Newspaper article The Christian Science Monitor

Swiss Bank Thumbs Nose at Rights Law

Newspaper article The Christian Science Monitor

Swiss Bank Thumbs Nose at Rights Law

Article excerpt

Two years ago President Bush told the world "you're either with us or against us in the fight against terror." Well, those against us may in fact be disguised as our allies.

From within a vault at the Zurich airport, vacuum-packed US bank notes were secretly shipped to the rogue nations of the world, including Iraq, between 2001 and 2003. The shipments eluded the US inspectors who routinely visited the site. While this sounds like a Robert Ludlum novel, it actually describes the actions of staffers of UBS of Zurich, Switzerland's largest bank. UBS took advantage of its contract with the Federal Reserve of New York to circulate new US notes and retire old ones. Under US and UN sanctions, the Swiss bank was to neither deliver nor accept dollar notes to or from banks in countries under US trade sanctions.

All told, an estimated $650 million found its way to safe houses along the Tigris River, according to a Federal Reserve Bank investigation.

A year has passed since American soldiers discovered the money in stashes near the Tigris River. Sequential serial numbers and markings from three Fed banks helped the Fed trace the notes to Switzerland. But the extent of Switzerland's involvement in the illegal transfer has only just surfaced. The Federal Reserve's investigation found that UBS had transferred between $4 billion and $5 billion to several countries under sanctions, including Cuba, Libya, Iran, and the former Yugoslavia.

Once more a Swiss bank has shown its propensity to thumb its nose at international law. Switzerland has a pattern dating back to World War II for banking with the bad guys. Look at the heavy involvement of Swiss banks in apartheid South Africa during the 1983-1992 international trade embargo: Switzerland extended credit to the apartheid government and was a stable investment center for South African state-owned corporations. Swiss reasoning then, as now, was that Switzerland doesn't mix political policy with economic policy. Despite reforms first undertaken in the early 1990s, the banks continue to operate as if they are a country unto themselves.

Initially the Federal Reserve Board fined UBS - which operates branches in the US and had been under contract with the Fed - $100 million for the currency violation, according to UBS. …

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