves took to facilitate U.S. tax evasion. The first bank is LGT . . .
The second bank is UBS, a Swiss bank. It is one of the world’s largest financial institutions, the world’s largest manager of private wealth, and a public company of international renown. Yet, as we will hear today, UBS has an estimated 19,000 so-called undeclared accounts for U.S. citizens with an estimated $18 billion in assets that have been kept secret from the IRS.
We initiated this investigation into tax haven banks in February 2008, as a global tax scandal erupted after a former employee of LGT provided tax authorities around the world with data on about 1,400 people with accounts at LGT Bank in Liechtenstein.”
UBS GLOBAL WEALTH MANAGEMENT AND BUSINESS BANKING
|"Mr. Chairman, I have now had the chance to review your Subcommittee’s staff report. I am here to make absolutely clear that UBS genuinely regrets any compliance failures that may have occurred. We will take responsibility for them. We will not seek to minimize them. On behalf of UBS, I am apologizing. I am committing to you that we will take the actions necessary to see that this does not happen again.
First, we have decided to exit entirely the business in question. That means that UBS will no longer provide offshore banking or securities services to U.S. residents through our bank branches . . . there will be no new accounts opened.
Second, we are working with the U.S. Government to identify those names of U.S. clients who may have engaged in tax fraud."
From the beginning, getting the names of the clients was a game of cat and mouse, with ever-changing estimates of the number of individual clients.
|Senator LEVIN. You have testified that you were going to address the current 19,000 accounts, approximately.
Mr. BRANSON. Yes.
Senator LEVIN. Can you just give us a little more detail as to what your intent is, as to how you are going to handle that and see to it that any wrongdoing in those accounts will be disclosed and taken care of and shared with the IRS? Can you give us that again?
Mr. BRANSON. So in terms of——
Senator LEVIN. The existing accounts.
Mr. BRANSON. Existing accounts and any possible misconduct that may have occurred within UBS, we have an enormously comprehensive internal investigation into that, and obviously at the same time cooperating with the investigations of the U.S. Government into that potential misconduct. There are no final conclusions from what is an ongoing investigation.
Senator LEVIN. Are you going to be cooperating with the IRS now?
Mr. BRANSON. Yes, we are.
Senator LEVIN. In looking at these 19,000 names?
Mr. BRANSON. We will be cooperating with the IRS on their summons.
While Levin was quoting the estimated number of accounts at the time, 19,000, Branson committed to “cooperating with the IRS on their summons,” which requested information on accounts the bank had between 2002-2007, only, as the IRS Commissioner explained.
TESTIMONY OF HON. DOUGLAS SHULMAN, COMMISSIONER
INTERNAL REVENUE SERVICE
U.S. DEPARTMENT OF THE TREASURY
|"The IRS has since requested, via a John Doe summons, that the bank turn over account information on any other U.S. client who used this Swiss bank to avoid U.S. income taxes. The summons directs the bank to produce records identifying U.S. taxpayers who had accounts with the bank in Switzerland between 2002 and 2007 and elected to have their accounts remain hidden from the IRS."
UBS didn’t comply with the John Doe Summons anyway. Switzerland’s government refused to recognize the validity of the IRS John Doe Summons, insisting that it had a treaty with the US that would accommodate the request for client names, instead.
February 18 2009
The Department of Justice
UBS Enters into Deferred Prosecution Agreement
- The Swiss Financial Markets Supervisory Authority agreed to allow UBS to identify its clients.
- UBS agreed to pay $780 Million in fines, penalties, interest and restitution, the sum of UBS profits from its American clients and taxes that should have been withheld from investment income paid to its American clients.
- UBS agreed to expeditiously exit the business of providing banking services to US clients with undeclared accounts..
March 4 2009
Senate Hearing 111–30
Tax Haven Banks And U.S. Tax Compliance
Obtaining The Names Of U.S. Clients With Swiss Accounts
PERMANENT SUBCOMMITTEE ON INVESTIGATIONS
Carl Levin, Chair
At the March 2009 hearing, Levin tried, unsuccessfully to nail down the exact number of US clients at UBS.
