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

Tom Burroughes

12 September 2012

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.