A sweeping investigation into UBS bank, accused of tax fraud and money laundering, comes to trial in Paris today. The bank risks a fine of up to €5 billion (CHF5.7 billion).
The trial is set to begin on Monday after years of investigations into the Swiss bank’s French activities, as well as aborted negotiations in which authorities made a settlement offer of €1.1 billion.
The trial involves the central UBS Group, its French unit, and six top executives. Charges centre on aggravated tax fraud, money laundering, and illegally soliciting French clients in the period between 2004 and 2011.
The six individuals include the former number two of UBS France, Patrick de Fayet, and ex-UBS executive Raoul Weil, who was acquitted of the charge of aiding massive tax evasion in the US in 2014. Weil subsequently claimed to have been treated as a “scapegoat”.
A similar judicial process in the US in 2009 saw the bank accept a settlement deal of $780 million (CHF774 million); Germany fined UBS €300 million in 2014.
After turning down a settlement in France, the bank intends to fight over the course of the trial. “After more than six years of legal proceedings, we will finally have the opportunity to respond to the often-unfounded allegations,” a spokesperson told the Reuters news agency.
For cases of money-laundering, French criminal law allows for fines of up to half of the amount laundered. In this case, prosecutors estimate that €8-10 billion was hidden from the taxman by UBS.
The trial is set to last for six weeks, with the early stages likely to focus on technicalities raised by defence lawyers.
Swiss banks penalised
Various Swiss banks have been fined by foreign authorities over the past decade, especially in the US, since the financial crisis and new tax evasion rules spurred tighter scrutiny of international practices.
In 2013, a Swiss-US agreement laid the foundations for a Swiss Bank Programexternal link that enabled wrongdoers to settle financially to avoid criminal prosecution through the US courts.
This classified Swiss banks under four categories: category 1 was those banks already under investigation, category 2 comprised of banks that wanted to come clean about their activities, whilst categories 3 and 4 contained those that had no case to answer.
Around 80 category 2 Swiss banks have paid out over $1.3 billion in fines to avoid prosecution. Credit Suisse, a category one bank, was fined more than $2.5 billion in 2014. A handful have yet to reach settlement.