News

A series of public graft scandals from Uzbekistan to Argentina are alike in having landed dozens of domestic officials, business executives and other suspects in jail in countries already perceived as vulnerable to grand corruption.

They also share another feature common to many graft schemes: a Swiss private lender is at the center of each.

Lombard Odier, one of the largest private banks in Europe, is under criminal investigation in Switzerland for anti-money laundering failures involving accounts allegedly used by the daughter of Uzbekistan’s former president and her accomplices to launder roughly $700 million from a bogus telecom contract.

The Geneva-headquartered bank, which has been owned by the same family since first opening its doors in 1796, has also come under scrutiny in Argentina, Brazil, Panama, Spain, the United States, Uruguay and other countries for having knowingly or unknowingly enabled corrupt officials, crooked executives and wealthy clients to hide criminal proceeds and undeclared assets.

Brazilian investigators claim that the bank was used to launder bribes and kickbacks to politicians funneled through Petrobras, including $100 million in illicit proceeds collected over a 14-year period by Pedro Barusco, a former executive of the state-owned energy firm, according to court records and local media reports.

Paulo Roberto Costa, a Petrobras executive convicted of money laundering and racketeering in April 2015, received more than $1 million from at least two individuals between 2011 and 2014 in the Lombard Odier account of OST Invest & Finance, an offshore entity he secretly controlled, court records indicate.

The former chief of Petrobras’s international division deposited millions in several numbered accounts he opened under the names of shell companies at Lombard Odier and Brazil’s Banco J. Safra ahead of his conviction for money laundering and corruption last year.

The Alpine lender “acts a bit like the local HSBC, involved in all the scandals that are out there,” according to Douglas Hornung, an attorney with DH Avocats in Geneva.

“Bank Lombard Odier claims, which is probably correct, that it took the first step and reported [the activity] to the Money Laundering Reporting Office of Switzerland,” Hornung said. “But of course that came a bit too late, when it was obvious that they had these kinds of problems. That’s what banks do when things get too hot.”

The Petrobras scandal continues to expand, as does public knowledge of Lombard Odier’s alleged role in it.

In January, Panamanian prosecutors accused two children of former President Ricardo Martinelli of receiving more than $8 million in bribes from Brazilian construction firm Odebrecht into a corporate account at Lombard Odier, national broadcaster TVN reported that month.

The name Lombard Odier also appears in the 800-page indictment Argentinian prosecutors filed late last year against former President Cristina Fernandez de Kirchner, who is accused of conspiring to launder at least $1 billion in misappropriated funds.

The bank was the ultimate destination for suitcases full of cash deposited into a domestic account by her longtime associate, jailed entrepreneur Lazaro Baez, who funneled the funds through accounts for legal entities in Belize and Panama, according to the indictment.

Most of the $60 million in public funds allegedly laundered through 10 accounts at Lombard Odier, J. Safra Sarasin, Citibank in Geneva and PKB in Lugano by Baez and his children were repatriated to Argentina through bonds and real estate purchases, according to an Argentine prosecutor cited last year by the Buenos Aires Herald.

Lombard Odier is also among the 80 or so Swiss banks that from 2015 to 2016 paid a combined $1.4 billion in fines to the U.S. Justice Department, identified customers and culpable employees, and handed over transactional records under agreements to avoid criminal charges for helping American clients evade taxes.

Spanish prosecutors have also accused the bank of holding and laundering corrupt funds, including from Luis Barcenas, former treasurer of the conservative People’s Party.

Barcenas paid 33 visits to Lombard Odier between 2003 and 2008 and deposited a total of more than $4 million in cash, tens of thousands of dollars at a time, according to a June 2013 government report cited by El Pais.

Some of the funds were wired to banks in Madrid, the United States and Uruguay, and at least $10 million was repatriated back to Spain during a tax amnesty implemented by the People’s Party government.

“For a bank to have a couple bad accounts that slipped through the cracks would be explainable, but it gets more difficult to cast their compliance program in a positive light when they have repeatedly found themselves in the middle of almost any massive scandal involving a Swiss bank in recent memory,” said Jeffrey Neiman, a former federal prosecutor who investigated foreign banks for aiding American tax evaders.

Private lenders in Switzerland often employ a deep roster of bankers who maintain relationships with external asset managers, attorneys and other advisors and use those relationships to identify prospective clients, Neiman, now a white collar defense attorney in Fort Lauderdale, Florida said.

Lombard Odier is not the only Swiss bank that appears to have been used to move corrupt proceeds in years past. PKB and J. Safra Sarasin in Lugano are among several recurring names in global graft investigations.

The scandals that have surfaced thus far are the “symptom” of fierce competition among Swiss private banks seeking to attract prosperous clients, according to Hornung, the Swiss attorney.

However, the more “lenient” approach to due diligence in the recent past has given way to more restraint following pressure from the United States, and Switzerland’s adoption of tougher anti-money laundering regulations in November 2015, he said.

A Lombard Odier spokesperson declined to comment.