Treasure Islands - Nicholas Shaxson [109]
Krall’s experiences, and her treatment, are echoed in the widely publicized case of Bradley Birkenfeld, the gregarious old Bostonian UBS director who recently helped the U.S. Internal Revenue Service dismantle a $20 billion UBS program to help wealthy U.S. residents evade taxes and forced Switzerland to accept a new, somewhat more transparent tax treaty with the United States. Birkenfeld described in court how UBS bankers would frequent events like the UBS Trophy yacht race off Rhode Island, the Art Basel contemporary art fair, classic car shows and concerts, and—his personal favorite—a ten-thousand-dollar-a-head evening with Elton John at the Waldorf Astoria in 2005, illegally soliciting client business. “I’d say, ‘Do you want to go to Wimbledon, have lunch and see the match?” Birkenfeld recalled.2 “‘Do you want to come to Oktoberfest and drink some beer and look at hot girls? Whatever you want to do.’ I would go to the Cannes Film Festival, the Venice Film Festival, the Bangkok Film Festival.” On one occasion, he smuggled diamonds into the United States in a toothpaste tube. His star client, Oleg Olenicoff, explained how impressive the Swiss bankers’ performance was while courting his tax-evading business. “It’s all very proper and precise,” Olenicoff recalled. “You feel you’re in the German Reichstag with all the generals there!”3
While visiting the Caymans in 2009, I was chatting with a former senior Caymanian politician at his house when a thickset, dark-skinned Caymanian, probably in his forties, wearing a blue polo shirt, khaki shorts, and sunglasses, walked in and introduced himself as “The Devil.”
I still do not know his name, though my sober and well-connected host vouched firmly for him. The mystery stranger said he had serious credentials in international law enforcement so—this was all I could think of—I tested him by showing a photo on my phone that I’d recently taken of Robert Morgenthau, the Manhattan district attorney, a legend in the business. Not a sophisticated test, for sure, but my stranger passed it without hesitation.
He said he had spent years probing some of the global sins that freewheel through the Cayman Islands and chatted about several cases, many of which I’d never heard of. One concerned Imad Mugniyah, whom I later discovered to be a senior Hezbollah official killed in Syria in 2008; another was about a Cayman company fingered in the transfer of missile technology to Iran (later I checked with the U.S. Office of Foreign Assets Control and discovered this was still a very live investigation). He touched on some Cayman operations of the international arms dealer Victor Bout that never reached the media. He spoke of Cayman hedge funds, mutual funds, and special purpose vehicles, and he described these sectors as being riddled with crime, though he declined to go into any real details. At this point, he supplied me with a health warning.
“If we discuss this with you, you will end up like Salman Rushdie. There are things here not to be discussed. I mean it,” he said. “This is a wicked, vicious place.”
He said he had become too interested in certain stones that would normally, and deliberately, have been left unturned—and this had made him an enemy of the establishment. This, he said, was why he called himself “The Devil”—for that was how they treated him now.
“You have to have a deep soul,” he continued. “They carry out economic isolation—they destroy your credibility and your integrity. They will strip you of your dignity. We operate here under a code of silence—omertà. They will tell you this is not so.”
“There is a cabal here…. These people in [the] firms get together—it is an informal thing—and