Federal prosecutors say that for years the bank, UBS, helped super-wealthy Americans cheat the IRS by hiding billions of dollars outside the government's reach. The bank boasted about its influence on Capitol Hill to prospective clients, according to prosecutors' filings.
Despite the scandal, lawmakers -- including powerful committee chairmen -- and party committees have taken over $1 million from a political fund set up by the bank, over the past two years.
UBS said recently an internal review found evidence of "a limited number of cases" of tax fraud. It says it has ended the practices which have gotten it into trouble. Bank spokesman Mark Arenas said the bank "categorically rejects any suggestion that UBS PAC contributions are designed to influence the outcome of any official investigations."
The fund, UBS Americas Fund for Better Government, gave generously to senior lawmakers and committees which oversee the finance industry. Senate Banking Committee Chairman Christopher Dodd, D-Conn. took $10,000 from the fund in February, according to Federal Election Committee records. Dodd did not respond to requests for comment.
Dodd's counterpart in the House, Financial Services Committee chairman Barney Frank, D-Mass, also accepted $10,000 from the fund. A spokesman for Frank said Monday that in light of the indictment of a UBS executive last month, he would return the money.
The fund last year gave $5,000 to Rep. Spencer Bachus, R-Ala., the ranking Republican on Frank's committee. His office did not respond to requests for comment.
Sen. Norm Coleman, R-Minn. was the lead Republican on a Senate investigative panel that probed the bank's alleged misdeeds earlier this year. Coleman took $10,000 from the UBS fund, including $4,000 after his committee announced its probe in February. The panel's announcement did not identify UBS as a subject of its inquiry. Coleman did not respond to calls seeking comment.
"That doesn't look good to the average voter, I would think. It doesn't look that good to me," said Bob McIntyre, president of Washington, D.C.-based Citizens for Tax Justice, when asked how lawmakers could take money from the UBS fund. "You got a company that's basically admitted to being a crook, and you're a politican taking money from crooks," McIntyre said.
The fund is run out of the American branch of the bank, UBS Americas, and distributes money contributed to it by employees for UBS' U.S. arm. Swiss employees of the bank would be ineligible to contribute to the bank's U.S. PAC, under federal law.
UBS earlier this year reportedly barred as many as 50 of its Swiss executives from traveling to the United States, fearing their arrest; the bank said it had only "reissued guidelines" on travel to those employees, which it had issued years earlier.