The Enemy Inside

THIRTY-NINE

You asked about the source of this cash.” It is getting late, nearly midnight and Korff is still telling us about the dealings of his old employer, Gruber Bank.

“When you are talking about the PEPs, politically powerful people who are carrying cash to the bank, there are generally two sources that you look for. Either the person has looted his country’s treasury, which happens more often than you would like to think. But usually that is limited to the third world. Or the PEP is being bribed by some foreign entity, a corporation, perhaps a wealthy individual, or some other country.

“It is the reason why the PEPs are so much trouble. They show up with cash. You don’t know the source. Even if they claim it is legitimate, how do you know? There is no way to prove it.”

“But you said Gruber allowed these PEPs to make large deposits in cash?” says Harry.

“Yes. That’s why I complained. As the bank’s anti-money-laundering compliance officer I knew what would happen. The minute they deposited the funds they would start to launder it.”

“How do they do this?” I ask.

“There are a number of ways,” says Korff, “but the most common is to purchase a legitimate business that deals in large amounts of cash, high volumes. A casino, for example. They are notorious as currency laundries. Or what happened in one case involving one of your American PEPs, he bought a chain of coffeehouses.

“The way it works, they use clean money, funds for which taxes have already been paid, to buy the business. They start small. Then if the business makes, say, two hundred thousand dollars the first year, they report income of two million. They take dirty money from the secret bank account to make up the difference.”

“But they’d have to pay income tax on the full two million?” says Harry. “Doesn’t make any sense.”

“On the contrary,” says the banker. “That’s the point. The money in the bank was free money. They didn’t have to do anything to earn it, other than the corrupt act. But they can’t spend it until it is laundered. They report it as legitimate income and pay the tax. What is left is clean. The entire purpose is to legitimize it by paying the tax.

“Then the next year they take the laundered money and expand their business. Now they have five coffeehouses. That year they earn a million dollars in actual income and report five million. You can see how it would grow very quickly. At some point you stop expanding the business and instead use the laundered profits to invest in other things. When you are done, you end up with a business worth a fortune and a pile of clean cash invested elsewhere.”

“Like I said before, we’re in the wrong business,” says Harry.

“Did you know any of these PEPs? Were they people you recognized?” I ask.

“Oh, yes, of course,” he says. “There were a number of prominent politicians. Some from Europe. Some from the United States. Many of them I didn’t know. Some from South America. They would come in speaking Spanish, sometimes Portuguese. And the Russians, of course, they were always there.”

“You mean to say Russian politicians are corrupt?” says Harry.

“Does a Frenchman speak French?” says Korff.

They both laugh.

“The Americans,” I say. “I’d be curious to know who some of them. .”

“I really shouldn’t tell you that.” Korff is weaving in his chair, halfway through the latest pitcher of lager. “It could get me in serious trouble.”

“Just between us,” says Harry. He upends the pitcher of beer over Korff’s stein one more time. “Would you like another?”

“I would not say no.” The banker laughed.

“Come on, a few names,” says Harry. “Between friends.”

“OK. A lady, a woman. One of your senators. Her last name is”-he whispers-“Grimes.”

“Maya Grimes?” I look at him.

“You said it, not me. She made trips over several months. Enough cash to fill a cargo container,” he says. “This was maybe four years ago. And there were others.”

Before I can ask who, Korff gives up eight more names, every one of them recognizable, fixtures with long tenures in the House and the Senate. And he tells us that one retired member of the Senate now sits on the board of directors of Gruber Bank. The names include members of both political parties. If what we are being told is accurate, corruption may be the only thing that is still bipartisan in Washington.

He says there are more, but he can’t remember all the names. I recall the comment by Graves concerning Abscam and the FBI sting, that if the feds hadn’t pulled the plug and brought the undercover investigation to an end they might have had trouble finding a quorum to do business in either house on Capitol Hill.

“How much money are we talking about here?” says Harry. “In broad numbers, I mean. Do you have any idea?”

Korff starts to nod. “That was what worried me, part of the reason I complained so much. Before all of this, Gruber was a small regional bank with local deposit holders, mostly individuals and small businesses. It had assets of a little more than half a billion francs. All of a sudden, in less than two years, we had accounts in excess of one hundred billion.”

Harry looks at me. I know what he is thinking. It’s time for me to start worrying about what he told me on the plane on the way over.

