Research assistance Isabel Gautschi
from WhoWhatWHY Website
images recovered from
President Obama on Martha’s Vineyard, summer 2009.
UBS banker and Obama
fundraiser Robert Wolf is driving the golf cart.
Last August, the presidential press corps followed Barack Obama and his family to Martha's Vineyard for their brief vacation.
The coverage focused on summery fare - a visit to an ice cream parlor, the books the president had brought along. Nearly everyone mentioned his few rounds of golf, including his swing, and the enthusiasm of onlookers.
What caught my eye, though, was the makeup of his foursome.
The president was joined by,
In a decidedly incurious piece, a New York Times reporter made light of Wolf's presence:
Wolf, however, is hardly - as the Times suggested - just another donor.
For one thing, he is a leading figure in an industry that almost
brought down the entire financial system - and then was the recipient of
astonishing government largesse. UBS, along with other banks, benefited
directly from the backdoor bailout of the insurance giant AIG.
this rather problematical situation, why then would the President choose
UBS’s Wolf of all people for this honor?
And that now game the system so well that the rest of us - wherever we live in the world - are kept fighting for the scraps.
a former senator who led deregulation efforts before working
at UBS Bank with Obama fundraiser Robert Wolf.
BOTH SIDES NOW
But when it
comes to real power, an ability to come out ahead no matter which party is
in power, it’s hard to top certain financial institutions.
During the 2008 campaign, while Robert Wolf was courting Democratic hopeful Obama, his UBS cohort, former Senator Phil Gramm, was working the other side of the street. As chairman of the Senate Banking Committee in the 1990s, Gramm, a corporate-friendly Texas Republican, played a key role in the deregulation of the banking industry, an act so central to the nation’s financial collapse.
Since 2002, Gramm has been UBS Americas’ vice chairman. In 2008,
he was the leading economics adviser for Obama’s opponent, John McCain - and
even touted as a possible treasury secretary in a McCain administration.
As Slate’s money columnist Daniel Gross quipped back in 2008,
Furthermore, UBS’ stock
lost nearly 70 percent of its value even before the recession really kicked
in - making it the worst performing foreign bank operating here.
The Alpine quiet surrounding its
activities was, however, quietly shattered in mid-2007, when an IRS audit of
a US citizen led to a UBS banker who then revealed certain UBS practices
that encouraged wealthy Americans to hide taxable income. UBS bankers had
apparently used every trick in the book - including giving customers code
names and assisting them with or providing them with untraceable pay phones,
encrypted computers, fake trusts, document-shredding and even
The House sponsor was Rahm Emanuel - who would go on to be President Obama’s Chief of Staff.
Another, weaker bill was proffered by Sen. Max Baucus of the Finance
Committee - parts of which did just quietly become law as part of an
stimulus bill signed by Obama in March, 2010, with the goal of
capturing lost tax income as a way of financing job creation.
The states of New York, Texas and Massachusetts sued the bank in 2008, accusing it of misleading investors about risks in its auction-rate securities market. UBS executives dumped their own holdings when the supposedly safe investments took a nosedive, yet continued to recommend them to customers.
In Puerto Rico, a Bloomberg News reporter found, UBS had created its own closed-loop system for generating profits - it advised the Commonwealth to issue bonds, marketed the bonds to investors through UBS mutual funds, and then loaned the mutual funds money so they could buy the bonds.
As James Cox, a Duke law professor and expert on finance and law said at the time,
In a filing last June, New Hampshire's securities regulator charged UBS with "dishonest and unethical" practices in selling notes from the now-defunct Lehman Brothers, causing New Hampshire investors $2.5 million in losses.
Wrote one securities lawyer on Forbes’ website:
Further south, Brazilian police arrested officials of both UBS and the insurance giant AIG as part of a half-billion-dollar tax avoidance scheme, alleging that the companies used suspected black market money-changers to spirit the funds out of Brazil to Switzerland.
At the time, the daily newspaper O Estado de Sao Paulo published a picture of a man in handcuffs, identified as a UBS executive, and reported that he told one of the arresting officers:
Things are not necessarily so different up north.
The only company official sent to jail in the United
States thus far in connection with the massive tax evasion case was,
remarkably, the former employee who blew the whistle on the scheme in the
According to his
calendar, the presidential hopeful was visiting New York City to speak at a
fundraising dinner for children in poverty. Beforehand, though, he attended
a much more exclusive gathering - in the midtown Manhattan conference room
of billionaire George Soros - for a dozen wealthy figures eager to have a
closer look at the prospect.
Then just 45, he had already
been a major fundraiser for John Kerry’s 2004 presidential bid and for
congressional Democrats in 2006. For 2008, he had initially backed a
moderate, Mark Warner, the former governor of Virginia. But when Warner
decided not to run, Wolf turned to Obama, liked what he saw, and signed on.
He praised Obama’s early opposition to the invasion of Iraq.
And he told Business Week:
Wolf soon became a top fundraiser.
the time of the New York article, he had already hosted two big cocktail
parties, made a lot of calls, and brought in more than $500,000. It was
through people like Wolf that Obama was able to match and then pass Hillary
Clinton in fundraising for the primaries.