OPENING STATEMENT OF SENATOR LEVIN
|"First, let’s examine the UBS case. UBS is headquartered in Switzerland and is one of the largest banks in the world. During our July hearing, UBS admitted publicly for the first time that an estimated 19,000 U.S. clients had opened UBS accounts in Switzerland with nearly $18 billion in assets that were not disclosed to the U.S. Internal Revenue Service (IRS).
Since then, new evidence suggests that there may be far more than 19,000 U.S. clients with hidden accounts at that Swiss bank.A 2004 UBS internal report . . . states:
‘‘The number of account relationships in [Wealth Management and Business Banking ] in Switzerland with U.S. residents where the account holder has not provided a W–9 is approximately 52,000.
The reference to ‘‘account relationships’’ leaves it unclear whether UBS had 19,000 U.S. clients, as UBS estimated in July, many of whom may have had multiple accounts; or whether it had 52,000 U.S. clients; or some number in between. We hope to clear up that issue today.
I am not surprised the Swiss Government is opposing UBS’ compliance with the John Doe summons and has directed the bank not to provide all the names, or that it refused to show up at this hearing. They make a living off secrecy. Bank secrecy is a cash cow in Switzerland.
The Swiss Government argues that, instead of the John Doe summons, the United States ought to be using the procedures set up under the U.S.-Swiss tax treaty. But that tax treaty, like other tax treaties and tax information exchange agreements that the United States has in place around the world, is not designed to handle inquiries for information on taxpayers whose names are unknown."
Republicans on the Committee did their best to create more confusion and doubt about the number of US clients UBS had.
TESTIMONY OF JOHN A. DiCICCO
ACTING ASSISTANT ATTORNEY GENERAL, TAX DIVISION,
U.S. DEPARTMENT OF JUSTICE
|Senator COBURN. OK. And so the implication is what we are talking about here was not meant to include corporate accounts in what we have seen thus far. Is that true?
Mr. DICICCO. Well, Senator, we have not gotten the information yet, and we have not been able to analyze it.
Senator COBURN. It is possible, but that is not what we have seen, that is not what we have heard about. Most of these, at least what we have been told, of somewhere between 19,000 and 52,000 accounts, are probably individual accounts.
Mr. DICICCO. I think that is correct, but I do not know the answer to that.
March 5-6, 2009
Secretary of State Hillary Clinton attended a NATO Foreign Ministers’ meeting and met with the EU and Swiss Foreign Ministers in Brussels.
Secretary of State Hillary Clinton met with Russian Foreign Minister Lavrov in Geneva.
July 31, 2009
Secretary of State Hillary Clinton and Swiss Foreign Minister Micheline Calmy-Rey
announced an agreement in principle between their two governments regarding the UBS case.
SECRETARY CLINTON:"This is my second meeting with the federal councilor, and I am delighted to welcome her to the State Department. Our first meeting was in Geneva. At that time, we discussed a broad range of issues, and today, we will, of course, be doing the same, both bilateral as well as regional and global.
We’re very grateful to the Swiss Government for the role that they play representing us in countries like Iran, serving to mediate longstanding issues between countries like Armenia and Turkey. And so we really welcome the involvement and support that the Swiss Government gives to so many important causes around the world.
And of course, today, it’s especially fitting that the federal councilor would be here. There has been an agreement reached in a litigation that was just reported to the court in Florida that confirms there has been an understanding between the Swiss Government and our government over the ongoing litigation concerning UBS. Our governments have worked very hard on this to reach that point, and so we’re very pleased that the announcement was made this morning."
has been criticized because UBS was obligated to provide the IRS with information on less than 5,000 clients, instead of the 52,000 Levin mentioned at the March 2009 hearing.
However, the IRS didn't ask for every name. It asked for account holders during the 2002-2007 time period, presumably because of the statute of limitations that applies to federal income tax.
