American Millionaires Plead Fifth Before Congress on Tax Dodging Allegations
Peter Lowy and Steven Greenfield refuse to answer questions at hearing.
July 25, 2008— -- Two of America's wealthiest businessmen refused to answer questions today about secret bank accounts in Liechtenstein, invoking the fifth amendment in an appearance before the Senate Permanent Subcommittee on Investigations.
Though the allegations of tax dodging against the men -- Peter Lowy, a California resident who heads the U.S. division of the Westfield Group, one of the largest shopping mall chains, and Steven Greenfield, a New York-based toy importer -- have been compared to the stuff of spy novels, their testimony lasted just minutes.
But even if today's hearing was somewhat anti-climactic, the committee's investigation has already led to a turnaround from Swiss bank UBS AG which pledged during a hearing last week to stop selling secret accounts to American clients -- a move that even surprised the senators.
UBS' turnaround "provides a dramatic example of how congressional oversight can help stop offshore abuses," Sen. Carl Levin (D-Mich.), chair of the subcommittee, said today.
The hearing was part of a wide-ranging investigation by the subcommittee into how bank secrecy laws have allowed thousands of U.S. citizens to shield their wealth from tax collectors.
In addition to UBS, the investigation has focused on LGT, a private bank owned by the royal family of Liechtenstein. Though LGT officials met privately with congressional staff, they refused to speak publicly about the bank's practices, other than issuing a statement that the bank's practices have changed. "Count me skeptical that LGT has stopped selling secrecy to its clients," Levin said.
Both Lowy and Greenfield had tried to avoid the reach of the committee last week when it held its first hearing on the investigation, Levin said. Lowy apparently left the country just before the U.S. Marshalls could issue him a subpoena but agreed to testify today. Greenfield simply refused to comply with the congressional subpoena ordering his testimony last week, but changed his mind after senators threatened to hold him in contempt.
Today, Levin wasted no time detailing the lengths both Lowy and Greenfield had gone to in order to hide their wealth from investigators. Both men had used LGT to create foundations in Liechtenstein that were then used to open accounts with millions of dollars. And, Levin said, both Lowy and Greenfield then worked with LGT to develop a complex chain of front companies to hide their ownership in these accounts. "What they have in common is that LGT bank officials acted as willing partners to move a lot of money into their bank while obscuring the ownership and origin of the funds," Levin said.
During the hearing, Greenfield appeared first. He had no opening statement so Levin began with a question.
Did he have any contacts with LGT, Levin asked?
Instead of answering, Greenfield read a statement invoking the fifth.
Levin tried again: Did Greenfield have any corrections to any of the allegations raised against him. Again, Greenfield had the same response.
So, Levin asked, did he intend to keep mum at every question? Greenfield said he would.
The routine was precisely the same when Lowy appeared under oath. But this time Lowy's attorney, Robert Bennett, who has represented numerous high-profile individuals including former President Bill Clinton, tried to interject.
"I just want to make one correction," he said.
Levin interrupted. He didn't want to hear from a surrogate for Lowy. Bennett, who has said his client did nothing wrong, tried to protest. Instead, Levin shot back, "If there are any inaccuracies, they should be under oath by your client, not by his lawyer."
And with that the hearing was over.