Leak reveals how Swiss wealth consultants shield global cast of suspects
Scilla Alecci, ICIJ
—
Secret files show sprawling industry of enablers exploiting gaps in anti-money laundering laws.
Photo: Valentin Flauraud/Bloomberg/ICIJ
For six decades, one of Switzerland’s largest fiduciary firms has pledged to protect its clients’ fortunes from tax collectors, family members and others who may try to claim a share.
“Think big!” the Fidinam Group says on its website. “We take care of everything else.”
One client who thought big – too big, according to Italian prosecutors – was Massimo Bochicchio, a financier who promised his investors hefty returns. All they had to do, Bochicchio said, was wire funds to the account of Kidman Asset Management, which he claimed was affiliated with British banking giant HSBC.
But Kidman was a shell company in the British Virgin Islands, a tax and secrecy haven, and was not part of the British bank’s global network. Investors, including Antonio Conte, former manager of the Chelsea Football Club, never saw their money again.
A leak of financial records provides new details of Fidinam’s connection to the scandal. Over a decade, the firm, which promises “personalized and discreet” care, provided key business services to Kidman, even holding power of attorney over a Kidman bank account, through an offshore company the Swiss firm secretly controls.
Bochicchio used that bank account in a $600 million embezzlement scheme, court filings say.
Fidinam’s ties to Bochicchio are revealed in the Pandora Papers, a leak of more than 11.9 million files from offshore service providers. The records cast a rare light on Switzerland’s murky advisory industry, showing ways that businesses like Fidinam have exploited gaps in the country’s regulatory system to help the rich and powerful hide money from tax authorities and courts.
Screenshot of Fidinam’s website.
The International Consortium of Investigative Journalists received the documents and shared them with 150 media partners. The resulting globe-spanning investigation exposes the vast scope of the shadow economy that benefits the wealthy and well-connected, including hundreds of politicians, at the expense of ordinary people.
Propping up this economy is a sprawling industry of enablers, from global law firms to trust companies to offshore specialists, many operating within the United States and other Western countries, like Switzerland.
The leaked documents include information on more than 90 Swiss advisers – legal, notary and consulting firms – whose role in the offshore system is often obscured by more visible actors, like banks, and by a cloak of secrecy that enables them to operate with little accountability.
In Switzerland, banks are required to conduct due diligence on clients to identify money laundering risks, and to report suspicious financial activities to authorities. But advisers have no such requirements, unless they manage their clients’ money. In 2020, advisers submitted a tiny fraction – barely 2% – of the more than 5,300 suspicious activity reports filed in the country. Those reports are often the first step to identifying financial crimes.
A recent attempt by some Swiss lawmakers to impose stricter rules on advisers failed. Opponents successfully argued that existing laws were sufficient to combat money laundering.
The Pandora Papers undercut that claim.
From 2005 to 2016, at least 26 Swiss firms that appear in the documents provided services to clients whose offshore companies were later investigated by authorities looking for evidence of money laundering and other financial crimes. In most of the cases, the firms played the role of introducer, connecting clients to offshore service providers.
Fidinam, at times, was more than an introducer. The entities the firm controlled in Panama and the British Virgin Islands held shares in client companies, facilitated loans between shell companies of different clients and oversaw clients’ bank accounts, the records show.
Fidinam did so even after other financial firms raised red flags about its clients.
Bochicchio had opened an account for Kidman with HSBC, where he once worked as an investment director. HSBC closed that account in 2017, after finding “irregularities,” according to court filings. Soon after that, two Fidinam employees, working through the firm’s British Virgin Islands subsidiary, helped Bochicchio open a Credit Suisse bank account.
Authorities say both accounts were used in the alleged fraud.
An HSBC spokesperson said that neither the bank nor its managers “had any ownership interest in Mr. Bochicchio’s investment schemes and never endorsed or promoted them.”
Credit Suisse later closed the account there because of “anomalies,” Bochicchio’s former business partner told prosecutors. The bank declined to comment.
In May 2020, Italian prosecutors wiretapped Bochicchio’s phone and listened to his conversations with his wife, clients and business partners. On one occasion, he complained to a friend that some clients in Milan had called Fidinam as part of their “messy” attempts to get their money back, according to investigative records obtained by L’Espresso, ICIJ’s media partner in Italy.
The criminal case against Bochicchio is pending. A London court has seized his luxury homes and other assets. This year, he told the court that he intends to return his clients’ money.
Bochicchio and his lawyers did not respond to ICIJ’s repeated requests for comment.
Fidinam declined to comment on its clients, citing “privacy, confidentiality and business secrecy duty.”
In a statement to ICIJ, the firm, which has branches in Lugano, Zurich and Geneva, said its “Swiss subsidiaries comply and have been complying diligently with the legal and regulatory provisions in force in Switzerland and with the applicable international regulations.”
