An honest man is someone who doesn’t cheat the person who bribes him.
Old Swiss saying
Within hours of the Swiss police raids on Jurg Bollag back in December 1994, Alan Bond had started legal action to prevent the Australian police getting their hands on any of the evidence. The Swiss had seized a pile of documents from Bollag’s office that clearly related to Bond and had been promised more by the Zuger Kantonal Bank, who had agreed to surrender everything in their possession. Bollag, meanwhile, had been ordered to face examination by the Zug prosecutor about his relationship with Bond.
The Australian Federal Police (AFP) undoubtedly knew at the time that they were in for a long wait, because Swiss law allowed people being chased by foreign police to challenge their pursuers in the courts. And as John Elliott was busy demonstrating, it was perfectly possible to stall this process for years.
Way back in 1991, Australia’s National Crime Authority (NCA) had asked the Swiss to obtain documents from Bank Cantrade in Zurich relating to an alleged secret $78 million profit made by Elliott and others in the big BHP takeover battle of 1986. The Swiss had granted the application promptly, but Elliott and Bank Cantrade had fought tooth and nail in court to prevent the documents being returned to Australia. And in late 1994, as the AFP began chasing Bond in Switzerland, the NCA had still not got the material.1
It was therefore only natural that Bond and Bollag should adopt the same strategy, because even if their chances of winning were slim, there was a good possibility that they could delay matters so long that the AFP’s patience would be exhausted.
The saga of Bond’s legal challenges is worth recording in some detail, because it reveals how the rich can use the courts to escape justice. As a joint parliamentary committee observed in 1998 in reviewing Elliott’s protracted battles with the NCA, the legal system gives those with money far too much scope to wage guerrilla warfare in the courts, in the name of protecting their rights.
While the system aims to ensure that no accused may be denied a fair trial, at the same time it leaves the way open for well-resourced defendants to defeat the process. People who successfully engage in criminal activity may delay or even avoid the due consequences of their actions.2
Or, more bluntly, there is no guarantee in today’s world that the rich will ever be brought to trial.
Nor was there any guarantee that the police would ever get Bond. Within hours of the raids on Bollag, his lawyers asked Zug Prosecutor Paul Kuhn for a formal review of the decision to issue search warrants. When this application was turned down they appealed to the Justice Commission of the Zug Superior Court. And when that was rejected in April 1995, Bond appealed to the Swiss Federal Court in Lausanne, who also knocked him back. But this was just the beginning.
Two months later, Bond applied to Kuhn for a new review, on the grounds that his bankruptcy had been annulled, and when this also met with rejection, the legal challenge once more climbed all three rungs of the ladder up to the Swiss Federal Court, which yet again ruled against him.
After these six legal skirmishes, the score stood at Switzerland 6, Bond 0, but the exercise had bought Bond valuable time, for by now the clock had ticked on to January 1996 and the police had been forced to sit on their hands for an entire year. There were plenty more battles to come—when Paul Kuhn ordered that the documents be sent to Australia, Bond was allowed by the Swiss to mount yet another round of legal challenges. These also ascended all the way up to the Swiss Federal Court, which once again ruled against Bond in August 1996, by which time it was Switzerland 9, Bond 0, and another eight months had passed.
During these legal challenges, the vital Swiss documents had been locked in a safe in Zug for twenty months, and the AFP had not been allowed to inspect them. But Bond, bizarrely, had been given access, even though he never tired of telling the world that Bollag’s affairs were nothing to do with him.
In May 1994, in the Federal Court in Sydney, Alan had denied on oath to Francis Douglas QC that Bollag was looking after his money.
Douglas:
What I am putting to you is that Mr Bollag essentially administers your personal affairs overseas. You just give instructions to him as to what to do with the money over there, and he does what you want him to do.
Bond:
You know that not to be the case.
Douglas:
No, I do not, Mr Bond. In fact I am putting to you that that is the truth.
