The crux of the investigation is whether Bond had or has assets in Switzerland and Jersey, which he either failed to disclose to his trustee in bankruptcy or subsequently lied about when giving evidence on oath.
Letter of request to Switzerland for help in Bond investigation, September 1994
The Australian Federal Police’s (AFP’s) September 1994 raids were the first sign of any criminal investigation into Bond for concealing assets from his creditors, but the police had actually been on his tail for the previous ten months, and it was remarkable that they hadn’t been after him for much longer.
As it was, it had taken a complaint from the Western Australian Director of Public Prosecutions, John McKechnie, to get them started. Clearly disturbed that no one was policing the conduct of Bond’s bankruptcy, he had written to Australia’s Inspector-General in Bankruptcy, Richard Moss, in October 1993, enclosing proof that Bollag had held a Swiss bank account for Bond at the Zuger Kantonal Bank in the late 1980s.1 Needless to say, this was an account that Bond had not declared to his creditors.
In the words of a letter from Moss to the AFP the following month, the Swiss bank documents revealed:
… transactions which occurred during 1987 and 1988 through an identified Swiss bank account in the name of Mr Bollag on behalf of Alan Bond. The transactions concern substantial amounts of money.2
The problem with this remarkable evidence was that it had been obtained through the Swiss courts in 1991 in connection with a prosecution of Laurie Connell, and the strict rules of the process stopped the documents being used in any other investigation. Moss had therefore not been able to pass on copies to Ramsay or the AFP, or even let them have a look. But he had at least been able to tell the police what the documents contained and request that they investigate.
In a way, it was poetic justice that Laurie Connell was now causing trouble for Bond, because they had long been partners in crime. And they were undoubtedly two of a kind, in that they were brash, flash and decidedly short on ethics. Connell had made his fortune by the simple device of stealing it from the punters who banked with his Rothwells merchant bank, and had used it to acquire an island in the Philippines, 400 thoroughbred racehorses and six houses around the world. These included an English manor which he had decorated with fine antiques and paintings. His silver collection alone, which he shipped out of Australia in early 1989, was worth some $3 million. His art collection, which included works by Rees, McCubbin, Nolan and Streeton, was worth far more. He had also amassed a collection of family jewels which included a magnificent diamond necklace valued at $1.2 million and a different Cartier watch for every day of the week. The insurance list for this jewellery ran to eleven closely typed pages.
Like Bond, Connell had made damn sure that none of his creditors would ever get their hands on this loot if he went bust, and well before things had begun to fall apart at Rothwells in 1987 he had started shipping it offshore. Even his mansion in Perth had been passed over to a company in the Channel Islands. Connell had not only used trusts in Guernsey and Sark but had also taken Alan’s advice and employed the services of Touche Ross in Jersey.
Joe Lieberfreund had followed Laurie’s money trail for more than a year, using records from the Allied Irish Banks and Touche Ross in St Helier, and had finally traced several million dollars to Switzerland, which was where he had also stumbled on money belonging to Bond. In November 1991 he had drafted an official letter of request from the Australian government to the Swiss, asking for help in obtaining bank documents and telling them that Connell had looted some $50 million from Rothwells since 1983 to acquire personal assets around the world. Lieberfreund told the Swiss that he and his fellow investigators had tracked down a consignment of antiques worth $700,000 that Connell had shipped in secret from London to Basle in 1989 and, more importantly, had identified three Swiss bank accounts.
One of these, at Ralli Brothers Bankers in Geneva, had received money in August 1987 from one of Connell’s Panamanian companies run by Touche Ross, with the reference ‘Pinky’ attached to the transfer. Another, at Credit Suisse in Geneva, had been sent some cash in July 1989. And, finally, the Zuger Kantonal Bank in Zug had received ‘a large amount of money’ from a company that kept popping up in Connell’s Jersey transactions. As the Australian Attorney General’s letter of request to Switzerland put it:
Documents from Touche Ross in Jersey show Balmoral Securities transferred a large amount of money on or about 7th December 1987 to account no: 00 737 999 04, reference: Xavier, at the Zuger Kantonal Bank … Inquiries show this company has multiple bank accounts in US dollars, Australian dollars and sterling, and that it has secretly handled large amounts of money on Connell’s behalf.3
Lieberfreund knew that Balmoral Securities was a clearing house for funds belonging to Touche Ross Jersey’s clients, and that it handled millions of dollars for Alan Bond and his top executives as well as Laurie Connell. But even he must have been delighted by the direct hit that he now scored, because the documents faxed back to him by the Swiss police, who had been only too happy to help, revealed that ‘Xavier’ at the Zuger Kantonal Bank was an account held by ‘Jurg Bollag on behalf of Alan Bond’.4
Only a handful of people in Australia have ever seen the documents relating to this account, but there is no doubt that it contained substantial amounts of money until 1988 or 1989. In the space of eighteen months, around $20 million is said to have passed through it, with the funds disappearing to Holland, the USA, the UK and elsewhere.
