Tuesday, November 19

Swiss bank UBS faces French court ruling on fraud charges

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A sign of Swiss banking giant UBS is seen at a branch in Zurich. After a six-year investigation, judges last year charged the bank and its French subsidiary of laundering proceeds from tax fraud carried out from 2004 to 2012, allegations the bank has denied. Paris courthouse will rule on the case for the Swiss giant bank UBS on the afternoon of Feb 20. — AFP photo

PARIS:  A Paris court will rule on whether Swiss banking giant UBS illegally tried to help French clients hide billions of euros from French tax authorities, charges which could see it face penalties of up to 5.3 billion euros (US$6 billion).

It’s a high-stakes gamble for UBS, which tried to negotiate a settlement to avoid the potentially embarrassing court showdown, before failing to agree on a fine with prosecutors.

The trial opened last autumn after seven years of investigations, launched when former employees came forward with claims of unlawful conduct.

This came as authorities across Europe cracked down on tax evasion and dubious banking practices in the wake of the 2008 global financial crisis.

The pressure eventually forced Switzerland to effectively end its tradition of ironclad bank secrecy, by joining more than 90 countries which agreed to automatically share more client account information with each other.

In the UBS case, French authorities determined that more than 10 billion euros had been kept from the eyes of their tax officials between 2004 and 2012.

The National Financial Prosecutor’s office is seeking a 3.7 billion euro fine, the largest ever asked for in France, saying the bank and its directors “were perfectly aware that they were breaking French law” by unlawfully soliciting clients and helping them evade French taxes.

They also want a 15 million euro fine from UBS’s French subsidiary, and fines of up to 500,000 euros for six top executives, including Raoul Weil, the former third-in-command at UBS, and Patrick de Fayet, formerly the second-ranking executive for its French operations.

In addition, lawyers for the French state, which is a plaintiff in the case, asked for 1.6 billion euros in damages.

UBS, which was ordered to post 1.1 billion euros in bail, has denied the charges and said its operations complied with Swiss law.

It also says it was ‘unaware’ that some French clients had failed to declare assets in Switzerland, and that prosecutors have not produced any proof, such as client names or account numbers, to back up their fraud claims.

The case is being closely watched by industry executives at a time when Paris and other European capitals are hoping to lure multinational banks from London as Brexit looms. — AFP