- The Washington Times - Friday, July 18, 2008

A man wanted by Liechtenstein for leaking secret banking information that identified millionaire tax cheats across Europe and the United States has described to congressional investigators how money was concealed.

Lawmakers played a videotape of the testimony by Heinrich Kieber at a congressional hearing Thursday that revealed rare details of offshore practices at two European banks. At the hearing, Swiss banking giant UBS AG announced that because of recent revelations, it will stop offering U.S. clients offshore services through branches based abroad.

Mr. Kieber appeared only as a silhouette against a white screen with eyeglasses and a balding head apparent. He is living under a new name in witness protection program, according to lawmakers. He has never spoken publicly about his role in exposing tax shelters he says were used by Liechtenstein’s LGT group.

In the videotaped interview with the congressional investigators, he described ruses that he saw while working at the bank, which he said were used to cover the tracks of money moved into accounts.

The hearing by the Senate Homeland Security and Governmental Affairs investigations subcommittee highlighted offshore tax abuses that they believe cost the U.S. government about $100 billion a year.

The hearing came a day after the panel released a 109-page report that took aim at LGT, owned by Liechtenstein’s royal family, and UBS, one the world’s largest wealth managers.

Mark Branson, chief financial officer of UBS’ global wealth management, said at the hearing that the bank regrets “any compliance failures that may have occurred” and will now provide banking or security services to U.S. citizens only through companies licensed in the United States. He said the bank also is working with U.S. authorities to identify clients involved in U.S. tax fraud.

LGT refused to send a representative but said in a statement that it had cooperated by sending a senior official for a lengthy interview and providing all the documents requested by the panel.

Both LGT and UBS came under withering criticism from the lawmakers.

UBS has said it is cooperating with a Swiss investigation as well as an expanding U.S. probe of taxpayers who may have used overseas accounts to hide assets and avoid taxes. UBS has promised to disclose records involving U.S. clients who might have broken tax laws. It also has banned its Swiss bankers from traveling to the United States.

The subcommittee report said UBS bankers searched out wealthy U.S. clients and aggressively marketed services to people who otherwise would not have opened Swiss accounts. It said the bank’s practices resulted in billions of dollars of U.S. taxpayer money in accounts that were not disclosed to tax authorities.

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