“These solutions will involve the creation of tax-evasion systems for this clientele based on the family foundation or, even more so, on the Anglo-Saxon legal institution, the trust.”
Switzerland’s reputation for financial secrecy goes back hundreds of years.
In 1713, the Council of Geneva banned bankers from divulging their clients’ details to safeguard the interests of the French monarchy, which wanted to obscure its dealings with banks in a ‘heretical’ protestant country.
Switzerland’s internationally recognised status of neutrality from 1848 onward helped attract huge amounts of capital from abroad, as did an expanding tourism sector that was trying to lure Europe’s wealthiest for long stays in lakeside palaces or Alpine sanatoriums.
“To add something that other countries didn’t have, they also adopted tax measures to stimulate rich people coming from outside to stay long in Switzerland,” explains Sebastian Guex, a professor at the University of Lausanne who studies the Swiss banking industry.
Switzerland became a tax haven, and started competing with France and other European banking heavyweights to attract foreign capital. Whether it was the mountains or the laws, it worked — wealthy foreigners started arriving in droves, with their money.
With the outbreak of the First World War, wealthy Europeans turned to Switzerland to insulate themselves from economic instability and tax hikes associated with the war effort.
In 1934 Switzerland formalised this with a Banking Act, a law which promised to jail any bank employee seeking to disclose confidential customer information.
More recently, Switzerland has made changes to the way its banking sector is regulated.
After the 2008 financial crash, the country agreed to lift the veil on thousands of accounts after a UBS employee told US prosecutors how the bank was helping Americans hide their assets.
But not without first securing the dismissal of US charges for enabling tax evasion, and raising the max sentence for breaching financial secrecy laws from just six months to five years.
Experts say the law essentially criminalises whistleblowing, silencing insiders and journalists who may want to expose wrongdoing within a Swiss bank.
“That law demonises those who come forward with good information to expose corruption,” said Jeffrey Neiman, a US lawyer representing Credit Suisse whistleblowers.
The leaked records analysed by Suisse Secrets reporters show accounts held by several high-profile human rights abusers, such as Algeria’s former defence minister Khaled Nezzar. As head of the armed forces, Nezzar was Algeria’s de facto leader from 1991 to 1993, when the country was embroiled in a civil war marked by atrocities committed against civilians.
Aside from Nezzar (already footnoted above), other human rights abusers are documented in Bank of Spies story with several intelligence figures implicated in torture. There is also Bo Stefan Sederholm (Aleph) who trafficked sex workers (Reuters); Azad Rahimov who profited from people smuggling (see also related ECHR ruling, 2021).
Despite well-publicised allegations against him, Nezzar appears in the Suisse Secrets data as a Credit Suisse client, with two accounts worth at least 2-million Swiss francs ($1.6m). A 1995 law criminalised the removal of the financial proceeds of Algerian economic activity from the country without central bank approval. The source of the funds deposited in Nezzar’s Credit Suisse account is unknown. It remained open until 2013, two years after he was charged in Switzerland with war crimes.
He denies any wrongdoing.
Credit Suisse also offered banking services to key figures implicated in corruption scandals in some of the poorest countries in the world. In Angola a disgraced banker, under investigation in Portugal after the bank he led collapsed with $5.7bn in untraceable debt, was able to open at least a dozen Credit Suisse accounts, some of which are being looked at by Portuguese prosecutors.
In Kenya Credit Suisse banked a key player in a huge corruption scandal even after authorities declared him wanted in a criminal probe. Millions of dollars appeared to be withdrawn from the account even as investigators in Switzerland and Kenya were trying to trace the stolen funds.
Another client was former Venezuelan spy chief Carlos Luis Aguilera Borjas. Aguilera was close to Hugo Chávez, Venezuela’s former president who died in 2013 after establishing a socialist regime that has become mired in corruption, with officials looting state funds and stashing the money overseas.
In 2001, Chávez installed Aguilera as head of the secret service, where he kept a low profile, avoiding interviews and photographs. “They call him ‘The Invisible One’, Carlos Aguilera, the head of the political police. Nobody sees him. I know where he is,” Chávez said in a 2002 national broadcast of his weekly TV show, Hello President.
But Aguilera fell out of favour later that year after failing to prevent a coup attempt that almost toppled Chávez. He left his secret service post and entered the private sector full time, amassing wealth most Venezuelans could only imagine.
In 2007, Aguilera became the major shareholder of Inversiones Dirca S.A., a Venezuelan firm that secured a $1.85bn contract the following year to renovate a Caracas metro line. There was no public bidding process, and Aguilera took a 4.8 percent commission worth almost $90m.
In 2011, two accounts were opened in Aguilera’s name and credited with at least 7.8-million Swiss francs ($8.6m). The Aguilera accounts were still open well into the last decade when the Suisse Secrets data was collected.
“By any definition, he’s high-risk,” said Barrow, the financial crime expert, adding that banks are responsible for making sure the sources of funds from politically connected customers are legitimate.
But a whistleblower who previously worked at Credit Suisse in Zurich recalled how executives encouraged bankers to pursue high-risk relationships.
“Management incentivises the servicing of questionably sourced money by putting pressure on its bankers, especially junior bankers, to keep toxic accounts or face the consequences,” the former banker said, on condition of anonymity. “Those consequences are often termination, no bonus, and no pay increase.”
Aguilera did not respond to OCCRP’s e-mailed questions.
Credit Suisse has repeatedly pledged to crack down on illicit funds, following a string of scandals beginning over two decades ago with the death of an infamous Nigerian dictator. After Sani Abacha died in 1998, it emerged that Credit Suisse had helped stash some of the billions of dollars his family had looted from his country.
In an effort to defuse the fallout from that revelation, the bank’s then-chairman said in 2000 that it had “continuously improved … control procedures and compliance with them.”
Later that year, Credit Suisse became a founding member of the Wolfsberg Group, an international banking association assembled to curb illicit financial flows.
“The bank will endeavour to accept only those clients whose source of wealth and funds can be reasonably established to be legitimate,” read a Wolfsberg Group mission statement in 2000.