“Not all of these deposits were from Americans, you understand. Some came from Europe, Latin America. As I said, we had deposits from almost everywhere. Money from the larger Swiss banks was being moved to smaller banks where it wouldn’t be noticed. Banks without branches overseas where your IRS and Treasury would have less leverage. We even had diplomats from the United Nations with PEP accounts at the bank.” Korff looks at both of us. He starts to laugh. “These people were on the news at night complaining about corruption in the third world, telling poor countries they had to clean up their act if they wanted help from the IMF, the International Monetary Fund. And during the day they were making PEP deposits in cash, large amounts into their numbered accounts at Gruber.”

“Makes you wonder about human nature,” says Harry.

Not if I know my partner. Harry’s been convinced since shortly after escaping the womb that the angels of our better nature took flight the instant Adam had his ass tossed from Eden.

“You wouldn’t by any chance have any documents concerning any of this?” he asks.

“No, of course not. But the bank has them. They would have all of the names and the account numbers.”

“You said there were exceptions to the bank secrecy laws in cases where there was evidence of criminal wrongdoing, money laundering. If that’s the case,” I say, “what’s to prevent a foreign government or some private party from accessing the banks’ files on these accounts?”

“Ordinarily I would say you are right,” says Korff. “But not in this instance. You see, there was a kind of informal understanding between the Swiss government and the other countries involved. What you might call a ‘safe harbor.’ ”

“Go on.”

“If the money was moved, transferred from the large Swiss banks that had international branches, during the window of time that was agreed upon, the United States agreed not to pursue it. Other countries followed the American lead. They would make no inquiries and the Swiss government would not be asked to relax the rules of secrecy concerning any of the PEP accounts. Once they were transferred, they would be untouchable.”

“Why would they do such a thing?” I ask.

“Because no one wanted the information to be made public,” he says. “There were serious concerns that disclosure would threaten political stability in a number of countries, not the least of which was your own. There was also concern as to the effect on financial markets,” says Korff.

“He’s got a point,” says Harry. “How do you explain to the common folk who are grubbing for a living that half of their leaders are on the take?”

“Precisely,” says Korff. “It was a very big problem. But still there should have been other ways to deal with it. I became a thorn because I kept pointing that out. Because, you see, I had no choice. As the bank’s compliance officer, if I said nothing and suddenly the news came out as to what was happening, I would be the one who was responsible. Gruber’s president and his friends on the board would claim they knew nothing. So what else could I do? I papered their walls with my complaints. When it was over they fired me. So there you have it. How I became unemployed. Now, what is this job you are looking to fill?”

“Why didn’t you take the information to the media?” I ask.

“This is not the United States, my friend. If I said anything they would have had me in jail, charged under the bank secrecy statutes.”

“But the statutes didn’t apply because of the criminal acts,” I tell him.

“They do if the Swiss government says they do. And the banking industry in Switzerland is very powerful.”

“Let me see if I understand what you’re saying.” I lean over the table. “The bank has all the information on these PEP accounts, numbers as well as the identities of the clients holding those accounts?”

“That is correct.”

“But the bank can’t be forced to give up the information, even though there is clear evidence of money laundering and probable corruption, because they’re shielded by secrecy. Not because it’s covered by Swiss law, but because other governments have decided not to challenge the issue since their own politicians are involved?”

“There you have it. Now you understand,” he says. Korff takes another swig from the stein and swallows it.

“And a private party seeking this information, bringing suit from outside the country. .”

“Would have no chance at all,” he says. “Without support from their own government, Switzerland would simply refuse to cooperate. Secrecy is the first rule. The only reason it has been relaxed is because of outside pressure from other governments. Take that pressure away and we go back to the first rule.”

I shake my head. If he’s right, Harry and I have hit a stone wall. A long trip for nothing.

“Excuse me,” says Korff, “but I’m getting the sense that you’re not really here to offer me a job. Instead, you’re looking for information. Am I right?”

“Yeah,” says Harry. “But you have to admit that the beer in this place is pretty good.”

“I thought so.” The German’s happy expression collapses. “Yes. The beer was good. And I enjoyed the meal,” he says. “And it is good to get out of my son’s apartment, to give them some time alone. So for that I thank you. I have enjoyed the conversation. When you get to be my age, it is good to be listened to by people who, at least for the moment anyway, think you have something important to say.”

I am feeling like a heel.

“It is difficult to lose one’s job when you get old,” he says. “There are not a lot of opportunities.”

“I’m sorry that ours was a lie,” I tell him. “Sorry that we had to deceive you. If there had been an easier way we would have taken it.”

“I understand,” he says. “I’m not going to ask you why you’re doing what you’re doing. Looking at your faces, listening to your questions, I assume that your motives are proper and correct. For whatever reason you are doing this, I hope you get them.”

