Swiss banking giant UBS is to go on trial in France for establishing a wide-ranging tax fraud scheme totaling billions of euros, legal sources said on Monday.
UBS is to be charged with illegal banking practices and dissimulating tax fraud, the sources said, adding UBS’s French subsidiary would also go on trial for complicity.
Five UBS managers are also facing trial, including Raoul Weil, the former third-in-command at UBS.
The French subsidiary’s former No. 2, Patrick de Fayet, has entered a plea bargain procedure, they said.
France opened a probe into UBS after former employees blew the whistle over the bank’s alleged system of setting up dual bookkeeping to hide the movement of capital into Switzerland between 2004 and 2012.
The bank’s staff allegedly approached French clients, from wealthy businesspeople to sports stars, during receptions, golf tournaments and concerts to convince them to hide their money in Switzerland.
“My honor will finally be cleared,” said former UBS internal auditing chief Nicolas Forissier, one of the whistle-blowers. “The company is going to have to face the truth.”
Forissier was sacked by UBS in 2009 for “gross misconduct.”
In total, at least 9.76 billion euros (US$10.54 billion) were kept from the French tax man, according to the national financial crimes unit.
In June last year, French prosecutors recommended that UBS face trial for “aggravated laundering of tax fraud proceeds,” while its French branch be judged for complicity in the crimes.
The move followed failed negotiations over a plea bargain.
“Those negotiations failed in particular because prosecutors and the bank could not agree on the sum that the bank would have to pay,” one source close to the case said.
UBS has always denied any wrongdoing, saying there was no proof for its implication in any such alleged scheme.
On Monday, it said it rejected both “the allegations and the nature of the charges brought,” a Paris-based UBS spokesman said.
The trial offers the bank “the possibility of responding to the accusations brought against it,” the spokesman said, adding that UBS was hoping for a “fair trial.”
A lawyer for the bank, Denis Chemla, said the charges contained “no special surprises” and called them “unfounded.”
According to documents that German authorities handed over to French investigators, deposits from about 38,000 French clients with UBS amounted to a total of about 13 billion Swiss francs (US$13.5 billion), a source close to the case said.
Not all the clients are suspected of tax fraud, the source said.
Any fine for UBS could amount to half the sums laundered, according to French criminal law.
If investigators are right in their estimates, that would mean a fine of up to nearly 5 billion euros.
French judges already slapped a 1.1 billion euro bond on UBS in 2014, a measure the bank failed to overturn before the European Court of Human rights in January.
The court, which normally hears complaints from individuals, ruled that the 1.1 billion euro bond was “an interim measure which did not prejudge the outcome of the proceedings.”
On the Zurich Stock Exchange on Monday, UBS shares closed 0.9 percent lower at SF15.89, having bounced off the day’s low of SF15.77.
UBS has faced similar accusations in other nations.
In the US it settled with the authorities, paying a US$700 million fine, after allegedly helping 20,000 wealthy clients to hide about US$20 billion from the Internal Revenue Service. Belgium has indicted the bank for serious, organized tax fraud.
Headquartered in Zurich, Switzerland, UBS provides financial advice and banking solutions to wealthy, institutional and corporate clients worldwide, as well as private clients in Switzerland.
It calls itself “the world’s largest and fastest-growing wealth manager.”
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