Additionally, the terms of the agreement required at least 10,000 more UBS clients to voluntarily self-disclose to the IRS about their failure to complete a W-9.
For those who believe there was leniency, here's a partial listing of the individuals who have been prosecuted.
|Feb 18, 2009
||UBS Enters into Deferred Prosecution Agreement
|Feb 19, 2009
||United States Asks Court to Enforce Summons for UBS Swiss Bank Account Records
|Apr 14, 2009
||UBS Client Pleads Guilty to Filing False Tax Return Hid Assets Worth $3 Million in Secret Swiss Bank Account
|Jun 25, 2009
||UBS Client Pleads Guilty to Filing False Tax Return
|Jul 28, 2009
||UBS Client Pleads Guilty to Filing False Tax Return, Hid $8 Million in Secret Swiss Bank Accounts
|Aug 21, 2009
||Former UBS Banker Sentenced to 40 Months for Aiding Billionaire American Evade Taxes
|Sep 25, 2009
||UBS Client Pleads Guilty to Failing to Report $6.1 Million in Swiss Bank Accounts
|Feb 04, 2010
||Former UBS Client Pleads Guilty to Hiding $10 Million in Offshore Bank Accounts
|Apr 12, 2010
||UBS Client Pleads Guilty to Failing to Report Over $1 Million in Swiss Bank Accounts
|Apr 13, 2010
||Former UBS Client Pleads Guilty to Hiding Assets in Secret Offshore Bank Accounts
|Apr 15, 2010
||Seven UBS Clients Charged with Hiding Over $100 Million in Secret Swiss Bank Accounts to Defraud the IRS
|Apr 23, 2010
||Former UBS Client Sentenced for Hiding $10 Million in Offshore Bank Accounts
|Nov 18, 2010
||California UBS Client Charged with Hiding Assets in Secret Swiss Bank Account
|Dec 22, 2010
||Former UBS Banker Pleads Guilty to Helping American Client Conceal Assets Offshore
|Mar 04, 2011
||Former UBS Client Sentenced for Hiding Millions in Offshore Bank Accounts
|Mar 08, 2011
||Former Ohio Man Pleads Guilty to Failing to Report His Foreign Bank Account at UBS in Switzerland
|Mar 14, 2011
||UBS Client Sentenced in San Diego for Hiding Assets in Secret Bahamian and Swiss Bank Accounts
|May 24, 2011
||New Jersey UBS Client Sentenced for Failing to Report More Than $1 Million in Swiss Bank Account
|Jun 20, 2011
||California UBS Clients Plead Guilty to Hiding Assets in Secret Swiss Bank Account
|Aug 02, 2011
||Former UBS Banker Charged with Helping U.S. Taxpayers Use Secret Swiss Bank Accounts to Evade U.S. Taxes
|Aug 03, 2011
||UBS Client Pleads Guilty to Filing False Tax Return
|Dec 07, 2011
||Client of UBS and Swiss Cantonal Bank Indicted for Conspiracy to Defraud the IRS
|Jan 30, 2012
||UBS Clients and Tax Attorney Indicted in Phoenix for Hiding Assets in Secret Foreign Bank Accounts
|Jul 30, 2012
||California UBS Clients Sentenced to Prison for Hiding Assets in Secret Bank Accounts Around the World
|Jan 30, 2013
||California Man Pleads Guilty to Failure to Report Foreign Bank Accounts at UBS
|Apr 12, 2013
||Arizona Businessmen and California Attorney Convicted for Hiding Millions in Secret Foreign Bank Accounts at UBS AG and Pictet & CIE
|Feb 27, 2014
||Portola Valley, Calif., Man Sentenced to Prison for Failure to Report Foreign Bank Accounts Held at UBS
|Mar 18, 2014
||California Attorney Sentenced to Prison in Scheme to Hide Millions in Secret Swiss Accounts at UBS AG and PICTET & CIE