UBS fails to overturn guilty verdict in French tax evasion case

Keystone / Sebastian Gollnow

An appeal court in Paris has confirmed that Swiss bank UBS is guilty of having assisted French tax evaders - but reduced the penalty from €4.5 billion (CHF4.7 billion) to €1.8 billion.

Switzerland’s largest bank systematically helped French clients evade taxes between 2004 and 2012 by enticing them to hide their money in Switzerland, the appeal court said on Monday.

In 2019, UBS was originally fined €3.7 billion and ordered to pay €800 million in civil damages to the French state after walking away from deferred prosecution negotiations.

UBS appealed the 2019 verdict, claiming it had been politically motivated. That appeal took place in March 2021 with the verdict being delayed by several months as a judge recovered from an illness.

The guilty verdict is a defeat for the bank that had asked for an acquittal. But the financial penalty is less than half of the original sum demanded and also less than the €3 billion that prosecutors wanted on appeal.

The new €1.8 billion charge consists of a €3.75 million fine, €1 billion of confiscated profits and €800 million in damages. Part of the reason for the reduced penalty is a ruling that the sum should be based on the amount of evaded taxes, not the total amount of assets held at UBS.

Mixed signal

Stéphanie Gibaud, the former UBS France employee whose whistleblowing started the proceedings against the bank, welcomed the guilty verdict as a “good signal” but questioned why the penalty had been cut by more than half.

“The size of financial penalties has to increase to force banks to change their practices,” she told SWI swissinfo.ch. “What has changed? Has tax evasion finished? Has the money come back to our countries? Of course not, because every year we seem to have a new scandal like the Pandora Papers.”

For Gibaud, the good news is that UBS has been found guilty by a court, rather than negotiating a settlement without having to admit criminal liability, as in other countries. “UBS can no longer say they have gone unpunished. This may pave the way for change as more people become aware of these scandals.”

And she called on countries to do more to protect whistleblowers to encourage more people to come forward with evidence of malpractice.

UBS said it is considering its optionsExternal link, including on whether to appeal for a second time.

The bank’s French branch was fined €1.875 million for unlawful solicitation of clients but, unlike UBS group, was cleared of money laundering charges. 

The bank had to stump up a €1.1 billion bond with the French authorities at the start of proceedings in 2014 and has set aside €450 million in legal provisions.