“On the contrary,” says the banker. “That’s the point. The money in the bank was free money. They didn’t have to do anything to earn it, other than the corrupt act. But they can’t spend it until it is laundered. They report it as legitimate income and pay the tax. What is left is clean. The entire purpose is to legitimize it by paying the tax.
“Then the next year they take the laundered money and expand their business. Now they have five coffeehouses. That year they earn a million dollars in actual income and report five million. You can see how it would grow very quickly. At some point you stop expanding the business and instead use the laundered profits to invest in other things. When you are done, you end up with a business worth a fortune and a pile of clean cash invested elsewhere.”
“Like I said before, we’re in the wrong business,” says Harry.
“Did you know any of these PEPs? Were they people you recognized?” I ask.
“Oh, yes, of course,” he says. “There were a number of prominent politicians. Some from Europe. Some from the United States. Many of them I didn’t know. Some from South America. They would come in speaking Spanish, sometimes Portuguese. And the Russians, of course, they were always there.”
“You mean to say Russian politicians are corrupt?” says Harry.
“Does a Frenchman speak French?” says Korff.
They both laugh.
“The Americans,” I say. “I’d be curious to know who some of them. .”
“I really shouldn’t tell you that.” Korff is weaving in his chair, halfway through the latest pitcher of lager. “It could get me in serious trouble.”
“Just between us,” says Harry. He upends the pitcher of beer over Korff’s stein one more time. “Would you like another?”
“I would not say no.” The banker laughed.
“Come on, a few names,” says Harry. “Between friends.”
“OK. A lady, a woman. One of your senators. Her last name is”-he whispers-“Grimes.”
“Maya Grimes?” I look at him.
“You said it, not me. She made trips over several months. Enough cash to fill a cargo container,” he says. “This was maybe four years ago. And there were others.”
Before I can ask who, Korff gives up eight more names, every one of them recognizable, fixtures with long tenures in the House and the Senate. And he tells us that one retired member of the Senate now sits on the board of directors of Gruber Bank. The names include members of both political parties. If what we are being told is accurate, corruption may be the only thing that is still bipartisan in Washington.
He says there are more, but he can’t remember all the names. I recall the comment by Graves concerning Abscam and the FBI sting, that if the feds hadn’t pulled the plug and brought the undercover investigation to an end they might have had trouble finding a quorum to do business in either house on Capitol Hill.
“How much money are we talking about here?” says Harry. “In broad numbers, I mean. Do you have any idea?”
Korff starts to nod. “That was what worried me, part of the reason I complained so much. Before all of this, Gruber was a small regional bank with local deposit holders, mostly individuals and small businesses. It had assets of a little more than half a billion francs. All of a sudden, in less than two years, we had accounts in excess of one hundred billion.”
Harry looks at me. I know what he is thinking. It’s time for me to start worrying about what he told me on the plane on the way over.
“Not all of these deposits were from Americans, you understand. Some came from Europe, Latin America. As I said, we had deposits from almost everywhere. Money from the larger Swiss banks was being moved to smaller banks where it wouldn’t be noticed. Banks without branches overseas where your IRS and Treasury would have less leverage. We even had diplomats from the United Nations with PEP accounts at the bank.” Korff looks at both of us. He starts to laugh. “These people were on the news at night complaining about corruption in the third world, telling poor countries they had to clean up their act if they wanted help from the IMF, the International Monetary Fund. And during the day they were making PEP deposits in cash, large amounts into their numbered accounts at Gruber.”
“Makes you wonder about human nature,” says Harry.
Not if I know my partner. Harry’s been convinced since shortly after escaping the womb that the angels of our better nature took flight the instant Adam had his ass tossed from Eden.
“You wouldn’t by any chance have any documents concerning any of this?” he asks.
“No, of course not. But the bank has them. They would have all of the names and the account numbers.”
“You said there were exceptions to the bank secrecy laws in cases where there was evidence of criminal wrongdoing, money laundering. If that’s the case,” I say, “what’s to prevent a foreign government or some private party from accessing the banks’ files on these accounts?”
“Ordinarily I would say you are right,” says Korff. “But not in this instance. You see, there was a kind of informal understanding between the Swiss government and the other countries involved. What you might call a ‘safe harbor.’ ”
“Go on.”
“If the money was moved, transferred from the large Swiss banks that had international branches, during the window of time that was agreed upon, the United States agreed not to pursue it. Other countries followed the American lead. They would make no inquiries and the Swiss government would not be asked to relax the rules of secrecy concerning any of the PEP accounts. Once they were transferred, they would be untouchable.”
“Why would they do such a thing?” I ask.
“Because no one wanted the information to be made public,” he says. “There were serious concerns that disclosure would threaten political stability in a number of countries, not the least of which was your own. There was also concern as to the effect on financial markets,” says Korff.
“He’s got a point,” says Harry. “How do you explain to the common folk who are grubbing for a living that half of their leaders are on the take?”
“Precisely,” says Korff. “It was a very big problem. But still there should have been other ways to deal with it. I became a thorn because I kept pointing that out. Because, you see, I had no choice. As the bank’s compliance officer, if I said nothing and suddenly the news came out as to what was happening, I would be the one who was responsible. Gruber’s president and his friends on the board would claim they knew nothing. So what else could I do? I papered their walls with my complaints. When it was over they fired me. So there you have it. How I became unemployed. Now, what is this job you are looking to fill?”
“Why didn’t you take the information to the media?” I ask.
“This is not the United States, my friend. If I said anything they would have had me in jail, charged under the bank secrecy statutes.”
“But the statutes didn’t apply because of the criminal acts,” I tell him.
“They do if the Swiss government says they do. And the banking industry in Switzerland is very powerful.”
“Let me see if I understand what you’re saying.” I lean over the table. “The bank has all the information on these PEP accounts, numbers as well as the identities of the clients holding those accounts?”
“That is correct.”
“But the bank can’t be forced to give up the information, even though there is clear evidence of money laundering and probable corruption, because they’re shielded by secrecy. Not because it’s covered by Swiss law, but because other governments have decided not to challenge the issue since their own politicians are involved?”
“There you have it. Now you understand,” he says. Korff takes another swig from the stein and swallows it.
“And a private party seeking this information, bringing suit from outside the country. .”
“Would have no chance at all,” he says. “Without support from their own government, Switzerland would simply refuse to cooperate. Secrecy is the first rule. The only reason it has been relaxed is because of outside pressure from other governments. Take that pressure away and we go back to the first rule.”