This post is at least a year old. Some of the links in this post may no longer work correctly.
In December 2007 the GIC invested S$14.2 billion in Swiss bank UBS. Its deputy chairman and executive director, Dr Tony Tan, had told the world: “In the case of UBS, they have a worldwide global wealth management business which is something not replicable by any bank.”
Of course not. Which bank conspires with tax cheats to hide away their money for which it now has to pay nearly US$800 million in fines? (See CNN report below)
The bank has admitted to helping defraud the US Government and, apart from paying the fine, has agreed to providing the identities of, and account information for, suspected American customers of UBS. The bank has also agreed to cease its practice of serving customers with “undeclared accounts”.
Back at home, the GIC had invested US$9 billion in UBS in 2007. Since that year, the Swiss bank has written down more than US$50 billion. It posted a loss of US$17 billion in 2008.
But these problems did not come about only in December 2007 when Dr Tan gave his ringing endorsement and, together with Mr Lee Kuan Yew, put S$14.2 billion into the troubled bank. In February that year US President Barack Obama, then a senator, had introduced legislation that would allow the US to pursue Americans who evaded taxes by stashing their funds in foreign banks.
Either Dr Tan knew about the developments and problems that UBS was facing and chose to ignore them, or he had no clue that trouble was brewing in and around the bank. Which is worse?
(By the way, Dr Tan is also the chairman of the Singapore Press Holdings, a state-owned company that monopolises the local print media, as well as the former deputy prime minister. He is a prime example of how a small PAP clique has its hands on all the levers of the Singapore system.)
Much of the money that the GIC and Temasek have put into Western banks are irretrievably lost. If there is anything that such a financial disaster teaches us it is that Mr Lee Kuan Yew and those around him will never tire of telling us that they possess special talent that the rest of us don’t and, this being the case, we should all just pipe down and let them run the show.
What is crucial is that we must never tire of pointing out their folly.
UBS admits helping tax evaders
19 Feb 09
Swiss banking giant agrees to pay $780 million and hand over account information after helping U.S. clients evade the IRS.
Switzerland’s largest bank, UBS, has admitted helping US taxpayers hide money from the IRS, and has agreed to pay $780 million in fines and restitution, and to turn over account information. The deferred prosecution agreement was approved Wednesday by a federal court judge in Fort Lauderdale, Fla.
“UBS admitted to conspiring to defraud the United States by impeding the IRS,” the Justice Department announced late Wednesday.
The statement says that UBS, “in an unprecedented move” based on an order by Swiss authorities, has agreed “to immediately provide the U.S. government with the identities of, and account information for, certain U.S. customers of UBS’s cross-border business.”
UBS (UBS) also has agreed to end its business practice of providing banking services to U.S. customers with undeclared accounts.
“Swiss bankers routinely traveled to the United States to market Swiss bank secrecy to United States clients interested in attempting to evade U.S. income taxes,” the Justice Department said.
The government document says Swiss bankers made a total of about 3,800 trips to discuss their clients’ accounts.
The government said that because the bank has acknowledged responsibility for its actions, has cooperated fully, and has taken remedial actions, the United States will recommend dismissal of the criminal charge “provided the bank fully carries out its obligations under the agreement.”
Two former UBS bankers have pleaded guilty to charges of conspiracy for similar conduct.
The acting head of the Justice Department Tax Division called Wednesday’s agreement “but one milestone” in the effort to make sure U.S. citizens pay their fair share of taxes.
“The veil of secrecy has been pulled aside, and we will continue to aggressively pursue those who shirk their federal tax obligations, or assist others in doing so,” said John DiCicco, acting assistant attorney general for the Justice Department Tax Division.
IRS Commissioner Doug Shulman issued a warning to the taxpayers who held the accounts, telling them to voluntarily pay up.
Shulman said the taxpayers should note that Wednesday’s agreement also stipulates that the U.S. government will continue to seek enforcement of its court action.
“People who have hidden unreported income off shore need to get right with their government. They should come forward and take advantage of our voluntary disclosure process,” Shulman said.