Bond:
… he has no assets of mine.3
More recently, in December 1994, after the raids on Bollag’s house and offices, Bond had told Mark Drummond of the West Australian that it was ‘rubbish’ that Bollag was holding assets for him and that investigators were on a ‘wild goose chase’.4
If these vehement denials were true, it was hard to see how documents seized from Bollag could possibly have related to Bond or put him in any danger of prosecution. Yet he had nevertheless decided, after seeing them, to fight as though his fortune and freedom depended on it, so that they would not fall into the AFP’s hands.
Bond’s determination to keep these documents secret made it pretty obvious that they contained incriminating evidence, and he was forced to admit as much in 1997 when he mounted yet another legal challenge to the Swiss investigation in the Federal Court of Australia. Bond’s lawyer Andrew Fraser told the court in these proceedings that interrogation of Bollag and surrender of the documents to the AFP were likely to harm his client because the questions put to Bollag (and his answers) would or might relate to Bond, and because in the case of the raids:
The material which has been seized will or may be used in the prosecution [of Bond] for the proposed criminal charge of perjury and for offences under the Bankruptcy Act 1966.5
No doubt Bond’s lawyers would dispute that this constituted an admission of guilt, and would argue that the material seized from Bollag would merely have encouraged police to pursue an unjustified prosecution of their client. But these did not look like the pleadings of an innocent man.
Nor did the rest of Bond’s actions suggest that he was telling the truth. Alan, after all, was supposedly broke when Bollag was raided in December 1994, yet he was able to pay his lawyers hundreds of thousands of dollars to fight the police chase. And the mere fact that he was so determined to stop the investigation was powerful evidence that he had plenty to hide.
Bond had already tried to persuade the Federal Court in Melbourne to call off the dogs back in 1995, on the grounds that his bankruptcy had been annulled. But the Australian courts had given him no more encouragement than the Swiss. Justice Sandberg ruled in February 1996 that Bond could quite legitimately be prosecuted, because he had been a bankrupt when the alleged offences were committed.6 Bond had, of course, then appealed to the full bench of the Federal Court, which had also given him the thumbs-down. This took his score to Played 11, Lost 11, Won 0.
But even though Bond had lost every battle and spent several hundreds of thousands of dollars on his defence, he had by no means lost the war, because he had managed to delay delivery of the crucial Swiss evidence to the AFP until October 1996, thus forcing the police to twiddle their thumbs for roughly 800 days. And during this time, the general public had quite possibly lost interest. Bond, after all, had been sentenced by mid-1996 to three years in prison for the $15 million Manet fraud and would soon be jailed for another four-year term on the Bell conviction. Many people felt that he had been punished enough.
The documents that were eventually handed over to the Australian police in October 1996 have never officially been made public, but there is no doubt that they showed at least one of Bollag’s Swiss bank accounts to have Bond’s name written all over it. The Zuger Kantonal Bank had already supplied records of the ‘Xavier’ account in 1991 to Western Australia’s Director of Public Prosecutions, John McKechnie, when asked to help in tracing Laurie Connell’s assets, and this material was now also supplied to the AFP agents chasing Bond.
But far more importantly, the AFP learned that a second account at the Zuger Kantonal Bank, code-named ‘Jane’, had been held by Bollag as trustee for Alan Bond. The records showed that at least $20 million had flowed through this account in the early 1990s, with money arriving in large chunks and then departing to various destinations around the globe. Crucially, this ‘Jane’ account had also coughed up hundreds of thousands of pounds to pay the bills at Upp Hall until July 1991 and had paid fees for some of Touche Ross’s Jersey companies in 1992, which meant that the trail was fresh enough for police to bring charges against Bond for perjury and for concealing his assets.
Unfortunately, by late 1996, the millions the account contained had long since vanished. The bulk of the money had probably been moved to Liechtenstein, where the Private Trust Bank in Vaduz was thought by police to have a couple of million dollars of Alan Bond’s money. But it was hardly worth bothering to give chase, because Liechtenstein was such a tough nut to crack. And once again Bond and Bollag had been given far too much warning that investigators would come knocking.
Even if they couldn’t recover the money, however, the evidence in Zug looked strong enough to mount a prosecution against Bond, particularly if the AFP could use the material to persuade Bollag to tell all. Getting Bondy’s banker onto the stand was therefore the crucial next step.
