Swiss Banks Accused of Hiding Indonesian Billions

Asia Sentinel, Source:

Thwarted in the courts and snubbed by the Swiss government, the estate of the late Indonesian diplomat Adam Malik is demanding that Switzerland establish a commission to help it recover what are described as billions of Swiss francs in accounts and gold deposited during the tumultuous years when hundreds of thousands were slaughtered in Indonesia.

Malik, who died in 1984, served as Indonesia’s third vice president as well as Minister of Foreign Affairs and Ambassador to Poland and the Soviet Union. The founder of the Indonesian news agency Antara, he also served as the 26th president of the United Nations General Assembly.

The odds of reclaiming anything look extremely long although in recent years, under intense pressure from US financial regulators, the wall of Swiss bank secrecy has begun to crumble. Administrators of the estate have been trying to recover what they describe as the missing funds for decades, alleging that at least the equivalent US$15.02 billion and perhaps as much as US$30 billion had been deposited by victims, or their agents, of the genocide that exploded in Indonesia in 1965 and 1966 in the wake of a reported Communist coup attempt which was answered by mass killings at the instigation of the armed forces or government officials.

The Malik estate demand thus reawakens one of darkest periods in Indonesian history, in which those targeted were said to have included Communist Party members and alleged sympathizers, ethnic Abangan Javanese, ethnic Chinese, Christians and alleged leftists, often at the instigation of officials “with a monetary motive.”

Although the petition alleges 1 million to 3 million were killed in the bloodletting, more sober scholars put the total at 1 million at the most, and perhaps more likely a still-shocking 600,000.

Switzerland at the time was a popular banking provider for Indonesians and remains so today although other observers question whether, even with Indonesia’s reputation for massive corruption, that much money could possibly have made its way out to Switzerland during that period. Indonesia, they say, just wasn’t that rich at the time.

According to the petition, the country and its banking system prior to Malik’s death sought the business of so-called Politically Exposed Persons (PEPs) like Malik and others – politicians and government ministers who frequented Switzerland and owned property there, enrolled their children in schools and universities and in some cases established residency and deposited funds.

In 2014, the Swiss banking giant UBS won dismissal of a federal lawsuit in California that accused it of seizing billions of dollars from inactive Indonesia accounts over the previous 30 years, including Malik’s. The estate alleged the suit was dismissed on narrow grounds, however, and has continued to press its case.

Certainly, Swiss banks have acquired a reputation over the decades of being secretive and of making it difficult for those related to overseas victims to reclaim their dead relatives’ accounts.

According to a Reuters report, “numerous claims have been filed against Swiss banks attempting to recover assets. In 1998, UBS and Credit Suisse Group agreed to pay $1.25 billion to settle claims over dormant wartime accounts of Holocaust victims.”

However, the Indonesians say they have had little luck.

Prior to adoption of the Foreign Corrupt Practices Act and similar laws, “it was not unusual nor unlawful for large sums to become the personal property of government leaders,” the petition notes, an apparent acknowledgement of corruption.

“In the case of Indonesia, it is estimated that at least CHF15 billion remains unaccounted for, much of it having been banked in Switzerland. Some of the unaccounted funds from that period involve assets seized or deposited by victims of the Indonesian mass killings or genocide.”

Malik survived the political upheaval and was viewed as a moderating influence in the Suharto government. He is said to have “obtained, came in possession or was assigned several bank and safekeeping accounts” with Union Bank of Switzerland and Swiss Bank Corporation, which later merged into UBS, in Switzerland and Singapore for his personal use.

The accounts are said to have contained well over 25 million Swiss francs. Other accounts were said to have been assigned to him by Jusuf Muda Dalam, the former director of the Indonesian Central Bank who at the time was under sentence of death as an enemy of the state and former associate of the Indonesian Communist Party. Muda died before he could be executed.

Since 1985 the Malik estate and its successor, the AM Trust, have kept investigators and lawyers busy on continuous efforts to trace the ultimate disposition of the accounts as well as access the known ones to little avail.

The legal department of Swiss Bank Corporation in Basel is said to have eventually admitted after extensive negotiations that although Malik had dealt directly with Ernst Seidel, SBC’s principal director in Basel, no further record of the accounts could be located because 10 years had elapsed since they had been closed. But, according to the petition, SBC conducted only a partial search even though accounts had been identified in Zurich, Breganzona, and Binningen connected to SBC.

SBC, the petition states, “provided no reasonable explanation why records dealing with an extremely high-profile individual like Adam Malik would have been destroyed. However, the estate relying on SBC’s assurance did not immediately realize that the proceeds of the accounts had been converted with the approval and participation of the Swiss government and that the records still existed and that the alleged search had not been completed in good faith but in fact was a cover up at the highest levels.”

Nor, the petition alleges, “did they explain how the account was closed, by who, and how that fact was known if the records no longer existed. UBS declined to meet with representatives of the estate or pursue the matter further nor advise the estate of the involvement of the Swiss government.

In 2013 the estate contacted the Swiss Banking Ombudsman Central Claims Office to determine the status of any dormant Malik accounts and received confirmation no dormant Malik account had been reported. Despite requests to open the investigation, UBS refused in 2014, saying it considered the case final as of 2006.

“UBS AG is either unable or unwilling to research the matter of the Malik and related accounts because of the involvement of the Swiss government,” the petition notes.

The trust “then attempted to bring the matter to the attention of Swiss Attorney General and the Swiss Financial Market Supervisory Authority, both of which declined to open a case.”

The funds and accounts “have been the subject of numerous attempts to commit banking fraud, beginning in the 1980s based upon irregular deposit certificates said to have been issued by UBS or its predecessors and in the possession of actual and/or spurious relatives and associates of the Sukarno family,” the petition continues, “reminding the Federal Department of Finance that Swiss financial institutions have previously been implicated in similar scenarios involving gold deposits from Nazi Germany, Holocaust-era accounts and more recently deposits by the Suharto family and former Nigerian officials which could only be definitively addressed by Swiss government intervention.”

The estate requested the immediate release of 100 million Swiss francs to the trust from a portion of the funds said to belong estate “that have been sequestered or confiscated by the Swiss government since 1984.”

Posted in: Oceania Asia

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