UBS ordered to pay more than $5.1 billion in French tax case

Bank was found guilty of helping French clients hide assets from tax authorities

Feb 20, 2019 @ 8:28 am

By Bloomberg News

UBS Group was ordered to pay more than 4.5 billion euros ($5.1 billion) by a Paris court that found the bank guilty of having helped wealthy French clients stash funds in undeclared Swiss accounts. Shares of UBS fell as much as 3.1%.

The Paris criminal court ruled on Wednesday that UBS illegally provided French customers with banking services to hide assets from tax authorities. The judge fined UBS 3.7 billion euros and added another 800 million euros in compensation to the French government.

"The criminal wrongdoings were of an exceptionally serious nature," said Presiding Judge Christine Mee.

For eight years now, UBS has been dealing with the French probe — and bad press.

Ahead of last year's trial, the lender was accused in the indictment of dispatching Swiss bankers across the border to seek out new clients even though they lacked the paperwork to offer such services in France, and also of laundering customers' undeclared funds. In court, financial prosecutors asked judges to impose a record fine of 3.7 billion euros on UBS, while the French state sought 1.6 billion euros in damages.

The French unit of UBS was also on trial in Paris after being accused of aiding and abetting its Swiss parent to commit the wrongdoing, and six former bankers were defendants in the case.

(More: UBS Wealth embraces exotic strategies to battle market headwinds)

For the first three weeks of the trial, all seemed to be going to plan for UBS. Testimony was consistent and in favor of the bank, with few biting questions from judges or prosecutors.

Then, mid-trial, Ms. Mee started telling defendants she didn't buy their explanations and her remarks became sarcastic. The judge cut off a UBS executive for lecturing her and even yelled at UBS's main counsel for squabbling with a plaintiff lawyer during a defendant's testimony.

(More: UBS saw decline in new client money in fourth quarter)

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