French Court of Appeal says UBS helped clients avoid tax

An appeals court in France on Monday ordered Swiss bank UBS to pay a fine of 1.8 billion euros (about $ 2 billion) for helping wealthy clients evade tax – less than the half the fine the bank was ordered to pay two years ago in a sensational case prosecutors compared to the plot of a James Bond movie.

Judges originally ordered UBS in 2019 to pay € 3.7 billion – the largest fine in French history – for implementing what prosecutors have called a long-standing ploy to help wealthy French clients illegally hiding huge sums of money from the authorities, using a coat. and dagger tactics.

The court reduced the financial penalty on Monday but upheld the charges against UBS. The sanction consists of a confiscation order of one billion euros and 800 million euros in damages.

UBS has denied any wrongdoing and said it will appeal the latest ruling to France’s highest court. He made an unsuccessful attempt earlier this year to get the case quashed on constitutional grounds. By asking for a reduced penalty, UBS’s lawyers argued that while some of its Swiss bankers encountered wealthy French clients, they were not illegally soliciting them to evade tax.

The case exploded in 2019 following a seven-year investigation by French financial authorities. Several whistleblowers from UBS France recounted how bank workers in France and Switzerland engaged in illegal activities that essentially sidetracked French tax authorities of more than € 10 billion. UBS fined the United States $ 780 million in 2009 to resolve charges it allegedly helped wealthy clients there evade taxes.

Prosecutors described how bankers at UBS France, motivated by the prospect of large bonuses, alerted their Swiss counterparts to possible “big potatoes” – French citizens with assets of 500,000 to 10 million euros.

To entice these people to open undeclared accounts outside of France, UBS employees smuggled from Switzerland to France, where they staged posh activities – including shows at the Paris Opera, exhibitions art and hunting trips – where bankers could mingle with prospects in the hope of circumventing French laws prohibiting foreign companies from soliciting clients on French territory, prosecutors said.

To avoid detection, the bankers involved in the scheme followed a UBS “security governance manual” which included instructions for using encrypted computers, business cards without the bank logo, and changing frequently. hotel, prosecutors said. In case of capture, instructions describe how to store documents and computer USB drives in hidden pockets sewn into coats and backpacks.

The bank also created a parallel accounting system known as milk books, after small notebooks used as ledgers by Swiss cow farmers, prosecutors said. The books have been used to monitor and hide illicit money transfers between Paris and Geneva, prosecutors said.

Four UBS bankers were sentenced to suspended prison terms of up to one year and fines of € 300,000 each.

UBS has five days to appeal the decision. The bank’s shares jumped nearly 3% on Monday after the court’s announcement.