How global banks are helping the wealthy hide assets
Two global companies were under mounting pressure, and threats were flying.
For years, the Swiss banking giant UBS Group AG and a Panamanian law firm named Mossack Fonseca & Co. embraced each other in a mutually profitable relationship. UBS had customers who wanted offshore shell companies to keep their finances hidden. And Mossack Fonseca, one of the largest creators of offshore companies in the world, was happy to sell them.
But in 2010, under threat of U.S. criminal prosecution for tax evasion and money laundering, UBS was scrambling to contain the damage. The bank’s board of directors wanted out of the shell-company business.
Tensions boiled over in a meeting in Zurich on Sept. 28, when UBS asserted that Mossack Fonseca – not the bank – was responsible for identifying the ownersof the shell companies behind the secret accounts.
Mossack Fonseca employee Dieter Buchholz argued that his firm had no idea who really owned some of the companies created for UBS customers, because the bank had withheld that information. UBS executive Patrick Küng objected, saying Mossack Fonseca was “in violation of the Swiss money laundering code” and he was “seriously” contemplating reporting the law firm to the authorities, according to emails describing the encounter.
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