A Brazilian Merrill Lynch banker still has flashbacks of the 5 days he spent in jail because he was following Merrill’s orders.
The banker, Alexandre Caiado, was jailed for making illegal fund transfers abroad in 2006, a crime he takes no responsibility for because he was told to move the funds by Merrill, his employer, Bloomberg Markets Magazine reports.
Six federal agents brandishing machine guns stormed into Alexandre Caiado’s apartment in 2006 and arrested him for helping Merrill clients move money to overseas accounts so they could evade Brazilian income taxes.
But that’s exactly what I was hired to do said Caiadom who said that Merrill was “emphatic about the fact that it was OK to transfer money abroad.”
And that it was OK to lie about it.
As the agents scoured Caiado’s desktop computer, Mary Livingston, a lawyer for Merrill, sat down alone with Caiado. “She gave me very specific instructions,” says Caiado, recalling the scene in 2006. “I wasn’t supposed to say what I really did.”
Caiado’s account of what happened is vehemently denied by the bank, begging the question: What’s really going on here? (Especially after similar claims of tax evasion were brought against Credit Suisse and UBS recently.)
[Caiado’s] job at Merrill was to open new accounts, manage assets and arrange fund transfers out of Brazil, all of which his bosses told him was legal, he says. Brazilian law prohibits such private bankers from offering those services, federal Judge Fausto De Sanctis says.
“I was doing what I was hired to do: bring in new clients and handle their investments,” he says. “I had no reason to suspect we were doing anything illegal. We were told by our superiors that if the client was evading taxes or breaking the law, it was their problem, not ours.”
In May of this year, Brazilian police, a prosecutor and a judge — having collected internal documents and e-mails from Merrill — concluded that Caiado was following orders from bank executives.
But even though Caiado was cleared of wrongdoing, Merrill still fired him. Apparently they “no longer need his services.”
Caiado is pissed. He was fired for doing what he was told, and he was left in a rancid jail for five days. He says he feels completely resentful and betrayed. So he’s suing them for $18 million.
Caiado alleges that Merrill’s lawyers told him to keep quiet about the transfers after he was arrested, which the legal team has neither confirmed or denied. In fact this is what Mary Livingstone, who was dispatched by Merrill on the day of the Caiado raid said:
“I’m not responding to that,” she says. Asked if she disputes Caiado’s account, she says, “I am not going to dignify his story with an explanation.” He has no credibility because he’s suing Merrill, she says.
That sounds totally dodgy. In our opinion, “I’m not going to dignify that with a response” is not a convincing explanation. And even though an investigation found that Caiado was merely following instructions and prosecutors say their case against him is totally based on what he did for Merrill Lynch and they have the emails to prove it, the bank is vehemently denying that his arrest had anything to do with them.
“We are vigorously defending ourselves in that matter,” Halldin says. No Merrill officer or director in Brazil has ever been charged with a crime, he says. Merrill isn’t responsible for the criminal charges against Caiado, he says. “This individual was arrested on matters that didn’t involve any activities related to Merrill Lynch,” Halldin says.
Caiado’s case is reportedly symptoamatic of a wider crackdown on “income-tax dodging in Brazil” since the country has seen a massive influx of wealthy investors and the banks that service them. Credit Suisse and UBS both had bankers indicted on the same charges as Caiado. As a result, all three banks shipped their private bankers from Brazil to Miami, New York, Zurich and Montevideo. Hm.
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