SHARE
COPY LINK

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

FOOTBALL

Trial over 2006 German World Cup corruption opens in Switzerland

Three former German football officials and ex-FIFA Secretary General Urs Linsi went on trial on Monday in Switzerland over suspicions that Germany bought votes to obtain the 2006 World Cup.

Trial over 2006 German World Cup corruption opens in Switzerland
Photo: FABRICE COFFRINI / AFP

The three defendants have indicated that they will not be present at the hearing in Bellinzona for a variety of reasons, including fear of travelling because of coronavirus contagion.

Swiss Linsi, 70, former German Football Association (DFB) presidents Wolfgang Niersbach, 69, and Theo Zwanziger, 74, and 78-year-old former DFB General Secretary Horst R. Schmidt are being prosecuted for “fraud”.

They are accused by the Swiss Federal Prosecutor's Office (BA) of concealing from the DFB the true destination of a transfer of 6.7 million euros ($7.6 million today), paid in 2005 by the organising committee to former Adidas boss, the late Robert Louis-Dreyfus, via FIFA.

The case of former World Cup organising committee chairman Franz Beckenbauer is being heard separately because of the former Germany captain's poor health.

The investigation was prompted by a report in German publication Der Spiegel in 2015 that Germany had used a secret fund of 10 million Swiss francs (6.7 million euros at the time) to buy votes and obtain the rights to host the competition at the expense of South Africa.

Beckenbauer is suspected of having asked Louis-Dreyfus, to contribute to this fund shortly before the vote on the host in the summer of 2000.

Louis-Dreyfus was allegedly reimbursed by the German Football Association on the pretext of expenses related to a FIFA gala evening, which ever took place.

Zwanziger, Niersbach and Schmidt have also been charged with tax fraud in Germany and the case is expected to come to trial in the coming months. cpb/pb/td

SHOW COMMENTS