The Zug prosecutor, Paul Kuhn, duly sent a summons to Bollag at the end of January 1997, telling him to present himself for questioning in early April. Meanwhile, back in Australia, Andrew Tuohy and Kelvin Kenney studied the Swiss documents, drew up a list of 7,000 questions, packed their bags for Europe, and tried not to get too excited about the prospect of getting their man at last. The Australian press also booked their tickets to Zug, in the hope of witnessing the kill, even though the examination would be conducted in Swiss German, behind closed doors.
At this stage, the AFP were optimistic that Bollag would talk, and privately confided to journalists that he had little choice but to do so. Bollag, they said, risked three months in jail for contempt of court if he refused to answer their questions, and was unlikely to want to do time for Bond. Word from the Bond camp indicated that they were also concerned he would crack.
Consequently, when Bollag walked into Kuhn’s office in Zug on 7 April, accompanied by a bevy of Swiss and Australian lawyers, there was an air of expectation that he would at last come clean about all the houses, horses and paintings that he had provided for the Bond family. But before the examination could even get under way, one of Bollag’s lawyers stood up to spoil the party. His client, he said, could not be forced to answer questions, because the Australian police had not yet brought charges against Bond and were merely investigating his alleged concealment of assets. Bond’s Swiss lawyer then leapt to his feet to make a similar statement and, with Bollag’s lips firmly sealed, the hearing was adjourned for the prosecution to regroup. The waiting press stood by puzzled as the phalanx of lawyers and policemen trooped out into the cold morning air after less than an hour.
A flurry of faxes was then exchanged between Zug and Canberra, in which the Australian Attorney General’s Department assured the Swiss that the law was quite clear and the interrogation must continue. But when the hearing resumed the next day, Bollag once again declared that he planned to stay silent, in defiance of a fresh directive from Kuhn that he answer all questions. And at this point Tuohy and Kenney had little choice but to pack their bags and catch a cab to the airport.
Shortly after they got back to Melbourne, Andrew Tuohy obviously decided that he had had enough of the whole business. In May 1997, after thirteen years in the AFP and more than three years chasing Bond, he left the police force to investigate fraud for a firm of accountants in the private sector, who would pay him twice as much money and give him cases where he had a far better chance of success. No doubt it would be a huge relief to operate outside the criminal justice system for once, where he would not need to prove the bleeding obvious beyond reasonable doubt.
Back in Switzerland, the examination of Bollag was now adjourned till June 1997 so that the Swiss courts could decide whether or not he could be compelled to answer questions, and before long they had given Bond and his banker another defeat to add to their score. But by the time the courts had made their decision Paul Kuhn had become bogged down in other cases in Zug, so the hearing had to be put off until November 1997, which was another five months away.
In the meantime, Bond and Bollag had opened up a second front of legal action in the Federal Court of Australia, running the same argument as in Switzerland, that Bond hadn’t been charged and that his alleged offences weren’t serious anyway. This, however, was comprehensively demolished in October by Justice Ron Merkel, who clearly felt it was time to take a stick to Bond in the interests of justice. Having scotched each one of Bond’s arguments, he told the court that he would have thrown out Bond’s application in any case because it was disgraceful that he hadn’t raised these issues in his previous attempt to kill the investigation in 1995. Bond and Bollag’s delay in bringing the proceedings, he said, was ‘unexplained, inordinate, inexcusable and unreasonable’, adding:
It is harmful to the administration of justice for applicants to challenge the criminal investigation process in a manner that both fragments and dislocates it … It is a serious misuse and abuse of the litigation process to contest proceedings in this manner …
Whilst the applicants have an undoubted right to challenge the use of coercive power in relation to them, they do not have the right to do so as and when they choose, by electing, reserving and preserving their points so they can be raised if and when it suits them or their litigation strategy. Yet that appears to be precisely what Bond and Bollag have done in the present case in order to delay the investigation into their dealings.7
Merkel’s stinging condemnation meant that Bond still hadn’t won a trick in thirteen legal battles in Switzerland and Australia. And it looked as though his luck might now run out on this number. In fact defeat appeared to be even more likely when Bollag’s examination resumed on 3 November because Bond’s banker surprised everyone, including his own lawyer, by telling the prosecutor that he was now prepared to take the stand. But just as victory for Bond’s pursuers looked certain, the prize was once again snatched away. On the second day of the examination Bollag began to parry questions by claiming privilege against self-incrimination, or as the Americans would put it, by taking the Fifth Amendment.
