Chapter 5 Part 2: Burned in Bern - The Breaking Point

The party was still going, but the music was getting worse. This is the second half of Chapter 5 in my Lucifer’s Banker Uncensored retelling series.

The World Was Changing

After 9/11, the USA PATRIOT Act gave federal agencies broad power to dig through financial records. The FBI, CIA, IRS – they were all sniffing around Swiss banking now. Mohamed Atta and his crew had bought cell phones in Geneva and moved cash through Swiss channels. That put Switzerland on the radar.

The Swiss refused to cooperate, of course. “Discretion is our tradition.” So American investigators cast a wide net. Birkenfeld’s clients – rich but not politically connected – were exactly the kind of fish that would get caught.

UBS bankers traveling to the US started getting extra attention at customs. Luggage searches. Long interviews. Some swore they were being followed. Birkenfeld stayed calm. He was a Swiss resident operating under Swiss law. But he was not stupid either. He could read the room.

Panic at the Top

Inside UBS, the senior guys were starting to sweat. Birkenfeld overheard a conversation between two bosses, Hansruedi Schumacher and Martin Liechti. Schumacher had a plan: shut down the Americas desk, move it outside UBS into a small Swiss shell company. The bankers would resign, become “independent asset managers,” and book business back through UBS. That way, if the Americans came knocking, UBS could point at the shell company and say “not us.”

Liechti hated it. He did not want to lose his power base. He told Schumacher to go to hell.

Schumacher quit UBS shortly after and joined a smaller Swiss bank. Several senior bankers followed him, taking 1.5 billion Swiss francs in client assets with them. Birkenfeld noticed. If guys who had spent their whole careers in this game were jumping ship, the iceberg was close.

Pressure From Every Direction

Meanwhile, Liechti kept pushing his bankers harder. More net new money. Higher targets every year. Hit 40 million Swiss francs? Now he wanted 60 million. His pep talks came with pictures of Breitling watches – “work harder and maybe you get a shiny prize.” At the same time, compliance kept sending memos about encrypting laptops and losing surveillance tails. It was a weird mix of corporate cheerleading and organized crime tradecraft.

Bovay Gets Personal

Birkenfeld’s boss Christian Bovay was turning into a real problem. Bovay was petty, jealous, and took credit for other people’s work. He resented that Birkenfeld had landed the $200 million Olenicoff account.

So Bovay hit him where it hurt. He transferred Birkenfeld’s assistant Valerie to be his own personal assistant. She hated it. Then Bovay screwed her on her annual bonus – refused to pay it, claiming he had not had time to “evaluate” her. Birkenfeld found Valerie outside the bank, crying. He went to a Swiss ATM, pulled out 10,000 Swiss francs in cash, and gave it to her himself.

Then Bovay tried the same move on Birkenfeld. His bonus of nearly 250,000 Swiss francs simply did not show up. Birkenfeld walked into Bovay’s office, recited the exact figure he was owed, and told him he could fix it now or discuss it with his lawyer. The bonus appeared the next morning.

The Document That Changed Everything

One evening in April 2005, a colleague named James Woods handed Birkenfeld a sheet of paper. It was the first page of a three-page internal memo titled “Cross-Border Business Banking.” Woods had found it buried deep in the UBS intranet – layers of clicks through “International Private Banking,” then “Americas,” then “USA,” then “Country Paper: New.”

The memo said, in legal language, that private wealth managers shall NOT travel to the US to find clients, shall NOT propose products outside US tax regulations, and shall NOT use subterfuge to bring in new money.

In other words: everything Birkenfeld and his colleagues had been trained to do, paid to do, and pressured to do – UBS lawyers had quietly written a document saying none of it was allowed. The memo was dated November 2004. Months before Birkenfeld found it. Right in the middle of all their client-hunting trips.

UBS had built itself a paper alibi. If anything went wrong, the bank could wave this memo around and say: “We told them not to do it.” The bankers were expendable. They had been set up.

Birkenfeld printed the three pages, stuffed them inside his jacket, and stormed out of the building. He had just realized what he was. Not a trusted employee. Not a valued partner. Just Lucifer’s banker – a useful fool with a target on his back.

Previous: Chapter 5 Part 1 - Burned in Bern Next up: Chapter 6 - Counterpunch

Part of the Lucifer’s Banker Uncensored series