Fidinam did not respond to questions about its offshore subsidiaries and their role in managing bank accounts for client companies, including Kidman. The firm did not say whether it reported Bochicchio’s company to the authorities.
Stefan Lenz, a former senior investigator with the Swiss attorney general’s office, told ICIJ’s media partner Tamedia that Swiss advisers often play a key role in enabling financial crimes.
Past investigations have shown that “Swiss trust companies and lawyers set up the crucial offshore structures for money laundering, with virtually no way to prosecute them,” Lenz said. “The existing oversight of these actors is far too full of holes.”
ICIJ
The introducer
Fidinam is one of Switzerland’s oldest fiduciary firms, providing tax, real estate and business consulting services on three continents.
The firm’s founder, Tito Tettamanti, is a former semi-professional Swiss soccer player, turned lawyer, conservative politician and financier.
Tettamanti started the firm in 1960, shortly after he resigned from his post as a regional justice minister following allegations that he had reduced a real estate developer’s fine for tax evasion.
At 90, Tettamanti, whose net worth is estimated at more than $900 million, remains Fidinam’s honorary chairman. During a career that spans more than half a century, he has built close relationships with heads of state and other politically powerful people.
Fidinam clients included Prince Khalifa bin Salman Al Khalifa, the long-serving, autocratic prime minister of Bahrain, who died last year.
The leaked records show that the firm kept some clients on its roster while they were under criminal investigation.
One of Fidinam’s longtime clients, Delfo Zorzi, was under investigation for decades for his alleged involvement in two deadly terror attacks: a 1969 Milan bank bombing that killed 16 people and a 1974 bombing, also in Italy, that left eight people dead. He fled to Japan shortly after the second attack and became a successful fashion entrepreneur.
In 1997, prosecutors investigating the bank bombing wiretapped Zorzi’s Japanese phone and identified hundreds of calls he made to phones registered in Switzerland and used by key business partners in Italy, including his “factotum,” according to police records obtained by L’Espresso. In their secret conversations, his partners referred to Zorzi with the code name “GM,” for general manager.
Some of the phones Zorzi called were registered to one company with a Swiss address, Vega Ltd., those records showed.
The Pandora Papers reveal that Vega was among six entities that Fidinam helped Zorzi and his business partners administer for his fashion enterprises. He also used one of those companies to buy property in Japan.
Zorzi was ultimately acquitted of all charges pertaining to the two bombings, but he continued to draw the attention of law enforcement.
In 2012, Italian authorities determined that Zorzi used some of his companies to evade $80 million in taxes that his fashion businesses owed. Zorzi settled the case, avoiding prosecution, court records show.
Zorzi, who now goes by the name Hagen Roi, did not respond to ICIJ and partners’ requests for comment.
Fidinam did not comment on Zorzi.
Jamie Aleman from Alemán, Cordero, Galindo & Lee, also known as Alcogal. Photo: ICIJ
The Panama connection
When seeking secretive tax havens for clients, documents show, Fidinam had what one provider called “preferred jurisdictions,” among them, Panama.
One Fidinam partner, the records show, was Alemán, Cordero, Galindo & Lee, also known as Alcogal, a Panamanian law firm and prominent offshore service provider. In his 2014 book “Honesty is Priceless,” Jaime Alemán described how the firm helped establish the tax-avoidance and secrecy industry.
“The client simply went to Switzerland … opened a numbered bank account for which the beneficiary was a Panamanian corporation, which in turn operated totally secretly, and had no obligation to pay taxes in either Switzerland or Panama,” Alemán wrote.
“The authorities in the client’s country had no idea these funds existed,” he wrote, “therefore they could not collect taxes on it.”
Since the early 2000s, Fidinam has worked with Alcogal to create more than 7,000 shell companies for its international clientele.
Fidinam repeatedly assured its Panamanian partner that it would take “all reasonable care to ensure that Money Laundering activities do not take place,” records show.
Authorities have investigated at least 30 of their shared clients for alleged financial crimes.
In 2017, Panamanian regulators found that Fidinam and Alcogal had helped Paulo Roberto Costa, a former executive at the Brazilian oil company Petrobras, set up two shell companies that he used to take in more than $5 million in bribes. Costa became a target of Operation Car Wash, a massive bribery investigation that ensnared Brazilian contractor Odebrecht and high-level government officials in a dozen Central and South American countries.
As part of a deal with prosecutors, he pleaded guilty and served a year under house arrest.
Thirteen Fidinam clients with offshore companies were involved in Operation Car Wash, leaked records show.
Fidinam and Alcogal also continued working with two brothers – Meyer and Nessim El Maleh – after they were convicted in Switzerland in 2013 of laundering an estimated $800 million.
Mossack Fonseca, the law firm at the center of ICIJ’s Panama Papers investigation, dropped the siblings as clients after their convictions.