Nemazee’s story circles back to UBS, through his involvement with Harken Energy, an obscure but supremely well-connected company that UBS took an unusual interest in keeping afloat. In the process, it illustrates how byzantine and pervasive the new trans-partisan money world has become. The complexity helps explain why reporters so often shrug and move on.
They should pause more often; within
that complexity resides an important truth about American democracy.
More importantly, he was deep into the Clinton inner circle. So much so, that he and a partner used an investment firm they had recently acquired, Carret Asset Management, to provide a lucrative perch to Terry McAuliffe, the Clintons’ confidante and money man.
(This was in the
period between McAuliffe’s chairmanship of the Democratic National Committee
and his chairmanship of
Hillary Clinton’s presidential campaign.)
AFP PHOTO/Robyn Beck
campaign chairman and Democratic fundraiser Terry McAuliffe,
who shared a sponsor with George W. Bush.
This indebted the Clintons further to Nemazee, who had been an avid supporter of Bill Clinton’s presidency and major donor to his defense fund during the Monica Lewinsky/impeachment saga.
his part was rewarded with appointment as ambassador to Argentina - an offer
that was withdrawn, however, when Forbes reported that he had improperly
represented himself as a “Latino” in order to secure targeted bond business
from the state of California.
At the time of the meeting to size up Obama in Soros’s office, Nemazee was simply window-shopping, as he remained committed to Hillary. But when Hillary dropped out of the race, Nemazee became a major Obama fundraiser.
And once Hillary became Obama’s secretary of state, according to
insiders, she pushed the administration to take a tougher line with Iran’s
revolutionary Islamic government than Obama preferred. In so doing she
renewed the appreciation of the retinue around the exiled Pahlavi faction,
which still hopes to return to power one day, directly or indirectly.
Since then, Nemazee has pled guilty to defrauding
several banks over the course of a decade, through the use of false
collateral documentation, to the tune of $292 million. In a brief flurry of
coverage, Nemazee’s downfall was smirkily dismissed as just another day in
the hothouse of Democratic corruption. The media has shown little further
interest in Nemazee, and in what his arc signified.
point the rising star was not Barack Obama, but
George W. Bush.
And both of them have been involved
with a company called Harken Energy, a mysterious outfit with links to some
of the world’s most powerful and odiferous regimes.
Photo by Donald Bowers/Getty
to Bush, Clinton and Obama
before his arrest on bank fraud charges.
Harken, Nemazee, Quasha (and UBS) first came to my attention while I was researching my 2009 book, Family of Secrets, which is an investigative history of the rise of the Bush family and the special interests behind them.
I was examining George W. Bush’s run of good fortune in the 1980s when his failed oil ventures repeatedly became golden as larger ventures scooped them up and increased his remuneration.
Texas-based Harken Energy, the
biggest of these, paid Bush more than he had ever earned, gave him a nice
board position, and basically freed him up to move to Washington and work on
his father’s 1988 White House race.
In the process Harken took Bush, a man without
much to show for himself as a businessman, and gave him the credibility and
financial means with which to embark upon a political career - which he did
The few media organizations - Time and The Wall
Street Journal among them - that looked into Harken concluded that
something was fishy about the venture itself. The company’s structure and
transactions were unnecessarily convoluted. It violated most of the rules of
sound business practice yet somehow continued to exist despite the fact that
it rarely made money for its public shareholders.
Three years later, thanks to a
flurry of acquisitions and infinitely complicated transactions, revenue
would exceed a billion dollars.
In other words, this obscure company somehow was catnip to brutal and corrupt foreign leaders who had grown fabulously wealthy at the expense of their people - and who collaborated closely with the highest levels of the US military-intelligence-corporate establishment. (Soros’s role seems especially strange; he went on to become the leading single funder of efforts to deny President George W. Bush a second term.)
UBS was among the
banks that profited from this dubious funding.
For those who have
forgotten, BCCI was a criminal banking operation whose customers ranged from
Western intelligence agencies to drug cartels and terrorist organizations.
BCCI was eventually shut down in raids commenced by the British government, after intense investigations by Senator John Kerry’s Foreign Relations terrorism subcommittee and the Manhattan DA. But evidence of its ties to the highest levels of the US government under Ronald Reagan and George H.W. Bush, extensively uncovered by investigators, was repeatedly rebuffed by superiors and by regulators.
It is worth noting that the Treasury Department official responsible for scrutinizing BCCI’s affairs in the Reagan-Bush administration was assistant secretary for enforcement John M. Walker Jr. - who happened to be the cousin of George H.W. Bush.
have for generations been involved both in government and banking, with
another close relative serving as a top official at Lehman Brothers before
it precipitously failed. More on this topic, and on George H.W. Bush’s
secret past in deep covert intelligence work, can be found in my book,
Family of Secrets. )
Yet where Ferdinand Marcos, the Saudi royal family, and the Shah converge with the son of an American president, in a deal involving large amounts of money, it is not necessary to untangle all the spaghetti strands to sense that something is amiss.
to begin with, would a major international bank get involved with a shadowy
operation such as Harken? Whatever the reasons, the bank clearly gained
influence with a White House that had family connections to the company.
