13/12/21

SWITZERLAND: UBS fails to overturn French tax evasion guilty verdict.

As published on swissinfo.ch, Monday 13 December, 2021.

An appeal court in Paris has confirmed that Swiss bank UBS is guilty of having assisted French tax evaders - but reduced the penalty from €4.5 billion (CHF4.7 billion) to €1.8 billion.

Switzerland’s largest bank systematically helped French clients evade taxes between 2004 and 2012 by enticing them to hide their money in Switzerland, the appeal court said on Monday.

In 2019, UBS was originally fined €3.7 billion and ordered to pay €800,000 in civil damages to the French state after walking away from deferred prosecution negotiations.

UBS appealed the 2019 verdict, suggesting that it had been politically motivated. That appeal took place in March 2021 with the verdict being delayed by several months as a judge recovered from an illness.

The guilty verdict is a defeat for the bank that had asked for an acquittal. But the financial penalty is less than half of the original sum demanded and also less than the €3 billion that prosecutors wanted on appeal.

The new €1.8 billion charge consists of a €3.75 million fine, €1 billion of confiscated profits and €800 million in damages. Part of the reason for the reduced penalty is a ruling that the sum should be based on the amount of evaded taxes, not the total amount of assets held at UBS.

Stéphanie Gibaud, the former UBS France employee whose whistleblowing started the proceedings against the bank, welcomed the guilty verdict as a “good signal” but questioned why the penalty had been cut by more than half.

“The size of financial penalties has to increase to force banks to change their practices,” she told SWI swissinfo.ch. “What has changed? Has tax evasion finished? Has the money come back to our countries? Of course not, because every year we seem to have a new scandal like the Pandora Papers”.

For Gibaud, the good news is that UBS has been found guilty by a court rather than negotiating a settlement as in other countries, without having to admit criminal liability. “UBS can no longer say they have gone unpunished. This may pave the way for change as more people become aware of these scandals.”

And she called on countries to do more to protect whistleblowers to encourage more people to come forward with evidence of malpractice.

UBS has not yet responded to the appeal verdict.

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