Fall guy or wise guy? Swiss private banker Juerg Heer

Written by Michael Yockel on . Posted in Breaking News, Posts.


When the cops
finally nabbed Juerg Heer on Oct. 4, 1997, he was warming his bones in
the southern Thai resort town of Hat Yai. Located on the Gulf of Siam not far
from the Malaysian border, Hat Yai was millions of miles, at least figuratively,
from Heer’s home in Zurich, the starting point of an on-the-lam odyssey
that lasted nearly five years. During that time, the 61-year-old former senior
Swiss banking officer chugged through Italy, Turkey and Azerbaijan before settling
in Thailand.


Back in
the summer and fall of 1992, Heer stood at ground zero of a cataclysmic scandal
that roiled the privately held Rothschild Bank AG Zurich, a branch of the vast,
respected and centuries-old European financial house built by the aristocratic
Rothschild family. After serving for more than 20 years with the bank (opened
in 1968), the last nine as its credit manager, Heer was dismissed in June 1992.
Rothschild officials accused him of taking what they termed up-front “kickbacks”
in exchange for making unsecured and unapproved loans to German-born Canadian
real estate magnate Karsten von Wersebe–agreements that ultimately resulted
in a $155 million loss to the bank when von Wersebe’s house-of-cards property
empire toppled in 1991.


Detained
by the Swiss district attorney’s office in late July 1992, Heer was held in
custody–but never criminally charged–while the government investigated
the bank’s allegations. Rothschild Bank AG Zurich contended that Heer fraudulently
pocketed more than $20 million from his dealings with von Wersebe, working outside
the knowledge of its board and auditors, then misrepresenting his actions when
confronted with the $155 million ledger debit. (Additionally, he supposedly
broke Swiss Banking Commission regulations by lending more than 20 percent of
the bank’s capital to one client, von Wersebe.) While Heer acknowledged receiving
the $20 million, he explained that the money derived from “commissions” on transactions
wholly endorsed by his superiors.


Either
way, he knew how to spend it, purchasing 80 vintage automobiles, an enviable
collection of modern art, a small flotilla of boats and cellars brimming with
fine wines in his luxuriously furnished homes in Switzerland and Spain.


Herr Heer
saw himself as a scapegoat, a sacrificial lamb offered up by the bank’s new
broom, chairman Sir Evelyn de Rothschild, who took over from longtime chairman
Baron Elie de Rothschild in July 1991. Released from “investigative arrest”
in October 1992, Heer fought back, disregarding the Swiss financial fraternity’s
unwritten vow of silence: he blabbed to U.S., German, Swiss and Italian newspapers
about a multitude of convoluted and hair-raising improprieties, irregularities
and outright illegalities at the bank, which reached all the way up to Baron
Elie and vice chairman/former general manager Alfred Hartmann.


Heer launched
his opening salvo in November, telling the Swiss paper Sonntagszeitung,
“I was part of a criminal system,” then proceeding to relate how the Zurich
bank, renowned for managing the accounts of Europe’s richest families, had routinely
concealed the assets of its clients, many of them Italian, by setting up shell
corporations under its trusteeship.


According
to Heer, it worked like this: a client signed over his assets to a trustee–sometimes
someone at the bank such as Baron Elie, Hartmann or himself, sometimes a dependable
outside associate–with the proviso that they could be bought back in the
future at an agreed-upon price. Then the assets were transferred to a holding
company established by the bank. One such phony firm, the Panama-based Orion,
was a popular destination; Orion, in turn, begot offshore subsidiaries for similar
purposes. In this way clients avoided taxes and other monetary controls back
home, while bank officers, Heer included, netted millions in handsome commissions
for services rendered. This, Heer asserted, was standard operating procedure,
as were the labyrinthine loans he made to von Wersebe and others.


