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Thursday, December 11, 2008

Federal Agents Target Trillions in Swiss Banks, Holocaust Monies

Swiss bank secrecy in toughest test since Nazi gold
by John O'Donnell - December 11, 2008

FRANKFURT/ZURICH, Dec 11 (Reuters) - More than a decade after holocaust survivors won compensation from Swiss banks for emptying Jewish accounts that had lain dormant since the war, the pressure is on again to dismantle Swiss banking secrecy. This time, the tax collector is leading the charge. With Washington joining Germany to press for an end to a code they believe helps tax dodgers, many see it as only a matter of time before the Swiss lift the cloak guarding the secrets of the world's wealthy. "The challenge to bank secrecy is a thunderstorm which has been brewing since the holocaust money," said Sebastian Dovey of consultancy Scorpio Partnership. "It is a hot potato and I don't think the heat is going to be turned down." Nearly one-third of wealth kept abroad globally is in Swiss banks: the Swiss Bankers Association and consultants estimate this at $2.2 trillion, making the Alpine state the globe's biggest offshore centre ahead of Britain and Luxembourg.

But its code of secrecy -- which local myth inaccurately claims was introduced to protect fleeing Jews -- is as controversial as it is protective. Laid down in a 1934 law, it has spawned plots for bestselling thrillers, but also real-life intrigues such as that of Gizella Weisshaus. Shortly before her father was murdered by the Nazis during the war, he told his children about gold coins and jewellery he had stowed away as Germany's army marched towards their home in Romania. "I found the money and his gold watch hidden in the roof of my house," she told Reuters by telephone from New York. "And there were some pieces of paper. It didn't mean anything to me." Decades later, the Auschwitz survivor was still trying to unravel the riddle of those long-discarded papers which likely contained the numbers of Swiss bank accounts.

But like many others who travelled to Zurich to trace her father's money, she was turned away repeatedly. She later became central to a series of legal actions taken against the banks and in the mid-1990s under pressure from Washington and Jewish community group the World Jewish Congress, they finally paid $1.2 billion for accounts they had sucked dry. Now Switzerland faces its toughest assault since. In an escalation of a U.S. investigation into its biggest bank, Raoul Weil, head of UBS's wealth management business, was recently charged with helping Americans hide billions. "With the UBS case, Switzerland is under huge international pressure and pretty much back in the situation it was then," said Swiss Social Democrat party official and historian Peter Hug. "Holding onto bank secrecy is not going to work in the long term. Switzerland is small and it cannot afford to help tax evasion in its neighbouring countries."


Germany, which at the start of the year paid an informant for the names of tax dodgers who parked money at LGT bank in smaller hideout Liechtenstein, is also pushing for change. "In the end, Switzerland will have no way around declaring who its foreign bank account holders are," said Hans Eichel, who as German Finance Minister between 1999 and 2005 tried to tackle offshore havens. "This is a business based on a criminal activity -- dodging tax in a neighbouring country." The Swiss have already made some concessions: introducing, for example, a tax on income earned by European Union citizens in Swiss accounts. Stuart Eizenstat, U.S. Deputy Secretary of the Treasury under Bill Clinton, said the dormant accounts case he helped negotiate prompted the Swiss to cooperate on other fronts. "I do think it had a catalytic effect of making the banks more open," he said. "They became strong supporters, for example, of the anti-terrorist financing measures. It did spur them to become more open on money-laundering."

But with demands from Germany that Switzerland be blacklisted by the Organisation for Economic Cooperation and Development, pressure is rising for more. "The Americans said that if you do not cooperate, then we will make sure you cannot do business here," said Eichel. "European neighbours of Switzerland such as Germany have to consider similar measures." Many believe an agreement between Liechtenstein and the United States this week to drop bank secrecy in cases of tax evasion could force Switzerland into similar concessions. Prince Nikolaus, the brother of Liechtenstein's ruling monarch and the country's ambassador to Brussels, said UBS's problems and Germany's probe of his family's bank, LGT, sent a clear message to offshore havens. "It was these two banks -- the biggest in their respective countries -- which were turned into a big case," he told Reuters by telephone from Brussels. "It has symbolic value. It shows the political priority."


The pressure from Washington is unlikely to let up. As a senator, U.S. president-elect Barack Obama introduced legislation early last year to make it easier to probe and prosecute tax dodging in offshore locations. As president, he will need to fund an economic stimulus plan that analysts estimate could cost at least $500 billion. Hug believes Liechtenstein's move shows the air is also getting thinner for the Swiss elite. And he sees the first cracks appearing in the country's usually unshakeable facade. "There is a conflict of interest between Swiss industry and the banks," he said. "Industry wants compromise on bank secrecy so that the country's image is not spoilt."

