Secret Credit Suisse Stash, Bahamas in Case Targeting Enablers

(Bloomberg) -- For a savvy banker, the way Jean-Marc Forneri moved funds around in 2014 was curious, to say the least.

That year, Forneri -- who over a high-profile career advised a French finance minister, climbed to the top ranks at Credit Suisse Group AG and ran his own M&A firm -- wound down his Bahamas company and moved nearly $1.5 million from an undeclared account at the Swiss bank to one in London in his own name. The transfer raised red flags at the anti-money-laundering watchdog in France and drew the attention of the tax man. A police raid on his home outside Paris a few years on in 2017 turned up about $6.5 million stashed away in another unreported account, this one at Morgan Stanley in the U.S.

Forneri, who was due to face trial for tax fraud, died late last year at the age of 61 -- taking his secrets to his grave. But details of the case emerged as the Swiss lawyer who helped set up his Bahamas company and Forneri’s wealth manager were put on trial in Paris last week, in the latest example of the determination of French criminal authorities to go after not just alleged tax dodgers but also those seen as facilitators.

An aggressive effort to cast the dragnet far and wide to deter potential enablers of tax fraud has had marked success in France. The Parquet National Financier’s landmark cases in recent years have included the conviction of five former UBS Group AG bankers and a record penalty of $5.5 billion for the Zurich-based lender. Also snared in other cases were a tax lawyer for the heiress to fashion designer Nina Ricci and the chief executive officer of Reyl & Cie in a probe focusing on the secret Swiss account of a French minister.

“The intermediaries are also to blame -- perhaps just as much as the fraudsters themselves,” Prosecutor Sébastien de La Touanne said during the trial. He’s seeking an 18-month suspended sentence and a 300,000-euro fine for the Swiss lawyer, John Metzger, and a one-year suspended term and a 150,000-euro penalty for the wealth manager, Michel Glas.

Neither of them had anything to do with the secret Morgan Stanley millions and both say they had no idea Forneri’s tax affairs were in such shambles. They point to the fact that Credit Suisse’s compliance teams in the U.K. audited the Bahamas company’s account at the Swiss bank several times without ever raising any concerns.

Forneri’s Stature

“Learning that someone with the stature of Mr. Forneri didn’t declare his wealth was a surprise and even a shock,” Metzger, the Swiss lawyer, told judges. He said the origin of the funds -- stock options earned from working at Credit Suisse -- meant there was every reason to believe they “were perfectly above board from a tax point of view.”

Presiding Judge Christine Mée, who also oversaw the UBS case, was skeptical, noting that the type of company set up in the Bahamas for Forneri “can be used as a screen to conceal assets from the French tax administration. Is that something that crossed your mind?”

A ruling in the case is expected on June 24. Credit Suisse declined to comment on the case as did Morgan Stanley and François Esclatine, an attorney for Forneri’s daughter.

French investigators suspect that Metzger purposefully set up the Bahamas structure to help Forneri shelter more than $2 million in Credit Suisse stock options from French tax authorities. The wealth manager, Glas, is accused of having initiated the move by introducing Forneri to Metzger in the mid-2000s.

By then, Forneri had quit his position as vice chairman of Credit Suisse First Boston in Europe to start Paris-based M&A advisory boutique Bucephale Finance.

Glas -- who worked at Credit Suisse at the time -- denies any involvement in the creation of the Bahamas structure. When Forneri told him about it, the reason provided for the setup “didn’t make me suspicious,” he said.

“Forneri didn’t want too many people at Credit Suisse knowing how much he had in stock options,” Glas said. While the Bahamas structure limited the number of Credit Suisse employees who would know, it wouldn’t have sheltered Forneri’s identity in case of an investigation, he added.

Easy Target

Forneri’s passing away made him something of an easy target during the trial. Jean-Pierre Versini-Campinchi, an attorney for Metzger, said the late Frenchman’s alleged efforts to evade taxes would not have been apparent to his client. To pick holes in the prosecution’s case, he pointed to the fact that Forneri’s Morgan Stanley account had gone undetected despite having no Bahamas structure and being in his own name.

Before his death, Forneri had started putting his tax affairs in order. The dues avoided on the Bahamas company’s account amounted to about 540,000 euros ($658,000), according to Judge Mée. Among other undeclared 2014 transactions were a 100,000-euro payment for renting out of his French Riviera villa in exclusive Saint-Jean-Cap-Ferrat, the sale by Bucephale of a Pierre Soulages artwork and the sale of two Limoges enamels for more than 300,000 euros.

A lawyer for the French tax administration said that a deal of about 3 million euros to settle Forneri’s dues is nearly finalized.

A product of France’s elite Ecole Nationale d’Administration -- the spawning ground for the country’s presidents and CEOs -- Forneri had been an M&A adviser to France’s A-list. Among his achievements at Credit Suisse was that he had been the main adviser to Total Fina SA in its takeover battle for Elf Aquitaine in 1999 to create one of Europe’s biggest oil refiners.

“For someone in his situation to take such a risk makes no sense to me, even today,” Glas told the Paris court.

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