Occasionally
foreign tax officials became suspicious. In one case, Heer recalled, he flew
to Rome, where he knowingly lied in court in an effort to allay concerns about
the true ownership of Italy’s sixth-largest insurer. When Baron Elie declined
to comply with a similar summons, Heer added, the Italian judges flew instead
to London, where the baron plied them with food and drink and falsehoods before
sending them on their way singing “For he’s a jolly good fellow.” Heer also
tarred Hartmann, who in addition to his positions at the Zurich bank served
as chairman of the Swiss branch of the notorious and now-defunct Bank of Credit
& Commerce International; Heer alleged that Hartmann used the familiar dummy-company
stratagem to funnel BCCI money from Nigeria.


Just warming
up, Heer got personal, accusing Baron Elie of keeping a stable of mistresses,
one of whom bore him a child.


Most sensationally,
Heer recounted a potboiler indirectly connecting his bank to the death of Roberto
Calvi, chairman of the collapsed Banco Ambrosiano, who was found dangling under
London’s Blackfriars Bridge in June 1982, his pockets filled with bits of bricks
and $15,000 in sundry currencies. Later that same year an associate of a higher-up
in Italy’s banned P2, the shadowy Masonic lodge with ties to the Mafia, phoned
Heer requesting his participation in a secret mission. After giving his assent,
Heer received at the bank an envelope containing half of a torn dollar bill,
plus a leather suitcase. A few days later two men arrived at the bank driving
an armored Mercedes; one of them produced the matching half of the dollar. Heer
duly delivered the suitcase. Shortly thereafter, in a conversation with his
P2 contact, Heer inquired as to the nature of the mysterious exchange, and was
informed that the suitcase had been stuffed with $5 million in P2 cash–"money
for the killers of Calvi.”


Not surprisingly,
Rothschild Bank AG Zurich senior staffers went into damage-control overdrive
denying Heer’s allegations. “It’s all nonsense,” one groused to London’s Sunday
Times
in February 1993. “This man is a compulsive liar.”


True or
false, Heer’s revelations succeeded in sending some of the bank’s more jittery
clients scurrying for the exits, as they withdrew their money and deposited
it elsewhere. Sir Evelyn reacted swiftly, hiring a p.r. firm to quell the brouhaha.
“What Heer is saying is blackmail,” he huffed to The Wall Street Journal
in December 1992, while suggesting that Heer’s intent was to steer the bank
toward a substantial out-of-court settlement. “He’s trying to muddy the waters
to [imply] that it was all crooked. But it wasn’t.”


Turning
up the heat, the bank sued Heer for violating client confidentiality. This merely
pissed him off even more. “I’ll spoil this show for them,” he railed to the
WSJ. “You can be sure of that.”


No idle
saber-rattler, Heer popped up in a Zurich probate court in December to testify
against his former employer in a messy inheritance case concerning the disputed
billion-dollar estate of Count Corrado Agusta, deceased scion of a family that
owned an Italian helicopter manufacturer. Agusta’s widow, Contessa Francesca,
from whom he separated in 1986, claimed that Rothschild Bank AG Zurich had conspired
with Riccardo Agusta, the count’s son from an earlier marriage and his principal
heir, to conceal a considerable portion of her husband’s assets after his death
in 1989. Italian law entitled the contessa to at least one-third of the estate.
Under oath, Heer swore that the bank’s attorney had connived with Riccardo to
deny Francesca her rightful inheritance.


Then, clutching
his passport, Heer took off for a holiday in Thailand, agreeing to return for
a March 1993 court hearing in connection with the fraud charges leveled against
him. But when he failed to show in March, an international warrant for his arrest
was issued, and Heer began his four-and-one-half-year fugitive’s existence.


Born into
a prosperous Zurich banking family in 1936, Juerg Heer initially worked for
Swiss Bank Corp., where his performance caught the eye of then-Rothschild Bank
AG Zurich general manager Gilbert de Botton. In 1972, after the two men met
at a dinner party tossed on behalf of Andy Warhol, de Botton wooed Heer from
Swiss Bank Corp. (De Botton left for a post in London in 1981, replaced by Hartmann.)
Heer thrived under de Botton’s mentorship, immersing himself in a pampered lifestyle.
In 1974, for example, he bought the first of his parking lot’s worth of vintage
cars: a 1954 Mercedes 300. Later he added a clutch of Ferraris. “Money was always
important for me,” he told the Journal. “I have always had so many hobbies.”
Well, yes, including collecting art: Heer set about acquiring works by Warhol,
Alberto Giacometti and Jean Tinguely, among others.


