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CORRUPTION

Swiss banking giant UBS on trial in France over tax fraud claims

The Swiss banking giant UBS goes on trial in Paris on Monday October 8th to face accusations it orchestrated a huge tax fraud scheme for wealthy French clients, with potential fines of billions of euros.

Swiss banking giant UBS on trial in France over tax fraud claims
Photo: Fabrice Coffrini/AFP.

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.

“UBS will finally have the chance to respond to what are usually unfounded claims,” the bank has said, vowing to “strongly defend itself.”

Six bank managers and former managers are also on trial, including Raoul Weil, the former third-in-command at UBS, and Patrick de Fayet, formerly the second-ranking executive for its French operations. The inquiry was opened after a former employee alerted authorities over the bank's alleged system of setting up dual bookkeeping to hide the movement of capital into Switzerland.

France's national financial crimes unit estimates at least €9.76 billion ($11.2 billion) was not reported to the French tax authorities. 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. If convicted UBS could face fines of up to half the amount of money laundered, or nearly €five billion.

'My honour' 

The whistleblower in the case, Nicolas Forissier, was sacked by UBS in 2009 for alleged “gross misconduct”. “My honour will finally be cleared,” Forissier, a former internal auditing chief, said last year when judges ordered the trial after prosecutors and bank executives failed to reach a plea deal. 

READ ALSO: Behind the headlines: How Switzerland's political golden child fell from grace

According to documents provided by German authorities to French investigators, deposits from some 38,000 French clients with UBS amounted to a total of around 13 billion Swiss francs (€11 billion, $13 billion), a source close to the case told AFP. Not all these clients are suspected of tax fraud, the source said. 

UBS has faced similar accusations in other countries in recent years. In 2009 the bank was ordered by the US authorities to pay a $780 million fine for allegedly helping 20,000 wealthy clients hide some $20 billion from the Internal Revenue Service. 

READ ALSO: Swiss bank UBS to pay $230 million in US subprime settlement

Belgium has also indicted the bank for organised tax fraud. France has cracked down hard on tax evasion in the wake of the 2008 financial crisis, not least after a former budget minister was found to have hidden money in overseas accounts. A court upheld Jerome Cahuzac's fraud conviction this year, handing him a €300,000 fine and banning him from public office for five years. 

The UBS trial is expected to run until mid-November, barring any procedural delays.

READ MORE: Former Spanish king accused by alleged former lover of holding secret Swiss bank accounts to launder funds

CORRUPTION

Barçagate: Police raid FC Barcelona offices and arrest former president

Police raided the offices of FC Barcelona on Monday, carrying out several arrests just six days ahead of the club's presidential elections, a Catalan regional police spokesman told AFP.

Barçagate: Police raid FC Barcelona offices and arrest former president
Barcelona's former president Josep Maria Bartomeu is among the arrested. Photo: Josep Lago/AFP

Spain's Cadena Ser radio said one of those arrested was former club president Josep Maria Bartomeu, who resigned in October, along with CEO Oscar Grau and the club's head of legal services.

But the police refused to confirm names, saying only “arrests are taking place” and adding that the operation was being run by officers from the financial crimes unit.

“We are in the process of carrying out an operation right now with agents of the financial crimes unit,” the police spokesman told AFP.

According to reports in the Spanish media, the operation is linked to last year's investigation into the 'BarçaGate' scandal, which saw the club deny hiring a company to criticise current and former players on social media to improve the image of the then-president Bartomeu.

Cadena Ser said Barca paid €1 million in six separate invoices to the company I3 Ventures, with whom the club have since cut ties.

Bartomeu resigned in October, after mounting pressure following months of controversy and a dramatic decline in performances on the pitch.

His successor is due to be elected on Sunday, when club members will choose between the final three candidates, Joan Laporta, Toni Freixa and Victor Font.

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