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UBS

Swiss lawyer wanted in US family fraud case

A British lawyer has been charged and a Swiss lawyer is wanted for questioning by the US tax authorities for allegedly helping a well-known American family to hide unpaid taxes in Swiss bank accounts.

The US authorities have found the wealthy Seggerman family in New York to have held significant undeclared funds offshore in foreign accounts. The funds were smuggled into the US in tranches in an elaborate tax-evasion plan, newspaper Tages Anzeiger reported.

The head of the family, Harry Seggerman, the former vice-president of the Fidelity Investment Funds Group, died in 2001, leaving some $20 million to members of his family, with a significant portion being spread between offshore accounts at UBS Switzerland.

Following Harry Seggerman’s death, a family meeting was held in 2001 at the Four Seasons Hotel in New York. It is there that UK lawyer Michael Little is alleged to have presented the family members with a strategy to keep the funds hidden from the tax authorities, the New York Times reported.

A scheme was then set up whereby sums of money would be transferred to Britain and then changed into smaller sums or travellers’ cheques that could be brought discreetly back to the US.

Little, a 61-year-old lawyer, was arrested at Kennedy International Airport as he arrived from the UK on Thursday. He is the first UK lawyer to be held by the US authorities under such circumstances. If found guilty, he may be sentenced to up to five years in prison.

Suzanne Seggerman, one of the Seggerman daughters, is cooperating with the authorities as a witness. She has provided a number of details about the case, including details about the secret code words used in emails when communicating and notes taken from the original meeting in 2001.

A Swiss lawyer and a New Jersey accountant are also wanted for questioning by the prosecution services.

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FRANCE

Switzerland’s UBS faces €3.7-billion fine as crucial court ruling looms

A Paris court will rule Wednesday on whether Swiss banking giant UBS illegally tried to convince French clients to hide billions of euros in Switzerland, charges which prompted prosecutors to seek a record €3.7-billion fine.

Switzerland's UBS faces €3.7-billion fine as crucial court ruling looms
UBS denies charges it helped French clients evade tax and says it will defend itself "vigorously". Photo: AFP

The trial opened last autumn after seven years of investigations, launched when several former employees came forward with claims of unlawful conduct. 

The move came as authorities across Europe cracked down on tax evasion and dubious banking practices in the wake of the global financial crisis which erupted in 2007.

The pressure eventually forced Switzerland to effectively end its tradition of ironclad bank secrecy, by joining more than 90 countries which agreed to automatically share more client account information among each other.

In the UBS case, French authorities determined that more than €10 billion had been kept from the eyes of tax officials between 2004 and 2012.

The National Financial Prosecutor's office urged a €3.7-billion ($4.2 billion) fine, the largest ever sought in France, saying the bank and its directors “were perfectly aware that they were breaking French law” by unlawfully soliciting clients and helping them evade French taxes.

They also sought a €15 million fine for UBS's French subsidiary, and fines of up to €500,000 for six top executives, including Raoul Weil, the former third-in-command at UBS, and Patrick de Fayet, formerly the second-ranking executive for its French operations.

In addition, lawyers for the French state, which is a plaintiff in the case, asked for €1.6 billion in damages.

UBS, which was ordered to post €1.1 billion in bail, has denied the charges and said its operations complied with Swiss law.

It also says that it was “unaware” that some French clients had failed to declare assets in Switzerland, and that prosecutors have not produced any proof, such as client names or account numbers, to back up their fraud claims.

The case is being closely watched by industry executives at a time when Paris and other European capitals are hoping to lure multinational banks from London as Brexit looms.

'Milk tickets'

UBS is accused of organising or inviting prospective clients to prestigious outings such as the French Open or luxury hunting retreats, where UBS's Swiss bankers would meet their “prospects” — something they were not allowed to do under French law.

UBS France directors then used notes called “milk tickets” to keep track of how many “milk cans” – amounts of money – were transferred to Swiss accounts.

They say the system was merely a way to balance out bonuses due to French bankers who were effectively losing a client to their Swiss peers, and the notes were later destroyed.

But investigators claim the “milk tickets” were proof that UBS had a parallel accounting system for keeping the transfers off its official books.

Only one “milk ticket” was found during the inquiry, prompting defence lawyers to argue there was no proof to justify claims of a massive fraud.

Yet prosecutors pointed to the roughly 3,700 French UBS clients who later took advantage of an amnesty offer to regularise their tax declarations with the French authorities.

UBS has been embroiled in a series of similar cases, most notably in the United States, where the authorities said the bank used Switzerland's banking secrecy laws to help rich clients avoid taxes.

In 2009 it paid $780 million to settle charges it helped thousands of American citizens hide money from the Internal Revenue Service, and agreed to turn over information on hundreds of clients, severely denting Switzerland's long tradition of shielding banking clients and their operations from prying eyes.

That case was also prompted by a former American UBS employee turned whistleblower, Bradley Birkenfeld, whose book “Lucifer's Banker: The Untold Story of How I Destroyed Swiss Bank Secrecy” was published in 2016.

Last November UBS was again sued by US authorities, who accuse the bank of misleading investors over the sale of mortgage-backed securities in 2006 and 2007, just before the financial crisis struck.

UBS has denied the charges and said it will defend itself “vigorously”.