Compliance

Ex-UBS Banker Is Paid Biggest-Ever Whistleblower Sum By US

Tom Burroughes Group Editor London September 12, 2012

Ex-UBS Banker Is Paid Biggest-Ever Whistleblower Sum By US

Bradley Birkenfeld, the former UBS banker who went to prison
after telling the Internal Revenue Service how the bank helped thousands of US
citizens evade taxes, has secured a whistle-blower award of $104 million, the
largest individual federal payout in US history, Bloomberg reported.

Birkenfeld worked at Switzerland’s biggest bank for five
years. He sought a reward from the IRS of as much as 30 per cent of any taxes
the agency recovered from his whistle-blowing activities.

He told authorities how UBS bankers came to the US to attract
clients, managed $20 billion of their assets and helped them cheat the IRS. He
pleaded guilty to conspiracy in 2008, a year after reporting the bank’s conduct
to the Justice Department, US Senate, IRS and Securities and Exchange Commission.
He left prison on 1 August.

“The IRS sent 104 million messages to whistle-blowers around
the world -- that there is now a safe and secure way to report tax fraud,”
Birkenfeld’s attorney Stephen Kohn was quoted saying yesterday at a news conference
in Washington. He is seeking a presidential pardon for Birkenfeld, who is under
home confinement, the report said.

Birkenfeld’s disclosures came ahead of UBS’s decision in
2009 to pay $780 million to settle criminal charges; it has also admitted it
enabled tax evasion and has handed over thousands of bank account details to US
authorities. The transfer of data was controversial as it was seen as a partial
breach of Switzerland’s
traditionally tough secrecy rules. Since then, UBS, along with a number of its
peers, has ceased to provide offshore banking to US citizens. The US and Swiss
governments are seeking to reach agreement on disclosure in return for drawing
a line under any further criminal proceedings. It is understood that at least
11 banks are under criminal investigation in the US.

“Today the IRS sent a message to every American taxpayer who
still has an illegal offshore account,” Kohn was quoted as saying. “Turn
yourself in while there is still an amnesty program. Turn yourself in before
your banker does.”

The IRS confirmed the award in a statement, saying: “The
whistle-blower statute provides a valuable tool to combat tax non-compliance,
and this award reflects our commitment to the law.”

This publication was unable to reach the IRS at the time of
publication, which was out of standard US business hours. UBS declined to comment.

To view an article about whistleblowers and the US offshore disclosure programme, click here.

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