Switzerland's PDVSA Rinsing Problem
Swiss banks first surfaced as handlers of illicit Venezuelan oil money in 2016, when U.S. Attorney Preet Bharara sought records from more than 18 of them on of bribery at PDVSA, a state-owned oil and natural gas company. Precisely two weeks later, Switzerland's financial regulator built its annual meeting around a frank warning to banks on money laundering.
The new cases emerging four years ago, Finma said at the
time, indicate corruption and rinsing of several billion in funds. At the time,
Malaysian 1MDB as well as FIFA, soccer's global governing body, were
attention-grabbing cases – but few people were as familiar with PDVSA.
Hugely Wealthy
That changed two years later when one of Julius Baer's
former private bankers, Matthias Krull, was arrested in Miami. But numerous
banks other than the Zurich-based wealth manager were also involved in rinsing
Venezuelan PDVSA money offshore.
They had catered to so-called bolichicos, a crop of
well-connected, younger businessmen who had grown rich under the regime of Hugo
Chavez. Unimaginably wealthy: investigative website «Infodio,» which is devoted
to PDVSA corruption, calculates that $1.5 billion disappeared from the
company's coffers between 2002 and 2014.
Billions of PDVSA Funds
The plunder is set against hyperinflation, shortages of food
and medicine, and unemployment created by the government of Nicolas Maduro, the
current president. PDVSA billions flowed through Swiss bank accounts in the
U.S. and in Spain, to be invested in real estate and companies, for example.
The U.S. is conducting several probes into corruption at
PDVSA. In Switzerland, banks in 2015 lodging alerts with MROS – the Bern-based
office that is banks' first port of call when they suspect money laundering,
the Swiss prosecutor said. The alerts were «regarding a significant number of
banking relationships,» the prosecutor told finews.com.
Swiss Mothball Probe
The matter was escalated to the Swiss attorney general two
years later, but an investigation was mothballed in April, the prosecutor said.
Bern couldn't obtain unbiased legal aid from Venezuela, where Maduro is holding
on despite opposition leader Juan Guaido, who was recognized as an interim
president, last year by dozens of countries including – crucially – the U.S.
Swiss justice officials have addressed countless requests
for legal aid from other countries – including the U.S. Until now, no bank has
been accused of laundering Venezuelan graft money. The Swiss as well as
Liechtenstein ties to PDVSA are well-known: besides Credit Suisse and its
former subsidiary Clariden Leu, UBS,
Julius Baer, EFG International, as well as Compagnie Bancaire
Helvetique, or CBH, and Lugano's Banca Zarattini, roughly one dozen more banks
are likely involved.
Bank of Choice: CBH
The bank which pops up most frequently in U.S. justice documents
is CBH: the Genevan wealth manager is suspected of laundering $4.5 billion in
just two years until 2014 for Luis and Ignacio Oberto, Venezuelan brothers.
The «guiding spirit» appears to have been Charles Henry De
Beaumont, a private banker who set up sham entities for the two to receive
PDVSA money. From there, the money flowed via Bank Espirito Santo, PDVSA's
house bank, to CBH in Geneva.
When the Portuguese bank collapsed in 2014, CBH took over
the Swiss arm, Banque Privée Espirito Santo. CBH also wanted to buy a Miami
subsidiary, Brickell Bank, but the deal fizzled – likely under the pressure of
the U.S. investigation. Brickell eventually went to Banesco USA, an American
bank focused on South Florida and Puerto Rico
Swiss Data Handover
Last year, a former Venezuelan prosecutor went so far as to
call CBH the «go-to bank» for the country's establishment. The bank denies
laundering illicit money or conducting unlawful transactions. None of CBH's
current or former executives are the subject of a criminal probe.
The CBH clients involved in the probe attempted to block the
transfer of their data to U.S. officials. However, Switzerland's highest court
last year allowed the handover.
Swath of Swiss Banks Tainted
The Obertos brothers also maintained accounts at EFG
International, allegedly to rinse PDVSA money. U.S. officials documented four
transactions of more than $1 billion in March and April of 2012 into an account
at EFG tied to the two. When EFG grew uneasy with the risk attached to the
Obertos, CBH was ready to take them on.
Venezuelan corruption has occupied officials in neighboring
Liechtenstein as well: last month, the colorful tale of how Chavez's former
nurse stowed more than $300 million in offshore accounts in Switzerland and
Liechtenstein (the strongman died in 2013).
Quietly Closing Accounts
Liechtensteinische Landesbank, or LLB, was named – but the
former Chavez associate also hid gold worth more than $10 million in a vault in
the principality. Beaumont, who appears to have left CBH in 2012, popped up as
her banker. Though Switzerland hasn't opened any criminal proceedings regarding
PDVSA, Swiss banks have quietly closed out their business with Venezuela.
Julius Baer exited the country when ex-Goldman Sachs banker
Beatriz Sanchez took over the region, and UBS has also moved to limit its
exposure. Credit Suisse was sanctioned by Finma two years ago – and CBH
recently elected a well-known regulatory expert, lawyer Sabine Kilgus, to its
board.
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