| |
US on the trail of the Marcos
millions
By Lucy Komisar
NEW
YORK - At a time when the integrity of global accounting
firms is being questioned, the US Securities and
Exchange Commission (SEC) and Justice Department are
looking into charges that KPMG Zurich, a division of the
international audit company, helped Credit Suisse hide
hundreds of millions of dollars looted by the late
Philippine dictator Ferdinand Marcos. A KPMG
spokesperson confirmed the investigation.
Dan
Burton, a conservative Republican congressman, wrote the
SEC that he had been informed that the agency has been
"presented with evidence against KMPG concerning
money-laundering and subversion of a joint Philippine
and Swiss freeze order for a series of accounts
containing millions of US dollars". Burton, a member of
the US House of Representatives International Relations
Committee, requested "prompt action" by the SEC "in
seeking out the truth". The SEC passed on its
information to the Justice Department.
The
freeze order had been issued by the Swiss Banking
Commission in March 1986, after Marcos was ousted.
Documents supplied to the SEC purport to show that the
funds were moved to Liechtenstein foundations controlled
by KPMG and Credit Suisse, both in Zurich. KPMG - then
known as Fides - had been a Credit Suisse subsidiary
until a few years before.
KPMG Zurich is a
member of KPMG International, headquartered in
Amsterdam, which includes the giant British audit firm
of the same name. Credit Suisse is part of the
Zurich-based Credit Suisse Group, the world's
third-largest private banking group, which owns the
Credit Suisse First Boston and Credit Suisse Asset
Management in London. Credit Suisse spokespersons in
Zurich and New York declined to speak about the
investigation. KPMG spokesperson Kate Maybank in London
said, "We are aware of it, but it isn't something we
would make any comment on."
The key documents in
possession of the US government include:
Records found in Malacanang Palace after Marcos fled
that detail transactions involving his "foundations" and
accounts in Switzerland and Liechtenstein.
An affidavit from a Philippine banker who said that
in March 1986 he was given power of attorney by Marcos
to move his money out of Switzerland. The banker,
Michael de Guzman, said a Credit Suisse official in
Zurich told him the transfer order was unnecessary
because Marcos' foundations and account names had been
changed to ensure that neither the Philippine government
nor Swiss authorities would get the Marcos deposits and
investments.
The testimony of Marie-Gabrielle Koller, a former
lawyer for KPMG in Zurich, who told a French
parliamentary committee, and attempted to interest the
US Justice Department in, her account of how officials
of Fides moved the Marcos money. She said she learned
from colleagues in 1997 how their predecessors had
worked to hide the accounts to beat an expected freeze
order.
During his 20 years in power, Ferdinand
Marcos routinely siphoned off cash from the treasury,
pocketed bribes, and stole money from International
Monetary Fund and World Bank loans and US foreign aid.
When I was in the Philippines in 1986 to cover the
political turbulence that ended with Marcos' overthrow,
US embassy officials told me that the Central
Intelligence Agency had calculated that the dictator had
stashed US$5 billion outside the country. His favorite
bankers were the Swiss, and among them Credit Suisse.
From 1928, Credit Suisse had an accounting
subsidiary called Fides Trust. Fides would split several
times, yielding the present Credit Suisse Trust (Vaduz)
and KPMG Fides (Zurich). KPMG Fides continued to provide
audit and tax advice to Credit Suisse. In its annual
report, KPMG lists as an affiliate Limag AG, which
happens to be located in the same building as Credit
Suisse Trust in Vaduz, the capital of Liechtenstein.
Credit Suisse, KPMG Fides and Limag Management AG
maintain a tight relationship, with easy communication
as the cities are just 116 kilometers apart.
Limag is a fiduciary, or asset manager.
Documents found at the presidential Malacanang Palace
showed that Limag had set up Marcos foundations on whose
boards Limag president Ivo Beck and vice president
Ulrich Siegfried served. Liechtenstein foundations, or
Anstalts, are not required to keep books, present
balances to tax authorities, or undergo any state
supervision. They are shells notoriously used by money
launderers. Malacanang documents showed that Fides Trust
and Credit Suisse officials sat on Marcos foundation
boards.
After Marcos fled to Hawaii aboard a US
military plane on February 28, 1986, Philippine banker
Michael de Guzman, then 38, thought he could pick up
some easy cash. He knew the son of Marcos' security
chief, and so he visited the dictator in Honolulu and,
as he later described in a 1986 affidavit, offered to
move his money to his Export-Finanzierungsbank GmbH,
Vienna, which had impenetrable bank secrecy. Marcos gave
him a power of attorney and had his son "Bong Bong"
alert Ernest Scheller, a senior vice president and
principal contact for Marcos at Credit Suisse.
Credit Suisse officials informed the Swiss
government of the transfer attempt. According to de
Guzman, when he arrived March 24, he was informed by
Scheller that the Banking Commissioner had decreed that
"all Swiss banks must monitor movements of accounts
directly related or even indirectly related to Ferdinand
E Marcos and his family". He said Scheller told him that
two weeks earlier that he had received instructions from
a Marcos aide to hide accounts - that funds and assets
had been transferred to Fides Trust. De Guzman said that
when he asked for account statements, Scheller replied
they weren't available, because Fides people were in the
process of moving the accounts and foundations.
That
evening, the Federal Council (the Swiss cabinet) issued
an emergency order freezing assets of Marcos, his
family, his corporate entities, and cronies. It was the
first time the Swiss had frozen a dictator's accounts.
