Swiss banking giant UBS and its executives are in the dock facing charges of aggravated tax fraud, money laundering and illegally soliciting clients in France. If convicted, the bank could end up paying a hefty fine.
Swiss bank UBS Group AG, its French unit and six top executives went on trial in Paris on Monday accused of helping wealthy clients stash cash overseas and avoid taxes in France.
The bank's staff allegedly approached French clients — from wealthy businessmen to sports stars — at receptions, golf and tennis tournaments or concerts to convince them to hide their money in Switzerland.
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If found guilty, the Zurich-based lender could face a hefty fine, amounting to as much as €5 billion ($5.76 billion).
The trial comes after years of investigations and the bank's aborted settlement negotiations with French authorities. During the French investigation, UBS turned down a settlement offer of €1.1 billion made by the authorities. The amount corresponded to what the Swiss bank had already paid as a court bond, according to judicial sources.
UBS, which is Switzerland's largest banking institution, intends to stand its ground in court. "After more than six years of legal proceedings, we will finally have the opportunity to respond to the often unfounded allegations," it said on Friday.
Among those on trial is Raoul Weil, the former third-in-command at UBS, and Patrick de Fayet, formerly the second-ranking executive for its French operations.
Legal woes all over
UBS has faced a series of fraud cases in a number of countries in recent years. Belgium has also indicted the bank for organized tax fraud, while it has paid fines to US, British and Swiss regulators over alleged interest rate rigging.
In the US in 2009, UBS accepted to pay $780 million to settle a similar tax probe after admitting it helped thousands of clients in the country to cheat the Internal Revenue Service. In Germany, likewise, UBS agreed to a €300 million fine in 2014.
The investigation into UBS in the United States began after UBS employee Bradley Birkenfeld revealed a scheme to funnel wealthy customers' cash from the United States to Switzerland bypassing the US taxman.
Birkenfeld spoke separately to French investigators. Even though he is not due to testify in court in Paris he will attend the hearings.
France's national financial crimes unit estimates at least €9.76 billion was not reported to the French tax authorities. For money laundering, French law lets judges enforce fines as high as half of the amount laundered.
The trial is set to last for six weeks until November 15. Most of the trial's first week will be spent on dealing with technicalities likely to be brought up by the defendants' lawyers.
The French tax case is one of two big legal issues still weighing over UBS. The bank is among several big financial institutions that have yet to settle disputes in the US over the sale of toxic mortgage securities in the years before the financial crisis.
sri/uhe (Reuters, AFP)