All the
while he savored his proximity to his baronial boss. “I admired Elie,” Heer
confided to the WSJ. “He is a huge showman, and somehow my role model.
He was a royal crook, and I helped him. I found it marvellous.”


Still,
Heer’s status did not exempt him from Baron Elie’s occasional tirades. At a
restaurant conclave arranged by Heer for the bank’s board of directors, Baron
Elie reportedly berated Heer, finding the establishment substandard. This unfortunate
dining decision so infuriated the baron that he threatened to dismiss Heer,
who survived only after his colleagues intervened to save his job the following
day.


Ultimately,
though, it was Sir Evelyn, and not Baron Elie, who sacked Heer and attempted
to characterize him as a rogue run amok, a knave who deceived the bank’s unsuspecting
board regarding his loan activities. This approach garnered little sympathy
among Zurich’s banking home guard.


“They
are foreigners and foreigners never make it in Zurich,” one local banker divulged
anonymously to London’s Daily Telegraph in February 1993. As Sir Evelyn
and his gray-suited brigade manned battle stations, the locals shook their heads,
admonishing, as the unnamed source told the Telegraph, “Why didn’t you
do it the Swiss way? Why didn’t you send this man to some island somewhere,
make him comfortable, and make sure he never came back to talk?” That probably
would have suited Heer just fine. But Rothschild officials refused to allow
him to make off with what they considered the wages of pecuniary sin, and he,
after telling tales out of class, vamoosed: to Italy, to Turkey, to Azerbaijan
and, finally, in the summer of 1996, back to Thailand. After 16 months there,
however, Heer apparently wore out his welcome with someone. Quite suddenly,
Thai tourist police, working with Swiss cops and Interpol, pinched him in early
October 1997, charged him with immigration violations and shipped him to a Bangkok
detention center for illegal aliens. One of his protectors, it would appear,
had finked on him.


At first
Heer admitted to entering Thailand on a bogus Hungarian passport, but, fearful
of repatriation to Switzerland, he soon changed his story, and at four separate
hearings he denied unlawful immigration. To help jog his memory, Thai authorities
relocated him to Lad Phrao jail, north of Bangkok. A month there took its toll.
In late November a visibly exhausted, wan and thin Heer finally pleaded guilty
in a Bangkok court, which fined him $75, handed him a 30-day suspended sentence,
and turned him over to Swiss policemen to be escorted home.


Although
a month’s stay in the squalor of a Thai jail no doubt proved extremely unpleasant,
it did not alone account for Heer’s poor physical condition: Sometime during
his flight from the law he had developed AIDS. So a Swiss judge placed him in
protective custody in a Bern hospital until he recovered sufficiently to stand
trial. When he finally came before a Zurich district court in September 1998,
the formerly combative Heer, now 62 and enfeebled by the disease, readily confessed
to embezzling 55 million Swiss francs ($33 million) from Bank Rothschild AG
Zurich between 1986 and 1992. When questioned by the court’s judge about his
alleged misconduct, Heer repeatedly responded, “I don’t want to recall it all.
But it must be right if you say so.”


Accordingly,
the court found him guilty. It also fined him $7350 for 1) participating in
a scheme that attempted to extort cash from three former bank clients during
his time on the run, 2) using forged passports and 3) breaching bank confidentiality
rules. Added to that were court fees of $22,000. Final sentence for his multiple
transgressions: four years in prison (the district attorney had asked for six),
with the nine months Heer spent in detention awaiting trial put toward time
served. He immediately gave his benediction to the sentence, promising not to
appeal.


Paroled
last year, Heer emerged to live primarily at Zurich Lighthouse, an AIDS hospice,
where he died, age 65, on Feb. 21.


“The bank
won’t survive,” Heer hissed to The Wall Street Journal in late 1992.
“They don’t want to close it, but I will make sure of it.” Fall guy or wise
guy, he was wrong nonetheless. The bank endured. He didn’t.

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