The AFP had anticipated this problem and granted Bollag indemnity from prosecution so that he could not be charged with any crime—which they believed would make it impossible for him to incriminate himself. But they had not done enough homework on the arcane provisions of Swiss law, for Article 29, paragraph 2 of the Zug Criminal Procedure Code allowed a very broad definition of what self-incrimination might mean. According to Bond’s Swiss lawyers, Bollag could decline to answer any question if he could convince the court that it would impugn him or make him personally responsible. Valid grounds for refusal, they said, might include the risk that it would expose him to civil action, jeopardise his reputation and social position, reveal defects in his character, force him to admit previous lies, expose him to disgrace or shame, force him to admit taking part in disreputable business such as money laundering, or even expose him to financial loss.
On this reading of the law, Bollag would be able to duck almost any question about his dealings with Bond, because typically he would either have to admit lying to the tax authorities about his income and wealth or confess he had lied to everyone else when he had denied it was Bond’s money he was looking after. But whether Bond’s lawyers were right or not about what Zug’s laws allowed him to claim, the AFP were almost certainly wasting their time, because arguments about Bollag’s right to stay silent would now trigger another round of legal challenges and postpone the examination again.
Worse still, as the current session disintegrated into farce, Bond and Bollag began yet another legal action in the Swiss courts to challenge release of the transcripts. Since Bollag had been examined in Swiss German and the AFP had not been allowed to tape the proceedings, Kelvin Kenney had only the vaguest idea of what Bondy’s banker actually said. And he would now have to wait an age to find out.
In the end, it took nine months until the transcripts were eventually released by the Swiss, after yet more legal defeats for Bond, and only then did the full scale of the catastrophe become clear. Bollag had spent the best part of three days either refusing to answer questions or claiming that he couldn’t remember.
By this stage almost four years had passed since the Swiss had been asked for help in tracking down Bond’s assets in September 1994, and almost five years since the AFP’s investigation had begun in November 1993, and it looked like taking another two years to get to the final showdown—or anticlimax. If Kuhn eventually decreed that Bollag had to answer questions, his decision was likely to be fought in the courts for six months or more. Then there would be a delay while a new examination was scheduled and then, if Bollag kept mum again, there would be another round of legal actions to challenge any punishment.
And in the meantime, even though nine months had elapsed since Bollag’s examination, Kuhn had not even begun the process of deciding whether Bollag’s reasons for claiming privilege should be accepted. In fact, he did not appear even to have received the written statement of reasons that Bollag was required by law to give.
To cap it all, the AFP now learnt for the first time that Bollag was most unlikely to face jail if he did defy the Zug prosecutor by staying silent. Prison, it seemed, was a punishment reserved for the most serious cases—such as drug trafficking or murder—while refusing to give evidence in a bankruptcy case was likely to be met with a fine of a few thousand dollars.
So in October 1998, faced with little chance of success, the AFP finally threw in the towel. Bond had lost every legal battle of the campaign but had still won the war. Soon afterwards, the AFP’s assistant commissioner Nigel Hadgkiss told a bankruptcy conference in Melbourne:
It became abundantly clear that Bollag was not a cooperative witness and would use any means available to him to thwart the investigation … It was clear that if we decided to pursue this matter and sought Bollag’s further examination in Switzerland he would be claiming privilege … and would seek to challenge any decision through the Swiss courts.8
The AFP had spent $750,000 of taxpayers’ money on the pursuit, while Tuohy and Kenney had devoted seven years between them to chasing Bond, yet they had still not managed to get their man. So what had gone wrong?
