Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
A Swiss private banker has been charged with multiple counts of theft, money laundering and fraud — and with using client funds to recapitalise illicitly the financially troubled lender he worked for.
The individual, whose anonymity is protected by Swiss criminal law, was accused by the Swiss public prosecutor on Wednesday of taking over SFr14mn ($15.4mn) in a multi-layered criminal conspiracy over seven years until 2015.
He was a board member of a small Geneva-based private bank, the name of which was also withheld in the indictment, filed in the southern Swiss city of Bellinzona.
The banker is alleged to have deposited large sums of money at his bank in his own name at the start of 2008, while in fact the money belonged to a third party, who wished to conceal its true ownership to shield his wealth from government authorities.
The banker then exploited the trust put in him by his client, the charges claimed, and stole the money outright, as well as making associates, family and friends large loans from it.
“The assets are believed to have been primarily used to finance the lifestyle enjoyed by the accused and his family,” said the prosecutor.
The fraud was uncovered after money-laundering authorities in Switzerland raised questions about large transfers made by the banker to businesses in the Dominican republic. Funds flowing back from those businesses to the banker were “of a criminal origin”, said the prosecutor.
The case is the latest in a series of scandals that have exposed the huge discretion Swiss bankers and wealth managers typically enjoy over their clients’ assets, and the potential for abuse that follows.
Despite sweeping changes to Swiss banking secrecy laws and compliance practices over the past decade and a half, the country, the world’s number one centre for offshore wealth, continues to be dogged by a steady drip of scandals.
In several recent instances, cases have come to court showing serious crimes going undetected for years thanks to a culture and system that still prizes secrecy and personal relationships.
The banker is also alleged to have routinely forged bank statements that he passed to his client, who, since he also sought to deceive the bank and money-laundering authorities, did not double check the true state of his account.
Prosecutors also claimed that the banker attempted to use at least SFr1mn of his client’s funds to try and keep his bank afloat. He invested SFr500,000 to help recapitalise the bank from the funds at one stage, and attempted to use a further SFr500,000 of the client’s money even after he had been notified that a criminal investigation against him was under way.
Instances of fraud and money laundering exposed by prosecutors raise questions over Swiss regulators’ ability to monitor and change corporate practices effectively across the country’s dozens of banks and more than 950 registered independent wealth managers.
In October, Swiss banker Benjamin G, a former employee of Julius Baer, was found guilty of stealing more than SFr22mn from the savings of an elderly Israeli-Ukrainian couple. He also routinely forged bank statements, and had been given full power of attorney over his client assets.
Read the full article here
