UNDECLARED SWISS FUNDS
UBS ‘very pessimistic’ about settling French tax fraud case
Paris — UBS Group is "very pessimistic" about reaching an agreement with French authorities to settle a case of alleged tax fraud that forced the bank to post a €1.1bn bond to cover any potential penalties three years ago, Journal du Dimanche reported.
France’s financial prosecutor was seeking a €1.1bn fine from UBS to settle the case with no admission of guilt from the lender, the French newspaper said on Sunday, quoting unidentified sources.
"Such a large amount is unthinkable vis-a-vis our shareholders as well as vis-a-vis other jurisdictions with which we have negotiated," UBS general counsel Markus Diethelm said in an interview with the newspaper.
UBS had been pushing to settle the French investigation for less than the €300m it paid to resolve a similar issue in Germany in 2014, people familiar with the matter said earlier in March. The Swiss bank was looking to pay less than what it cost to resolve the German case as the French wealth management market was much smaller, the people said at the time.
Investigative judges, who ran the probe, are currently in a position to order a trial or dismiss the case, a move that would effectively end settlement talks
After several confidential meetings with France’s financial prosecutor, Diethelm said he was "very pessimistic" about reaching an accord. "What was put on the table wasn’t reasonable," he said.
French MPs last year approved a new civil settlement procedure requiring that fines be based on the advantage derived from the wrongdoing, within a limit of 30% of average revenue over the past three years. Talks between the financial prosecutor and UBS have been continuing since.
Investigative judges, who ran the probe, are currently in a position to order a trial or dismiss the case, a move that would effectively end settlement talks. In February 2016, they completed their probe into allegations UBS had conspired to help clients evade taxes and laundered the proceeds.
While no action had been announced since then, the case might be sent to trial as soon as next week, the paper reported, quoting unidentified sources.
If the case goes to trial, UBS could be fined as much as €4.9bn or half of the €9.8bn that investigative judges estimate French citizens have stashed in undeclared offshore funds managed by UBS.
UBS previously sought to reach a deal with French authorities before the new settlement procedure was approved but talks broke down in 2014 after it baulked at entering a guilty plea.