Rembrandt’s vast portfolio included tobacco,
financial services, wines and spirits, gold and diamond mining and luxury
goods. Soon after that, Rembrandt took over a small, closely-held Denver
company, Frontier Oil. Frontier then announced an $ 85-million "revolving
credit facility" with… Union Bank of Switzerland.
The group took
particular interest in two South African-controlled companies that were
established in Switzerland at the time of global economic sanctions against
the apartheid regime - and one of these was Rembrandt.
UBS’s former chairman, Nikolaus Senn, actually had a medal bestowed on him for service to the white regime.
When it became inevitable that apartheid would crumble, Senn nevertheless pronounced his doubts about giving blacks the franchise:
The connections here are worth considering.
In 1988, while George W. Bush
advised his father’s presidential campaign and sat on Harken’s board, Harken
chairman Alan Quasha joined the board of Richemont, a new Swiss-based
company controlled by the same South African Rupert family that controlled
Rembrandt. UBS’s Senn became Richemont’s chairman.
And UBS played a
central role in the arrangement.
He remained an advocate of
Marcos to the end.
(AFP PHOTO/Robyn Beck)
having secreted a vast fortune in foreign bank accounts before
fleeing into exile in 1986, arrives at Hickam Air Force Base in Honolulu.
Marcos also was moving billions pillaged from the Philippine and American people (via aid to that country) into Swiss accounts.
In fact, Phil Kendrick, who sold Harken Energy to Alan Quasha, recalls having heard rumors back then that the money to buy him out came from Marcos himself. The Bushes and Marcos were famously friendly.
As vice president, George HW Bush visited Marcos’s Philippines during its protracted martial law and declared that country, to considerable subsequent ridicule, a great and vibrant example.
And Marcos’s widow Imelda would speak,
elliptically, of how the elder Bush had given her husband advice on how to
invest “his” fortune. Bush and Marcos even took lessons from the same golf
Photo: AFP/Getty Images
a powerful former banker, was President Eisenhower’s regular golf partner.
It’s all about access - and golf has long played a crucial role.
Back in the 1950s, Senator Prescott Bush, father of HW and a powerful former banker himself, used to have unique access to President Eisenhower as his regular golf partner.
By the time of Barack Obama’s little-studied invitation to Robert Wolf to round out his foursome, Wolf (and UBS), too, were already on the inside.
Early in the Obama administration, Wolf had quietly been appointed to Obama’s Economic Advisory Board. The fact that UBS is now playing a role in the administration of a liberal democratic “reformer” illustrates just how trans-partisan money interests can be.
Though the board has engendered little media notice
besides an Associated Press piece that subtly tried to spark broader
curiosity, its makeup alone deserves attention - for what it tells us about
the group that had the ear of the President as he embarked upon his change
(Photo by Alex Wong/Getty
his old friend and fellow member of the Yale secret society, Skull and Bones.
Bush named him chairman of the Securities and Exchange Commission;
Obama appointed him to his Economic Advisory Board.
One of Wolf’s fellow board members is William H. Donaldson, an old friend of the Bush family who served on the board of the tobacco company Philip Morris for two decades.
Donaldson headed the investment bank Donaldson, Lufkin & Jenrette, which looked after the financial affairs of George W. Bush over the years. Donaldson was one of the directors brought into Frontier Oil when it was taken over by the Quasha-Rembrandt-Bush-UBS group. President George W. Bush named Donaldson head of the Securities and Exchange Commission (SEC), where he served from 2001-2005.
During that period, he presided over changes requested by investment banks that lessened regulation; among other things, the SEC chose to rely on the banks’ own computer models for risk assessments.
And indeed it is.
Goolsbee has pretty much
stayed out of the news, except for a brief scandal during the 2008 campaign
when a Canadian government internal memo characterized Goolsbee as
reassuring our Northern neighbors that Obama’s anti-NAFTA rhetoric was just
that, “political positioning” that did not reflect the candidate’s real
position on globalization.
(Photo by Marshall)
witnesses include senate Banking Committee Chair Phil Gramm,
who later became economics adviser to the McCain campaign
and vice-chairman of UBS bank.
People wonder why, year after year, promise after promise, so little seems to change in Washington.
But it is usually left to academics and theoreticians to explain, somewhat abstractly and historically, how powerful institutions continue to influence the course of public affairs irrespective of who is in the White House and what party is in charge. Meanwhile, polls show that most Americans think that banks got a much better deal out of the Bush-Obama rescue-stimulus than the average Joe.
And they’re right - but they don’t quite get the real story on how such deals come about.
But such revelations carry an important message: that American presidents, no matter how good their intentions, are inevitably enmeshed in a self-reinforcing web of interests and influences that permits the wealthy to shape our national destiny no matter who controls the government in Washington.
Shining a light on the UBS-Obama link can serve as yet another warning beacon to anyone who underestimates the nature of the challenge facing American democracy. Figuring out how our world works - actually works - requires a skeptical eye and a willingness to follow the facts wherever they lead.
After all, sometimes a good golf story is just a story about some guys playing golf. And sometimes it isn’t.
Note: PDF version here