De Guzman returned in the morning and learned of
the freeze. Gustave-Adolphe Rychner, a senior Credit
Suisse officer, told him that foundations and account
names had already been changed, that neither the
Philippine government nor Swiss authorities would be
able to freeze Marcos' deposits and investments.
The Malacanang documents revealed that the
Marcoses and their cronies had 60 accounts under the
names of 17 foundations at six Swiss banks, including
Credit Suisse in Zurich, and in New York, where
securities and gold were kept in a Marcos sub-account of
the Credit Suisse account at Swiss American Securities
Inc (SASI).
Weeks after the dictator's escape,
Philippine authorities had opened a criminal action
against "Marcos and consorts" and on April 7, 1986,
lawyers officially asked Bern for legal assistance. The
request cited documents indicating where stolen money
had gone - to Credit Suisse Zurich; Societe de Banques
Suisse in Fribourg and Geneva; Banque Paribas, Geneva;
Bankers Trust, Geneva and Zurich; Banque Hoffman &
Cie, Zurich; and Banque de Paris et des Pays Bas,
Geneva. The Philippines also sought information from
Swiss banks relating to securities deposited in foreign
countries, "in particular in Liechtenstein (Limag AG and
the foundations certainly) or in New York (SASI New York
through Credit Suisse)". And the request named 15
individuals, including the Credit Suisse and Fides
officials who had worked with Marcos accounts.
But the Swiss investigative magistrates and
prosecutors refused to act. There would follow years of
efforts by the Philippines to recover the Marcos money
and years of stonewalling by Swiss banks, helped by
their government. The only person the Swiss district
attorney ever interviewed was Markus Geel, Credit Suisse
general counsel.
Not until the Philippines gave
Swiss authorities documents about specific accounts did
Bern announce that those and only those were the ones it
had frozen, valued at $356 million in Credit Suisse and
Swiss Bank Corp. It wasn't until December 1990 that the
Swiss Supreme Court authorized the transfer of the Swiss
bank documents to Manila authorities. The banks denied
records on 51 other accounts identified by the
Philippine government.
A chance event in 1997
would lead to another revelation about the events of
1986. Fides had gone through various splits and spawned
KPMG, Zurich. Marie-Gabrielle Koller, a Canadian lawyer,
had started work there in 1996 and was assigned the
Credit Suisse account.
She'd left her previous
job in Liechtenstein after she discovered that her boss
was involved in a scheme to sell improperly tested
blood. She told Liechtenstein authorities about the
blood scheme and, after a Swiss inquiry, a prosecutor
called her to testify. Her ex-boss's accounts were in
Credit Suisse and he was a good friend of a director of
Credit Suisse Trust. Koller says KPMG fired her that
same day at the behest of Credit Suisse, the firm's
principal Swiss bank client.
In May 2000, Koller
told a French National Assembly parliamentary commission
investigating money laundering in Switzerland that
KPMG/Fides had moved the Marcos money. She had learned
about the transfers to Liechtenstein from officials of
Limag AG and KPMG Fides who allegedly bragged about how
clever the firms had been in not being caught by legal
actions after Marcos fled the Philippines. She recounted
how staff had worked through the night to "redocument"
accounts holding $400 million and that Limag resolved
Liechtenstein officials' nervousness by giving a
well-paid board chairmanship to Prince Constantin, the
70-year-old cousin of the ruling Prince Franz-Josef II.
Officials of the companies denied the charges.
The money with interest now would approach $1
billion.
Last year Koller approached the US
Justice Department via Virginia lawyer David Smith, a
former associate director of the department's asset
forfeiture office. Smith on June 28, 2001, sent New York
Federal Bureau of Investigation (FBI) agent Mark Lauer a
fax that said, "I hope you find the attached e-mail
letter from Koller useful. Have you had a chance to read
the write-up I previously sent you? Have you circulated
it to others at the bureau or in the US Attorney's
Office? Is there any interest? It's very frustrating to
us, because we believe the information is extremely
valuable. As far as we know, the government hasn't
followed up on any of it, even the Marcos stuff that
asset forfeiture & money laundering said it was
interested in. I may send a copy to Mr Freeh." Louis
Freeh was FBI director from 1993-2001.
Smith and
Lauer said they could not discuss the matter. Justice
Department and FBI spokespersons also declined to
comment.
Did Marcos money end up in
Liechtenstein? The German Intelligence Agency in a
classified February 2000 paper cited several Vaduz asset
managers that it said handled Marcos money and were also
launderers for drug traffickers. Asked to authenticate
the document, a BND press spokesperson replied by
e-mail, "We certainly regret that the report you
mentioned has been leaked. Yet we do not wish to comment
[on] this issue any further and hope you will
understand."
Zurich district attorney Peter
Cosandey and his successor Dieter Jann have never
interviewed any of the bankers or fiduciaries who dealt
with Marcos accounts. Cosandey said, "As far as I
remember, I interviewed a guy from Credit Suisse, Markus
Geel of the legal department of the bank." No others?
"The Philippines didn't ask for it." That is
contradicted by the Philippine legal assistance request.
When in 1998 Cosandey quit as the official Swiss
searcher after the Marcos plunder, he was appointed
partner and director of Forensic and Litigation Services
at KPMG Switzerland.
Lucy Komisar is a
New York journalist who writes about offshore bank and
corporate secrecy.
(©2003 Asia Times Online
Co, Ltd. All rights reserved. Please contact content@atimes.com
for information on our sales and syndication policies.)
|
| |
|
|
 |
|
