Paris court orders UBS bank to pay 4.5bn euros in tax fraud case

By

A Paris court has ordered Swiss bank UBS to pay a record fine of 3.7 billion euros and another 800 million euros in compensation to the French government after it was found guilty of laundering money for its wealthy clients in France in order for them to evade due tax payments.

This article is freely available. Check out our subscription offers. Subscribe

UBS Group was ordered to pay more than 4.5 billion euros ($5.1 billion) by a Paris court that found the bank guilty of helping wealthy French clients stash undeclared funds in Swiss accounts, reports Bloomberg.

Following the verdict, shares of UBS fell as much as 4.8 percent.

The Paris criminal court ruled on Wednesday that UBS illegally laundered funds by providing French customers with banking services to hide assets from tax authorities. The judges fined UBS 3.7 billion euros and added another 800 million euros in compensation to the French government.

“The criminal wrongdoings were of an exceptionally serious nature,” said presiding judge Christine Mee, who openly clashed with bank officials during a six-week trial. “These acts were committed behind the veil of opacity.”

For eight years, UBS has been dealing with the French probe – and bad press. Ahead of last year’s trial, the lender was accused in the indictment of laundering customers’ undeclared funds, and dispatching Swiss bankers across the border to seek out new clients even though they lacked the paperwork to offer such services in France.

The size of the verdict – the largest ever in France and likely one of the biggest in Europe – was likely a surprise to UBS, which had only set aside $640 million for litigation and other regulatory matters at its wealth management unit.

Analysts at Credit Suisse Group AG said the fine was four to five times larger than what the market expected. Mee’s ruling, however, was largely in line with the 3.7 billion-euro fine sought by prosecutors and the 1.6 billion euros in damages the government requested.

UBS said it would appeal the ruling, which delays the need to make any payments until there is a final decision from higher courts.

“The bank has consistently contested any criminal wrongdoing in this case throughout the investigation and during the trial,” UBS said in a statement. “The charges of laundering the proceeds of tax fraud are without merit, as the predicate offence of an original tax fraud of French tax payers was not proven.”

The Zurich-based bank’s shares fell as much as 4.8 percent, the most since January 22nd. They closed 3.5 percent down.

The French unit of UBS was also found guilty, as well as five former bankers who were defendants in the case. A sixth banker, Raoul Weil, was cleared by the court.

“The concealment of assets and the unpaid taxes caused financial damages of an exceptional nature given the longevity and size of the fraud,” Mee said.

The UBS case is part of a French crackdown on tax fraud operated through Switzerland that’s seen the conviction of a former minister and a 300 million-euro settlement with HSBC Holdings, the largest criminal fine in France until Wednesday.

Read more of this report from Bloomberg.

 

Extend your reading on Mediapart Unlimited access to the Journal free contribution in the Club Subscribe