The trail uncovered by Lieberfreund was a great deal fresher than the one that Bob Ramsay had been following in Jersey, which had petered out in 1987. But unfortunately it was still too old for police to charge Bond with concealing money from his creditors, because the law required the AFP to show that he had held assets in the two years prior to his bankruptcy, and had failed to declare them to Ramsay. And the money in this ‘Xavier’ account had vanished at least three years before April 1992.5
There was also the minor problem that the AFP neither had the actual documents from the Zuger Kantonal Bank nor any details of the bank account they were looking for, and would need to assemble their own dossier of evidence for the Swiss authorities if they wanted to get hold of them. However, the fact that the bank records clearly existed gave them some degree of comfort, for it not only showed that Bond had stashed money in Switzerland but demonstrated that, in principle, one could get proof.
The task of chasing Bond was given initially to a young detective sergeant in Melbourne called Andrew Tuohy, who sat in Bird Cameron’s offices for the first three months of 1994, ploughing solemnly through Bob Ramsay’s files to see whether there was a reasonable chance of a conviction. By March he had decided that there was enough evidence to make it worth following, and had come up with a game plan of how to proceed.
At this stage, Tuohy constituted the full strength of the AFP’s newly christened ‘Operation Oxide’, but by July 1994 his task force had doubled in size with the addition of a smart twenty-four-year-old called Kelvin Kenney. Both he and Tuohy had degrees in accounting and experience in chasing complex fraud, yet for this they earned less in a year than Bond spent in a week. Ever optimistic, they told their superiors that they would have it all wrapped up within twelve months.
In retrospect, it’s hard to see how these two federal agents could have been so sanguine, for most of the assets that Bollag kept warm for Bond were in England, Switzerland or the USA, while the man who controlled this booty was based in Zug. The AFP’s budget, in contrast, barely allowed them to travel interstate. They would have to run the operation from an office in Melbourne, only venturing out to interview people when they had set things up in advance and knew that the interview would be productive.
They did not have the power to tap Bond’s telephone, which would have been an obvious way to get the evidence they needed, because this was only available for more serious offences. But they were able to get Bond’s telephone records, and these showed that Alan and Jurg were keeping in regular contact, with Bond making a dozen calls to Bollag’s number in Zug between June 1993 and May 1994 from his house in Cottesloe and another eight calls from the Rockman Regency Hotel in Melbourne.6
This obviously helped convince the AFP they were on the right track, but it did not begin to give them the sort of evidence that would bring a conviction. For this they would need a confession from Bollag that he was holding assets on Bond’s behalf, or documentary proof of such an arrangement. And both of those were likely to be found only in Switzerland.
What the police and Ramsay both dreamed of, of course, was a piece of paper acknowledging that it was Alan’s money that Jurg looked after, which set out Bollag’s role as Bond’s trustee. And it was perfectly reasonable to expect that something like this would exist, because even in Switzerland, people don’t hand over their fortunes to a lawyer without a written contract.7 But whether the police would be able to get hold of such a document was not clear. Bob Ramsay had made absolutely no progress in getting help from Switzerland, and it was by no means certain that the AFP would do any better, even though Swiss law appeared to give them a decent chance.
The Swiss authorities had long granted their own police powers to breach bank secrecy when investigating major crimes, but had slammed the door firmly in the face of all foreign investigators, until the mid-1980s when the USA had persuaded them that harbouring criminals was bad for their nation’s image. By 1994, in theory, it was simple for police to get help in opening the Swiss bankers’ vaults. But in practice it was a very different matter, and the system often failed to work smoothly or at all.
