Iranian Regime Emerges as Central Player In Probe of Money Laundering by UBS

La Nueva Cuba:

By Meghan Clyne

The New York Sun

WASHINGTON - The Islamic Republic of Iran has emerged as a central player in ongoing investigations into possible money laundering by the world's largest "wealth management" firm, UBS, as congressional staff disclosed yesterday that $762 million in American currency controlled by Saddam Hussein may have made its way from the Swiss bank to Iraq via the Central Bank of Iran.

The congressional investigation will also focus on whether UBS and Swiss officials abetted an anti-American axis between Iran and Cuba. In 2003, after American troops liberating Iraq found $762 million in American cash in Saddam's palaces, the serial numbers on the banknotes were traced to UBS, which distributed the currency as part of the Extended Custodial Inventory Program run by the Federal Reserve Bank of New York.

The Federal Reserve program, in cooperation with international banks, allowed clients to exchange old American banknotes for new ones. One condition of the program was that the international banks were not allowed to accept cash from countries against which America maintains sanctions. They also were not allowed to transfer cash to such countries. When American investigators probed the $762 million that emerged in Iraq, they found that UBS had also conducted transactions with Cuba, Iran, Libya, and Yugoslavia.

The prohibited business relationships with countries that appeared on the State Department's official list of state sponsors of terrorism led to UBS's being disciplined by the Swiss Federal Banking Commission and by the Federal Reserve, which imposed a $100 million fine.

The matter is far from settled in Washington, however, as Congress investigates the possibility that UBS laundered $5 billion for state sponsors of terrorism, business dealings about which relatively little is known, owing to the confidentiality afforded by Swiss banking laws. Over the weekend, Rep. Ileana Ros-Lehtinen, a Republican of Florida, announced that she and Rep. Dana Rohrabacher, a Republican of California, will press for more answers from UBS, which, the congresswoman has said, is "not forthcoming" with details about how the illegal transactions took place. Over the course of months of unfruitful discussions, more questions about the business dealings have surfaced than have been answered, the congresswoman said. "This is like the hydra," Ms. Ros-Lehtinen said in an e-mail. "You answer one question, and 5 or 10 more develop."

One question being explored is the Iranian involvement in the hundreds of millions of dollars in American cash unearthed in Iraq. A congressional staffer familiar with the matter said that the Swiss bank and the Federal Reserve reported that, based on the time frame of the transactions and the serial numbers on the banknotes found in Iraq, the American currency controlled by Saddam Hussein was part of a shipment of banknotes delivered to the Central Bank of Iran, for which UBS exchanged $1 billion in American banknotes under the Federal Reserve program. How hundreds of millions of dollars in American currency sent by the Swiss bank to the Central Bank of Iran made its way into Saddam Hussein's Iraq, the staffer said, was not explained by representatives of UBS, and is one line of inquiry that will be explored during the House committee's investigations in December.

Iran's connection to Cuba, too, will be probed, the staffer said.

As part of the Federal Reserve program, UBS also provided $3.9 billion in American currency for the Castro regime. Some of the money came from the exchange of old banknotes under the Federal Reserve program, some from the purchase of new banknotes by the Castro dictatorship, and some as dollar credits put in the Havana strongman's accounts, according to background materials prepared in 2004 by Senate staff investigating the UBS dealings. The Swiss bank also issued letters of credit for the Castro regime as it purchased petroleum, the congressional staffer said.

Because of the Swiss bank's assistance with the Cuban petroleum purchases; because UBS is accused of laundering $3.9 billion for Cuba between 1996 and 2003 as it was possibly laundering $1 billion for Iran; because Tehran and Havana have a documented alliance, and because the two regimes have an increasingly close cooperation when it comes to energy and technology, the congressional investigation will also focus on whether UBS and Swiss officials abetted the Tehran-Havana anti-American axis. According to press accounts, for example, in the 1990s, during the time UBS was purportedly laundering Cuban and Iranian money, Cuba and Iran undertook a joint venture for a large-scale biological research facility outside Tehran. When the complex was opened in the summer of 2001, Mr. Castro and the Iranian ayatollah, Ali Khameini, proclaimed: "Together we will bring America to its knees." In addition to the biotech facility and other joint Cuban-Iranian energy and technology ventures that may have been financed by funds laundered by UBS, Ms. Ros-Lehtinen is probing possible connections between the Iran-Cuba axis and Swiss officials. In 2004, the congresswoman discovered that the Swiss ambassador to Cuba during the period of the improper UBS transactions is under investigation by Swiss authorities for money laundering, according to Ms. Ros-Lehtinen's staff. The congresswoman also discovered that the former Swiss ambassador to Cuba was introduced to Cuban Central Bank officials by the former Iranian ambassador to Cuba.

A former American ambassador to Venezuela, Otto Reich, said yesterday that cooperation between Iran and Cuba over energy in the 1990s, during the period of the alleged UBS money laundering, would have coincided with Castro's desperate need for oil after the collapse of the Soviet regime in 1991 and before the provision of massive quantities of petroleum by Mr. Castro's new "sugar daddy," Venezuelan dictator Hugo Chavez. Now, Mr. Reich, who is Cuban-American, said, Venezuelan exiles attest that "Mr. Chavez is trying to get into the Iranian nuclear industry," a relationship that is "very possibly" being brokered by Mr. Castro. Yesterday, a spokeswoman for UBS, Christine Walton, declined to comment on the possible connections between Iran, Iraq, and Cuba through the Swiss bank, citing the firm's desire not to address questions in the press that might come up in the International Relations Committee's hearings. Ms. Walton added that the bank had not yet received official notification of the impending congressional investigation.