Treasure Islands - Nicholas Shaxson [105]
The Human Side of Secrecy Jurisdictions
IN 2009 I MET UP WITH A FORMER PRIVATE BANKER, Beth Krall, in attempt to understand a question that had been nagging me: How do private bankers who shelter the wealth of gangsters and corrupt politicians justify what they do?
We met in the bustling café at Kramer Books, off Dupont Circle, in Washington, D.C., where she was living, one Sunday in 2009. She had left private banking and had joined the nongovernmental sector. Dressed in a striking black and white coat, she still looked very much the stylish international financier.
Aged 47, and with nearly 24 years in the banking business, Krall (which is not her real name) was still coming to terms with her past life. She hated what she had seen and was clearly unsettled by exposing the horrors she had experienced, but she adamantly refused to reveal any of the client details she had sworn to protect. She was wary of disrupting the many friendships she had made in the industry and was careful about what she would and would not say.
Krall’s last offshore posting was in the Bahamas, the island archipelago with over three hundred thousand residents that has been an important offshore center since the golden age of American organized crime in the early decades of the last century. A few months earlier, a practitioner in the Caymans had warned me to watch for my personal safety if I go “asking all these questions” in the Bahamas. Krall said she was unsure what might happen to her if she went back, as she was partly breaking the private bankers’ code of silence. “I don’t want to have concrete shoes put on me,” she said, without smiling. One reason for her fear was something that had angered her in the first place: that so many of the people she dealt with were powerful members of society in their countries. One case involved “very prominent people in world politics.”
Unusually, for a foreign banker in the Bahamas, Krall became closely involved in local Junkanoo cultural celebrations, a mixture of Latin American and Caribbean carnival traditions that a dedicated website calls “the greatest cultural event of not only The Bahamas, but also the world at large.” She seemed distressed, while we talked, at the thought that fellow members of her Junkanoo group—not to mention many other friends she had left behind in Nassau—might judge her criticism of the country’s offshore industry “anti-Bahamian.” When we spoke she was still working up the courage to tell them why she could not go back. She was still redefining her relationship with the offshore values within which she had made her career: that secrecy is good, whatever brings in the money is good, and if you break the code of silence you are sloppy or treacherous.
People want to do the right thing, and it is easy, offshore, to be seduced into the idea that what matters is doing the right thing by your peers—and the rest of the world can take care of itself. In the rush to make a career, one can only make progress by ignoring the structural implications of what one does. She is one of very few to recognize the full moral weight of what she was doing and to step away.
Krall was born in Leicester, England, and took her banking exams straight after school, starting in Britain’s Midland International bank in 1980 before moving to a partly state-owned Swedish bank and then, in 1987, to Chase Manhattan in Luxembourg to work in its “back office”—the administrative side, where Chase was a paying agent for certain Eurobond issues. She moved to a Brazilian bank, Banco Mercantil de São Paulo, then to Cititrust in the Bahamas, where she ran evaluations and accounting for their mutual funds business. From this point onward, Krall declines to identify her employers precisely.
She became a client relationship manager with the private banking arm of a well-known British bank in the Bahamas. They worked with what were euphemistically called “managed banks” or shell banks, an offshore specialty. These have no real presence where they are incorporated, so they can escape supervision by responsible regulators.