UBS faces $3.6bn bill even as French seek tax-fine cut

Bloomberg

French prosecutors and lawyers for the government said UBS Group AG should be ordered to pay $3.6 billion — 33% less than the original judgment — for allegedly helping French clients hide money from the nation’s tax authorities.
Prosecutor Serge Roques asked a Paris court of appeals to impose a 2 billion-euro fine on UBS, acknowledging the limits set by recent guidance from France’s top court. The French state, which is a plaintiff in the case, is also seeking 1 billion euros in damages from the bank in addition to any court-imposed penalties.
The request came as part of the company’s appeal of a February 2019 ruling requiring it to pay 4.5 billion-euro in fines and damages, a European record. It was emblematic of a French crackdown on tax evasion that has focused on big banks from HSBC Holdings Plc to Credit Suisse Group AG, who investigators believed encouraged such behavior by its citizens.
“For facts of an exceptional magnitude, it is necessary to apply an exceptional fine,” Roques said during closing arguments in the case that started earlier in March.
Appeals in France take the form of a new trial where judges are often free to cut or raise the penalty as they see fit. The lower-court judgment has been put on hold pending the appeal and UBS has only set aside 450 million euros in provisions for the eventual verdict.
A ruling in the case is
expected in several months.
The stakes are high for UBS directors and executives after investors two years ago refused to release them from liability, reserving the right to legal action against management.
The bank was found guilty in 2019 of helping clients launder funds that should have been declared to French tax officials through numbered accounts and trusts. UBS further convicted of covertly dispatching Swiss bankers across border to encourage the prospective clients to move money across the border.
Five former UBS bankers were also found guilty, as was the lender’s French unit.
Earlier, judges expressed doubts about UBS’s arguments.
Presiding Judge Francois Reygrobellet voiced his exasperation after UBS invoked yet again Switzerland’s banking secrecy to remain evasive about a question that concerned client data.
“Foreign law cannot apply to facts that took place in France,” the judge said.
That followed Judge Hervé Robert being troubled by the way bank employees handled a prospective client in Bordeaux who had won 26 million euros in the lottery.