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UBS Money Laundering: What Did Phil Gramm Know?
Posted on Aug 18, 2009
In recent days yet another wealthy private customer of the Swiss-based banking conglomerate UBS admitted to criminal fraud in a growing parade of perp walks that could extend into the thousands. It is a case that threatens to ensnare former Sen. Phil Gramm, the Texas Republican who is vice chairman of UBS’ investment banking business. Given the widespread involvement of UBS in what the Justice Department alleges were systematic efforts to violate U.S. tax laws, it must be asked: Did Gramm as a top executive have no inkling about what was going on?
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In his last years in the Senate, Gramm succeeded in blocking legislation that, as The New York Times editorialized, would have made it easier “to crack down on offshore tax havens” and “would have expanded rules that require banks to find out more about individuals and foreign jurisdictions they are dealing with.” The Times noted, “The legislation won bipartisan support but was blocked by Senator Gramm of Texas, a foe of government regulation. …”
Following that victory, Gramm stepped into a top position at UBS, stating: “It will provide me with an opportunity to practice what I’ve always preached. … I have a strange combination of experiences that a lot of people don’t have … knowledge of economics, a knowledge of government policy.” Given that knowledge, it is legitimate to ask just how Gramm could have been unaware of the extensive efforts of his new employer, UBS, to thwart the IRS. In court cases involving UBS over the past year, witnesses have provided extensive details of the bank’s alleged practices in abetting tax avoidance.
As The Wall Street Journal said of the federal government’s campaign against UBS clients evading U.S. tax laws, “plea agreements … are providing a clearer picture of UBS’s sophisticated efforts to help Americans hide income or the existence of foreign bank accounts.”
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As The Wall Street Journal reported, “The U.S. crackdown on clients of UBS AG is widening into a global hunt, with the government detailing in court documents how the Swiss bank and outside advisers helped Americans hide money using enterprises set up in Hong Kong.”
Was Gramm truly unaware of the widespread efforts at UBS to defraud the U.S. Treasury? Did extreme ideologically driven naiveté lead him to believe that the bank would never engage in such chicanery? In the past he was the first to deny any hint of business naiveté and indeed defended his being hired by a bank that benefited from his legislation. Deflecting any suggestion of a conflict of interests, Gramm told a reporter: “You know, there is something to be said for not hiring people who just came in off a turnip truck. I have always believed that when I left the Senate that I would go into financial services as something that I know something about.”
Well, what exactly did he know about those offshore tax shelters that caused a revenue shortfall of at least $100 billion that honest taxpayers have to make up?
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