UBS accused in Paris tax trial
• Prosecutor says lender used James Bond-style tactics
UBS Group went on trial in Paris on Monday accused of encouraging rich clients to stash cash overseas to evade French taxes by deploying tactics “worthy of James Bond”.
UBS Group went on trial in Paris on Monday accused of encouraging rich clients to stash cash overseas to evade French taxes by deploying tactics “worthy of James Bond”.
The Zurich-based lender dispatched bankers across the border to seek out new clients even though they lacked the paperwork — a banking licence or European passport — to offer such services in France, the lead investigator wrote in the indictment, ahead of the trial that started on Monday afternoon.
When they came over from Switzerland to France, UBS bankers allegedly took several steps, described in the prosecution’s opinion on the case as akin to 007 techniques and listed in a “security risk governance” manual, to avoid detection by authorities. They used encrypted computers, had business cards without the lender’s logo and were told to switch hotels often, according to prosecutors.
UBS also allegedly helped clients to launder money they had not declared to French authorities. The bank, which risks billions of euros in fines if found guilty, has consistently denied any wrongdoing.
UBS’s French unit, UBS France, as well as several top executives including Dieter Kiefer, the former head of UBS Group’s wealth management for Western Europe, will also stand trial for their alleged roles in the case. The defence teams for UBS and its French unit are expected to raise procedural issues concerning the indictment at the onset of the trial.
The UBS case is part of a French crackdown on tax fraud operated via Switzerland that has seen the conviction of a former minister and a €300m ($345m) settlement with HSBC Holdings Plc in 2017.
The seven-year-old case began with a whistle-blower report and culminated in 2014 with UBS being forced to post a €1.1bn bond to cover any potential penalties — an amount even the European Court of Human Rights did not consider unfair.
The case has come to court after settlement talks between UBS and French authorities broke down in March 2017.
“After more than six years of legal proceedings, we will finally have the opportunity to respond to the often unfounded allegations that were frequently leaked to the media, in clear violation of the presumption of innocence and the legal confidentiality of the process,” UBS said in an e-mailed statement.
Investigators say UBS bankers organised client events in France, including golf tournaments, hunting outings and art exhibitions, to encourage residents to move undeclared assets to Switzerland, according to a summary of prosecutors findings. To calculate the basis for any fine in the French case, authorities set out to estimate the depth of the tax fraud.
In one estimation, investigators say French citizens may have stashed €9.8bn in undeclared offshore funds under the Swiss bank’s management — putting the maximum fine at half that amount or €4.9bn.
Kepler Cheuvreux analyst Jacques-Henri Gaulard says the HSBC precedent — where the amount of concealed assets was more than five times smaller than in the UBS case — suggests the fine could reach Sf2.2bn ($2.2bn). Still, other analysts have pointed to a smaller sum.
A settlement “in the same range” as HSBC would be taken well by the market, JPMorgan Chase analysts, led by Kian Abouhossein, wrote in a recent note to clients.
UBS had Sf567m of provisions for litigation and other regulatory matters at its wealth management unit as of the end of June. The bank does not break down how much of that number is dedicated to Monday’s case.
Nearly a decade ago, UBS already agreed to pay $780m to avoid US prosecution in a similar tax probe after admitting it helped thousands of clients in the country cheat the Internal Revenue Service.
AFTER MORE THAN SIX YEARS OF LEGAL PROCEEDINGS, WE WILL FINALLY HAVE THE OPPORTUNITY TO RESPOND