One view is that it was problematic having Paul Kuhn lead the fight. Kuhn was by all accounts an honest, diligent, dutiful prosecutor but he was also a small-town lawyer battling a team of international heavyweights. He was also wrestling with a criminal justice system in Zug that was understaffed and overworked. He had therefore not had the time, energy or experience to pursue Bond with sufficient vigour.
But neither were the Australian authorities blameless. Even though Kuhn barely spoke English, the AFP and Commonwealth Director of Public Prosecutions (DPP) did not take a translator to Switzerland. Nor did they hire a Swiss lawyer to represent them in court and guide them through the system. So the Australians found themselves playing away from home in a language they couldn’t speak, with rules that they didn’t fully understand. And this hardly gave them the best chance of success.
But on a broader, strategic scale, Bond’s pursuers also failed to appreciate what was necessary to win a case like this. Swiss lawyers say that the Australian authorities should have got far tougher with Bollag and should have put far more pressure on him to talk. Had the Americans been running the case, they say, investigators would have played hardball. Bollag would have been arrested the minute he stepped outside the country and extradition proceedings would have been used to induce him to talk.
As an example of how investigations in Switzerland can succeed, Swiss lawyers point to the case of Benazir Bhutto and her husband Ali Zardari, who were convicted of corruption and sentenced to five years in jail in Pakistan in 1998. During the investigation, the Pakistani Government uncovered evidence that the Bhuttos’ Geneva lawyer, Jens Schlegelmilch, had hidden more than $100 million in offshore companies that he controlled. Faced with his refusal to talk, they persuaded the Swiss to threaten Schlegelmilch with money-laundering charges, whereupon he agreed to give evidence.9
The Bhuttos, of course, were higher profile than Alan Bond, and several other factors made it an easier case to win. There were suggestions that drug money was involved, large sums were at stake, and new anti-money-laundering laws had come into force. But the Pakistanis also played tougher than the Australians by using their ambassador to put pressure on the Swiss Government to achieve a result. No one in the Bond investigation had imparted such a sense of urgency to the Swiss authorities or put the screws on Bollag. Australia’s police and politicians had either not believed it to be necessary or had felt it to be improper.
It was also a puzzle why the AFP didn’t attempt to bring charges against Bond in Australia without the Swiss banker’s evidence. To the ordinary person it was surely obvious that all the houses, horses and paintings belonged to Bond or his family. Plus, there was the testimony of Touche Ross in Jersey that they were dealing with Alan’s affairs and that the millions of dollars in Kirk Holdings belonged to Bond. Then there were the letters of instruction to Touche Ross that Alan himself had signed in 1982 and 1987. And more recently there were documents from the Zuger Kantonal Bank showing that the ‘Jane’ account had been held for Bond by Bollag and had paid bills for Upp Hall and the Jersey companies as late as 1992.
It seemed hard to believe that there was no prospect of a jury finding that Bond had possessed considerable offshore wealth at a time when he was denying on oath that this had ever been so. It also seemed hard to believe that no jury would conclude that he had concealed millions of dollars worth of assets from his creditors. Yet neither the AFP nor the Commonwealth DPP felt that it was worth mounting the case. Agent Kenney told the Australian Financial Review:
The likelihood of achieving a prosecution is not high. The fate of the investigation rested on the evidence of Bollag and without that we never had a case. He was the linchpin.10
By the end of 1998, of course, Bond was already serving time in jail for serious offences and paying his debt to society, so one could argue that he had been punished enough. But there were other compelling reasons not to let Bond get away with it. His ridiculous claims that he couldn’t remember having money offshore, his absurd story about a philanthropic Swiss banker buying him baubles, and his public protestations that he was brain-damaged, were such a flagrant insult to the system of justice that they should never have been allowed to go unchallenged. As it was, his escape sent a strong message to Australians: if you have enough nerve and enough money, like Alan Bond and Christopher Skase, you can get away with anything.
As for Jurg Bollag, who would now never have to tell the truth to investigators, he had served his master well. There’s an old Swiss saying that an honest man is someone who doesn’t cheat the person who bribes him, and Bollag had lived up to it. He had not run off with Bond’s money. Nor had he betrayed him to the authorities, despite the pressure to do so.
One had to say that Alan Bond had chosen his servant wisely.