Switzerland's banks -- the liabilities of its two largest are more than seven times the country's Gross Domestic Product -- have been talking up the services they offer beyond hiding customer identity. "This is not all we have," said Urs Roth, Chief Executive of the Swiss Bankers Association. "We do have a number of traditional advantages, like the economic, monetary and social stability." Ultimately, however, it may not be the industry but Swiss pride that is the biggest hurdle to dropping bank secrecy. A nationwide vote would likely be needed to change the rules. Few speak out publicly on the subject. No major Swiss bank wanted to discuss it with Reuters. "The Swiss are so brainwashed, that the bank there is untouchable," said Maram Stern, who as Deputy Secretary General of the World Jewish Congress oversaw negotiations with the Swiss banks about dormant accounts. "This was what the normal person on the street was not capable of understanding. There were people asking me: how can you question the bank?" (Additional reporting by Lisa Jucca; Editing by Sara Ledwith)


Anonymous said...

Only a bunch of New York lawyers and judges could pick a f&**ing survivor of the holocaust to rip off. This story is unbelievable !!

These bastard would rape Mother Teresa, and rob the organs of a living Jesus Christ, if they could make a dollar.

Anonymous said...

this whole thing was one big swindle. D'Amato, Korman and Paul Volker were all part of it, they all got plenty of our money and we got gornit. They should all drop dead and rot in hell.

Anonymous said...

I just read the Weisshouse story, which is heartbreaking. Something needs to be done.

Anonymous said...

All of you who cry for justice need take this story of Gizella to heart and as your guiding light when justice seems far away. Justice may be usurped by thugs who seem impenetrable but sooner or later Justice prevails if those who are wronged continue the fight.
The injustice may try your spirit but one day you will suceed or those whose champion your cause will even if you fail or are put in an oven. The story below from yesterday's news should give you a glimmer of joy that even fifty years later the crimes of the evil are tried and those who fought efforts were not in vain.

Germany may seek accused Nazi guard living in US By DAVID RISING – 1 hour ago Thursday, December 11, 2008

BERLIN (AP) — Germany's highest criminal court turned over to Munich prosecutors on Thursday the case against a retired Ohio auto worker accused of serving as a Nazi death camp guard, paving the way for his possible extradition from the United States for trial.

Munich prosecutors will now decide whether there is enough evidence of John Demjanjuk's alleged involvement in the deaths of 29,000 Jews at Sobibor camp to charge him and request that he be returned to Germany for trial, spokesman Anton Winkler said. Demjanjuk, 88, lives in suburban Cleveland.

The Munich office was still awaiting files from Germany's federal office that pursues Nazi-era crimes, and Winkler said it was not certain when a decision would be made.

Demjanjuk lived in a Munich-area refugee camp after the war, which the Federal Court of Justice ruled was enough to hand jurisdiction of the case to Munich prosecutors. The federal office also has said it believes there is enough evidence to charge him.

Charlotte Knobloch, president of Germany's Central Council of Jews, urged authorities to "do everything legally possible to accelerate the process so that Demjanjuk can be held responsible for his crimes during his lifetime."

"Demjanjuk and all other Nazi criminals still alive should know that for them there is no mercy," she was quoted as saying by Munich's Abendzeitung newspaper.

Demjanjuk's son, John Demjanjuk Jr., said Thursday that his father has spent 30 years defending himself and that there was no new evidence in the German case, which he predicted would not go to trial.

"Today, at 88 years old, he is in very frail health and unable to endure travel and another foreign trial," Demjanjuk Jr. said in a statement e-mailed to the Associated Press in Cleveland. "These statements about possible charges are not about justice ... they are about self-serving headlines."

Demjanjuk, a native of Ukraine who emigrated to the United States in 1952, denies involvement in war crimes, saying he served in the Soviet army and became a prisoner of war when he was captured by Germany in 1942.

But a U.S. District judge ruled in 2002 that Demjanjuk had served at several Nazi death camps during World War II.

German prosecutors have said Demjanjuk was a guard for seven months at the Sobibor death camp, in Nazi-occupied Poland.

Demjanjuk was extradited to Israel in 1986, when the U.S. Justice Department believed he was the sadistic Nazi guard known as Ivan the Terrible at the Treblinka death camp. He spent seven years in custody before the Israeli high court freed him after receiving evidence that another Ukrainian, not Demjanjuk, was that Nazi guard.

But when he returned to the United States, the Justice Department again sought to revoke his citizenship, alleging he had been a guard at Nazi death and forced-labor camps.

A December 2005 ruling determined he could be deported to Ukraine, Germany or Poland, but Demjanjuk spent several years challenging that ruling.

On May 19, the U.S. Supreme Court chose not to consider Demjanjuk's appeal against deportation, paving the way for the case in Germany.

Associated Press writer M.R. Kropko in Cleveland contributed to this

Best of luck to all in tearing apart the evil that destroys our childrens future!!!
Eliot Bernstein aka Bat Out of Hell

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