But Fidinam continued to keep records and handle correspondence for their companies, including one that was the target of the Swiss money laundering investigation. A French court in 2018 convicted the El Maleh brothers in a related case.
The El Malehs did not respond to ICIJ’s requests for comment.
Fidinam did not comment on the clients. In an emailed response to ICIJ, the firm said that it cooperates with authorities in the event of investigations.
In a statement, Alcogal said that it “duly complies with all laws in the jurisdictions in which it operates, and it has always been our policy to fully cooperate with competent authorities upon their request.”
“Switzerland is a pirates’ harbor. You find everything you need to hide money.”
‘Nothing but hot air’
Most Swiss advisers have a lower public profile than Fidinam. The Pandora Papers show that even solo practitioners have become key facilitators for some of the world’s most powerful people.
Susanne Reinhardt, who provides business support services from a village south of Zurich, helped the children and allies of Azerbaijani President Ilham Aliyev administer more than 30 shell companies. Some of those companies have secretly owned luxury property in the United Kingdom – holdings previously unknown.
Aliyev, who has hidden part of his multimillion-dollar fortune offshore, is an autocrat whose government is accused of torturing dissenters.
Reinhardt said she “didn’t care at all” about who these clients were and, still today, has “no idea” what their companies are used for. But “it was good money,” she said in an interview with ICIJ partners.
The leaked documents offer a rare peek into how some Swiss providers reacted to earlier scrutiny of the offshore industry.
Jürg Wissmann is an attorney and a politician with the Christian Democratic People’s Party. In 2016, after ICIJ published the Panama Papers, Wissmann sent emails to Alcogal and another offshore service provider demanding that they shield his clients’ identities and maintain paper records, not digital files. According to an internal Alcogal memo, Wissman would use WhatsApp for some confidential communications.
When asked to provide client tax information, records show, Wissmann refused and sent an angry email to Alcogal lawyers:
“You write about ‘advisors’ and about a ‘tremendous responsibility’ what I – being a professional lawyer working on international levels – consider as being nothing but hot air,” he wrote.
Wissmann told ICIJ partner, Tamedia, that client information should remain confidential. “I was probably right to take precautionary measures,” he said.
Wissmann’s clients, the documents show, included at least one company involved in the construction of a property known as Vladimir Putin’s palace. Putin’s critics allege that the $1.3 billion property by the Black Sea was built with bribes – an accusation the Russian president has denied.
Wissmann said he had “no clue” that the construction project was linked to Putin.
‘A pirates’ harbor’
Switzerland has been a hub of financial secrecy since at least the 1930s.
“Switzerland is a pirates’ harbor,” said Mark Pieth, a criminal law professor at the University of Basel in Switzerland. “You find everything you need to hide money.”
The global financial crisis of 2008 put Swiss secrecy in the spotlight. U.S. authorities found that UBS, Switzerland’s largest bank, had helped about 52,000 Americans hide billions of untaxed assets in Swiss accounts. Under pressure from the U.S. and other countries, Switzerland began reforming its banking sector, requiring banks to verify the identity of company owners and flag suspicious transactions.
In 2016, ICIJ’s Panama Papers exposed the role that Swiss advisers played in the creation of offshore companies. In response, the Financial Action Task Force, an international anti-corruption watchdog, recommended requiring lawyers, notaries and accountants to follow the same rules as banks. The proposal was part of a broader effort to improve Switzerland’s anti-money-laundering regulations.
A bill to tighten those rules sparked immediate controversy. In September 2018, a group of Swiss lawyers, consultants and lobbyists argued, in letters to the finance minister, that the proposed requirements were unnecessary and would undermine attorney-client privilege.
The proposal would “harm the whole wealth planning industry and is useless,” wrote a spokesman for the Society of Trust and Estate Practitioners, a professional association that has about 1,500 Swiss members, including Fidinam executives.
Supporters of the legislation insisted that reform would boost Switzerland’s reputation. “The only ones who benefit from our legal loopholes are mafia clans, dictators and other criminals who want to continue to use the Swiss business location for their criminal activities,” said Florence Brenzikofer, a member of the Swiss Parliament, at a hearing last year.
Lawmakers spent more than two years debating the legislation.
In March, the Swiss Parliament agreed to tighten parts of its anti-money-laundering law but rejected additional due diligence requirements for advisers.
The failure to include advisers was a “missed opportunity” to crack down on money laundering, said Jason Sharman, a University of Cambridge professor who studies tax havens and financial crimes.
“Enablers are rarely held accountable,” he said.
Sylvain Besson, Paolo Biondani, Christian Brönnimann, Allan de Abreu, Anna Klühspies, Vittorio Malagutti, Delphine Reuter, Oliver Zihlmann contributed reporting for this article.
