[ by Melanie Gretchen ]

We are definitely in the wrong business.

A former UBS banker received a $104 million award, after the IRS recovered $5 billion in back-taxes based on the employee's allegations of tax evasion at the Swiss bank.  Bradley Birkenfeld, a former banker who called himself "Tarantula", can lay claim to the largest-ever reward bestowed on a whistleblower after he reported his findings to U.S. authorities in 2007.

A Brave New World. Congress launched a whistleblower program as part of Dodd-Frank to attract Wall Street and corporate insiders to report suspicions of fraud to the SEC.  Congress's incentive: up to 30 per cent of the recovery amount.  If the IRS program, after which it is modeled is any indication of potential success, we can expect more of these results:

• What the IRS found: a tax evasion scheme that cost the US government billions of dollars in taxes and resulted in criminal charges against Swiss banks and top executives
• Where UBS stands: the bank agreed to pay $780 million to settle with the Department of Justice
• What Mr. Birkenfeld's reward is worth:
  • A new precedent: although percentage-wise the former banker's reward is one 48th of the IRS's recovery, compared with the $50,000 the SEC awarded, after netting $1 million in penalties (one 20th), $104 million is a lot more than $50,000

“The IRS today sent 104 million messages to whistleblowers around the world that there is now a safe and secure way to report tax fraud and that the IRS is now paying awards." -- Mr. Birkenfeld’s lawyers.

For further details, go to [FT, 9/11/12] and [FT, 8/21/12].