Legal Isolationism: On Swiss Banking, UBS and Marc Rich

It is refreshing to read the foreign press because they have decidedly different takes on issues. Whether you agree or not, it is important to hear those views.

The Swiss are very negative on the U.S. and their tax fight against UBS. This has them dredging up past legal skirmishes. Here’s an article from the Swiss daily Tagesanzeiger – a media outlet that is not considered an establishment paper – about Marc Rich. Remember him? He’s the wealthy man living in exile who created a scandal when he was pardoned by U.S. President Bill Clinton at the urging of Rich’s ex-wife. Here’s what the paper had to say (my translation):

U.S. law takes precedence: thanks to this principle and massive financial penalties, the United States has also forced Marc Rich on his knees.

The American oil dealer Marc Rich, living in Zug, got into the crosshairs of the U.S. authorities in the beginning of the eighties. The United States accused him of profiting from untaxed income of 100 million U.S. dollars at his Swiss company, and therefore claimed 48 million U.S. dollars in tax payments.

Request denied

Rich denied the claim. Then a district court judge in New York asked Marc Rich & Co. AG to submit all business documents concerning the oil deals. There were hundreds of thousands of pages. Rich refused. The judge, therefore, punished him with a fine of 50,000 dollars per day. For a full year, the oil dealer transferred a check on Monday and Friday to the U.S. – a total that came to over 20 million U.S. dollars in the U.S.. Only then was Rich ready to deliver the documents to the court.

And as a result, he fell into the crosshairs of the Swiss judiciary. The Office of the Attorney General seized all the remaining documents. An investigation into Rich was opened because of the economic news agency.

100 million U.S. dollars blocked

In the U.S. as well, the then-Attorney General Rudy Giuliani stepped into action, bringing charges against Rich and blocking his assets in the U.S. (real estate, pension funds, etc.). Their value was estimated at around 100 million U.S. dollars.

But that was not enough. Banks which had been associated with Rich in business were put under pressure. They were warned not to receive any money from Rich or to pay out money to him – including his own. Beside U.S. companies, non-American banks with branches in the U.S. became entangled in the wider net of the judge’s ban. "It was this pressure which forced him to capitulate," said "Weltwoche journalist Daniel Ammann, who in October will publish a biography of Marc Rich ( "The King of Oil," St. Martin’s Press, New York). Under these conditions, Rich could no longer do business transactions. He signed to pay a re-imbursement in U.S. court, although he has always denied the allegations.

According to Ammann, Marc Rich is sad to have paid 200 million U.S. dollars, which for 1984 was a huge sum. Did the U.S. win? Ammann: "In the Rich case, the U.S. has not won. They were not not able to get Rich before a court and never were able to obtain the desired documents. But they got the money. "The Americans could have gone through the legal route. This way was just too slow," said Ammann. He calls this attitude of the U.S. in his book "legal isolationism."

While you might abhor Rich and think the Swiss banking system is built on a bunch of tax dodging, this account regarding “legal isolationism” has the ring of truth to it. Certainly, these same issues are at play in the detention of enemy combatants at Guantanamo Bay. I would argue they are also at play in the Swiss tax law cases as well. And despite the Obama Administration’s claims to break from the past, don’t expect a change in America’s sense of “legal isolationism” any time soon.

Source

Wie die USA den Ölhändler Marc Rich weichklopften – Tagesanzeiger

Comments

[Alan Young:]

Thank you, Mr. Harrison. It's always good to get the other side of a story.

Jul 12 02:51 PM

[max12345:]

This is a case of the pot calling the kettle black. It is laughable that either the Swiss or the U.S. government can claim the moral high ground on this issue. And of course it is always precisely those who have the least claim to any moral high ground at all, who most loudly proclaim their morality and try to claim the high ground for themselves...and, whenever possible, also malign others.

The Swiss have been hiding away money for various dictators and tax evaders and criminals and royalties and aristocracies from time immemorial. The United States has been doing the very same but with emphasis on the money of Latin American dictators, torturers and common criminals. (for instance, Augusto Pinochet, who was placed in power by Henry Kissinger, apparently trusted keeping his money in the United States -at Riggs National Bank of Washington D.C.- more than in Switzerland; and of course there were also Papa and Baby Doc and a whole slew of others)

If the Obama administration is now really and truly intent on everybody playing by the rules (most definitely a noble and highly worthy objective) it should start by having the United States agree to submit itself to the International Criminal Court in the Hague (just as it expects everyone else to do) and turn over all the names of American war criminals past and present. (starting with Mr. Kissinger and Mr. Cheney but of course not only them)

It also should turn over the names (for immediate prosecution) of all the Americans (Wall's Street "best and brightest") who directly or indirectly recently stole billions and billions of dollars through their assorted clever financial (Ponzi?) schemes from the Swiss, the Europeans and many others around the world....instead of just saying that AIG, Lehman Brothers and Citibank (and Wall Street's misbehavior more generally) were "regrettable incidents".

If they were that "regrettable" the U.S. could start by demonstrating authentic "regret" by paying up and also by turning over the guilty for international prosecution.

Once the U.S. has paid back to the Swiss (in this specific instance, but not only them) the hundreds of billions that those people stole from them or caused them to lose, it would be on much firmer moral ground in demanding the Swiss either pay up in full the tax bills of Americans evading taxes in their banks, or turn over their names for prosecution.

As things stand the U.S. is only engaging in its usual moral high horse bullying tactics and "we are the shining city on the hill" which is going to teach the rest of the world out there proper morals. What is doubly laughable is that they seem to believe their own nonsense.

The Swiss (a tiny and insignificant nation compared to the United States were it not for its financial and banking might) for their part could try to think up some other (and much better and more honest) overall national strategy for wealth "creation and enhancement" other than squirreling away the money of some of the world's most unsavory characters.

Although the Swiss are right that the U.S. is one of the last countries in the world with the moral right to call them to account, they are wrong in continuing on the path they have been on and they definitely should clean up their act and find something better to do than hiding away the world's illegal money.

Of course yet another tactic the Swiss could easily adopt (but will they?...it certainly would be worth a laugh in this ongoing saga and farce) would be to agree to release those alleged 52,000 names a bit at a time. But starting first with the names of all the U.S. politicians, congressmen and congresswomen and state officials and legislators who have salted away money in their banks. The U.S. would very soon call of its moral high horse eager beaver attack dog. (the IRS)

And while the World is now nobly trying to clean up the act of so many countries in terms of the assorted different kinds of crimes they each have been perpetrating from time immemorial how about if we also were to hold China to account for their crimes against Tibetans and now also Turkik minorities?

Or how about if we hold the French and the British to account for their assorted earlier colonialist crimes in Africa?

Isn't that why the United Nations and some of its institutions (the International Criminal Court) were set up in the first place? To establish a supra-national institution with various agencies that -among other things- could hold countries to account?

Oh, almost forgot.... and how about if Israel gave up its completely illegal nuclear arsenal in return for Iran signing up to not develop one?

Yes the world is truly a very funny place. (and if it weren't so tragic
and false and hypocritical we probably all would die laughing) (instead as things stand, we will probably all die crying)

My father taught me to be honest (regardless of what others chose to do) ever since I was a child and I have always tried my best to be scrupulously honest in all things.

But of course I would LOVE to see a more honest and more moral world more generally. But I find it laughable and pathetic that some of the most guilty are the ones now leading the charge.

Jul 13 05:08 AM