Whistle blowing might well become more popular in the future because Bradley Birkenfeld, a former banker with Zurich based UBS AG, the largest Swiss bank, was recently awarded $104 million dollars for telling the US Internal Revenue Service [IRS] how the bank helped thousands of wealthy Americans evade taxes.
The award is the first issued under the IRS tax whistle-blower law and his lawyers say that it is the largest ever award to any American whistle blower and has sent a strong message to whistle blowers around the world that there is now a safe and secure way to report tax fraud.
Birkenfeld, who worked for UBS in the US, for five years up to 2007, told authorities how UBS bankers came to the US to woo rich Americans, managed $20 billion of their assets and helped them cheat the IRS.
He pleaded guilty to conspiracy in 2008, a year after reporting the bank’s conduct to the Justice Department, the US Senate, the IRS and the Securities and Exchange Commission [SEC]. He began serving his 40-month prison service in January 2010 and was released from prison in August 2012, having received remission for good behaviour.
UBS itself avoided prosecution in the US, by agreeing to pay a fine of $780 million, disclosing data on more than 250 Swiss bank accounts and admitting it helped foster tax evasion. It later agreed to hand over data on another 4,450 accounts.
Since Birkenfeld came forward, it is estimated that at least 33,000 Americans have voluntarily disclosed offshore accounts to the IRS, generating more than €5 billion in taxes.
Birkenfeld sought the award, which can be as much as 30% of any taxes the agency recovered as a result of his whistle-blowing activities. The IRS has been criticised for the slow pace of its whistle blowing programme by taking more than four years to reward a tipster, through an initiative that was launched in 2006.