By “them” I am assuming he means the PEPs. That’s not our mission, but if they should happen to tumble along the way, neither Harry nor I would shed any tears.

“So do we,” says Harry.

“All of this, the money, the PEPs, the corruption, it troubled me greatly.” He uncouples his hand from the beer stein, looks down at the table for a moment. When he lifts his head there is a tear running down one cheek.

“It is difficult, very difficult to do the right thing, and to end up as I do. I had worked for Gruber for twenty-two years. I knew the original owners. Nice men. To watch and see other people do what these people have done. To see them prosper. And to watch as society cloaks them with protection. . ”

I reach across the table, grab one of his fat hands before he can say anything more. “I’m not going to lie to you again and tell you that I feel your pain,” I say. “But I do understand. We both understand,” I tell him. “You need not have any doubts. You did the right thing. I think you know that and so do we. And if your family is any judge of character, and my guess is that they are, they know it as well. Whatever these other people did, they have to live with it. Take it to the grave with them.”

“I may not be much of an audience,” says Harry. “But I’ve been around long enough to know that it wasn’t the beer talking tonight. Sometimes life sucks,” he says.

“Yes, it does. But not always.” Korff lifts his head and wipes the tear away with his sleeve. “Sometimes you get lucky, as you have tonight.”

“How’s that?” says Harry.

“Because you see, there is another set of records.”

“What do you mean?” I look at him.

“I had to be sure I could trust you,” he says. “I am not the good person you think I am. I want my pound of flesh. The American PEPs used a broker. He would have his own set of files, account numbers, names, all of it. I assume he was a broker, at least that’s what I was told.”

“How do you know this?”

“Because I saw him. Everything about the way these accounts were handled was unusual. Normally an account is opened and funds are deposited, everything done between the bank and the client. No one else involved.

“But this, the transfer of all these accounts, the use of cash so that there would be no paper trail. To say nothing of the amounts involved. That and the fact they had such a short period of time to complete everything. That is probably why they used the broker. In fact, there were two of them. The actual broker and his lawyer. They were in the bank every day for almost two months.”

“Did you know them?” says Harry.

“No. They were both Americans, US passport holders. I know that. I was told that the broker was an acquaintance of Gruber’s president, that they had done business over the years, that the broker once worked for an American branch of a large Swiss bank headquartered in Zurich. They kept most of the staff at Gruber away from them, including myself. Only those in direct support had any contact.”

“Can you remember any names, anything about them?” I ask.

“You know, after he left, I thought about it, and I realized I forgot to tell your friend Graves about the woman, the lawyer. I only saw her a couple of times and always at a distance. I never heard anyone call her by her Christian name. They referred to her only as Fraulein Zerna.”

“You spell that with a Z?” says Harry.

“No. First letter S.”

“You mean Serna.” Harry looks at me.

“My English is not always good,” says Korff.

“Can you describe her?” I ask.

“As I say, I didn’t see her up close. I would estimate she was maybe. . a hundred and seventy centimeters in height.”

“In feet and inches?” says Harry.

He thinks for a moment, a quick conversion, banker’s brain. “About five foot seven in inches. She had short dark hair. Medium build. She spoke both English and Spanish. I remember that. Oh, and she worked for a law firm in Washington, D.C. I’m sorry I don’t know the name.”

“Well, we won’t be talking to her,” says Harry.

“Why not?”

“She’s dead,” I tell him.

“Oh.” Korff flashes a look at Harry, then back to me, weighs what is left unstated and says, “How did she die?”

“Officially?”

He looks at me and nods.

“An accident.”

“But you don’t think it was?”

“We know it wasn’t,” I tell him.

This doesn’t seem to surprise him. “I wondered,” he says, “how long it would take before this kind of thing began to occur. With that much money and these kinds of clients, it was certain to happen.”

“Why is that?” I ask.

“It’s the nature of the animal,” he says. “The thing about PEPs. They commit bad acts, they take money, and because of it they are highly vulnerable to extortion. It’s how they got the name ‘Politically Exposed Persons.’ Depending on the power they possess, there is a high correlation to violence. From what you’re saying, I take it then you knew these people, the broker and his lawyer? I expect that he is probably dead as well.”

“Do you have a name?”

“Yes,” he says. “Rubin Betz.”

I think about it for a moment and suddenly it all makes sense. The whistleblower. It was little wonder they had him locked up. It was probably the only reason he was still alive, that and the radioactive pile of information he had salted away.