UBS help for Iran
'broke US sanctions'
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2006/04/04/cnubs04.xml&DCMP=EMC-mcn_04042006
By Ambrose Evans-Pritchard, International
Business Editor (Filed: 04/04/2006)
The Swiss bank UBS has become the latest casualty of raging "Iran fever" on Capitol Hill after key congressmen stepped up allegations that it had helped finance the Mullahs' nuclear ambitions in breach of US sanctions, and that it had once banked for Osama Bin Laden.
Dana Rohrabacher, the chairman of a congressional inquiry into off-shore banking and terrorism, is mulling further hearings to determine whether UBS endangered world security by helping Iran through the illegal transfer of $440m (￡253m) in US bank-notes in the 1990s.
"Iran at that time was facing a credit crunch. If the US was trying to restrict Iran's flow of income, but UBS was working to supplement it through loans and credits, then it seems to me the bank was working directly against the interests of the country that acted as one of the most important sources of business," he said in congressional hearings.
"Worse, UBS transferred US banknotes to Iran in violation of the very programme they were entrusted to run," he said.
He told the Daily Telegraph that his committee planned to move forward "step by step" until it reached the full truth.
"There's another layer to the onion, and you can smell it. I simply do not believe that UBS would have taken such a risk unless there was something else going on," he said.
The Swiss bank is by far the biggest manager of wealth in the world, with $2,026bn in invested assets belonging to the elite club of billionaires. American clients account for $576bn, or just under a third, making it a crucial part of the UBS network.
Mr Rohrabacher, a California Republican and former aide to President Ronald Reagan, cited an account held for Osama Bin Laden as an example of the bank's "malfeasance".
Serge Steiner, a UBS spokesman, said it was true Bin Laden had been the beneficiary of an account held by his half-brother Yeslam, but the account was fully closed in 1997, and there had been no transactions since 1991.
"Osama Bin Laden has never been a client of UBS and never did business with us," he said.
UBS has admitted supplying Iran, Cuba, Libya and Saddam Hussein's Iraq with dollars obtained through a US Federal Reserve scheme, for which it paid a $100m fine.
The scheme is designed to swap old banknotes for new issue, but may not be used for dealings with states on the US sanctions list.
"UBS deeply regrets these failures," said Michael Herde, head of the bank's US operations.
The bank said at least eight staff have been fired for breaching rules, but denied that any of the dealings related to terrorism or money-laundering.
The bank decided to withdraw from Iran, Syria, North Korea and Sudan last November deeming the reward too small to justify the risk.
UBS's abuse of the dollar programme came to light when US troops in Iraq discovered $762m in US banknotes after knocking down a wall. Serial numbers tracked much of the cash to UBS.
A subsequent investigation found that UBS had also provided $3.9bn in US dollars to Fidel Castro's regime in Cuba, in breach of US sanctions.
The Rohrabacher committee is also considering plans to recall BNP Paribas for further questioning over its role in the UN's Oil for Food programme in Iraq, saying the French bank has yet to explain fully 400 payments to unauthorised third parties.
An inquiry concluded last year BNP had turned a blind eye to the use of front companies used to conceal interests linked to Saddam Hussein.
The bank insists that the money did in fact go to the humanitarian effort, but admits that a few of the total 54,000 payments were "not in full accordance" with rules.
"There is no indication that any of these payments were causally linked to any abuses," said the bank.