To ensure success, it was important for the police to be chasing a high-profile villain from a country that was prepared to apply political pressure to get a result. It helped enormously if drug money was involved or if there was large-scale money laundering. It was far better if at least US$100 million was at stake. And it was guaranteed to go much faster if it was handed to a no-nonsense prosecutor who was tough and experienced in these matters.
Unfortunately, none of these things was true in the case of Bond and Bollag. But Lieberfreund had succeeded with Connell, and in these early stages, at least, everything went like clockwork.
On 16 September 1994, an official letter was sent by the AFP ‘To the competent authority of Switzerland’ via Australia’s Attorney General, requesting the Swiss authorities to obtain documents from various banks, search Bollag’s house and offices, and summons Bollag for questioning on oath. It explained that:
Australian authorities have reason to believe that since 1978 Bond has caused his agents in Jersey and Switzerland to form, through a series of complex business arrangements, various corporate structures located in different parts of the world to act as conduits and repositories for his personal assets. It is believed that in 1987 control of these assets was transferred to Bollag, a Swiss national.
The crux of the investigation is whether Bond had or has assets in Switzerland and Jersey which he either failed to disclose to his trustee in bankruptcy or subsequently lied about when giving evidence on oath.8
The AFP’s letter, which ran to twenty-three pages, with another forty pages of supporting documents, went on to provide a summary of the case against Bond, listing his alleged offences and their penalties, and reciting in detail the AFP’s evidence that Bond had ‘accumulated such assets and misled his trustee’.
It then revealed that the AFP were seeking access to three specific accounts at the Zuger Kantonal Bank in Zug, along with any others that the bank might be operating for Bond. The most important of these was probably an account numbered 00736488-01 and code-named ‘Jane’, which had received £30,000 on 23 October 1987 from Kirk Holdings in Jersey via the Allied Irish Banks. This, the AFP said, had been accompanied by a note on the banking instructions saying, ‘Please ensure that this transfer is paid through London, and make no mention of Kirk Holdings Limited or Jersey’.9
More recently, this same ‘Jane’ account was known to have sent a total of £370,000 from Zug to Dallhold Estates UK between May 1989 and July 1991 to pay the bills at Upp Hall, and to have paid fees for some of the Jersey companies as late as 1992. This was easily close enough to Alan’s bankruptcy date for the AFP to bring charges, if the Swiss documents demonstrated the money really did belong to Bond.
A second account, numbered 70084300, in the name of Treuhand Konto Trust, had received SwF300,000 from Kirk Holdings on 20 February 1987, and SwF250,000 in two smaller transactions a few months earlier. And a third account, numbered 20736686, had been sent £500,000 by Kirk Holdings on 14 April 1987 with the reference ‘H. Bohler’, who was believed to be Hubie Bohler, an account officer at the Zuger Kantonal Bank.
Remarkably, the AFP did not ask the Swiss to obtain records from the Zuger Kantonal Bank for the ‘Xavier’ account which had been uncovered in 1991 by Connell’s pursuers, even though this was the one that had set them on the trail in the first place. Clearly, they had still not stumbled across it in their investigation.10
The Australian letter of request had been prepared in secret to deny Bollag and the Swiss banks the chance to destroy files or move money, so Bond had no opportunity as yet to challenge the process. And at this stage the Swiss were only too happy to help. The Swiss Justice Ministry sent the papers to the Public Prosecutor in Zug, Paul Kuhn, who promptly gave the operation the green light. Thus, on 7 December 1994, Swiss police descended on Jurg Bollag’s house and offices, and worked their way through his drawers, filing cabinets, cupboards and everything else as they searched for the documents that the AFP had asked for. Exactly what they took away with them is not clear, but they did not leave empty-handed.11 Bollag had obviously felt so secure in his Swiss home town that he had not bothered to shred his documents.
The Zuger Kantonal Bank had also kept Bollag’s records, which they agreed to hand over to the Swiss police without demur. But as soon as the raids were over the trouble began, for Bond and Bollag were prepared to fight every inch of the way in the Swiss and Australian courts to stop the evidence getting back to Australia.
The bank documents and the material seized from Bollag were therefore put under lock and key in Zug until their fate had been decided, which meant that the AFP were neither able to inspect the evidence nor even discover what the Swiss had seized on their behalf. And everyone then prepared for the war of attrition that any action against Bond provoked.
The AFP were fairly sure, however, that it would now be only a matter of time before they got their man. And Bond, according to his friends, was clearly concerned that they might be right.