UBS appears before the Paris Court of Appeal from 8 March

On the 03/08/21 at 7:37AM


Tuba Raqshan

Fined €3.7bn in February 2019, the Swiss bank plans to cite a French court ruling in another case.

Justice has been delayed by the pandemic. Initially scheduled for 2-29 June, UBS’ hearing before the Paris Court of Appeal in its tax evasion case will ultimately begin on 8 March and last for three weeks. In its annual report, which it released on Friday (5 March), UBS reiterated its stance: “UBS denies any criminal wrongdoing in this case. Our provision remains at EUR 450 million (USD 549 million), unchanged since year-end”. This case is nonetheless keeping the bank busy, as its special committee reviewed the matter throughout the year, the report said. The bank had already released a special, 12-page document prior to its 2020 annual general meeting to reply to questions from shareholders and employees.

For its defence, UBS is expected to cite a September 2009 ruling by the French Cour de Cassation in another case. In that case, the judge ordered a reduction in the fine against a person convicted of tax evasion, as it was based on sums hidden outside France and not on dues owed. UBS was found guilty not of tax avoidance but on the amounts deposited by almost 4000 of its clients in Switzerland. Payment of the fine is suspended during the appeal process. UBS looks confident, having set aside just €450m in provisions. “Even if UBS’s conviction is confirmed on appeal, the bank stands to get a significant fine reduction,” Arnaud Tailfer, a tax lawyer at Arkwood SCP in Paris, told Bloomberg. UBS has already suggested that it will take the case to the Cour de Cassation if the verdict is against it, in asking in the January 2020 document “if UBS could appeal the Court of Appeal’s decision”.

Its decision would carry weighty consequences. “As with all litigation, the final outcome of the French cross-border case will have an impact on the RoCET1 measure, and, accordingly, on the final payment of indemnities of the long-term incentive plan (LTIP) of all the UBS executive committee members, reflecting the alignment with shareholder interests”, the annual report said.  In particulier, “Some of the compensation paid to the group’s former chairman and CEO under the 2019 LTIP is also subject to confiscation depending on the final outcome of the French cross-border case”, the annual report said. Sergio Ermotti was paid CHF 13.3m for 2019.

The heaviest court-ordered tax-evasion fine ever in France

UBS had been fined €3.7bn in February 2019 by a Paris criminal court for illegal solicitation of clients domiciled in France from 2004 to 2011 and aggravated money laundering of assets generated by tax fraud by clients domiciled in France from 2004 to 2012. This was the heaviest in-court fine for tax evasion every in France. The French subsidiary, UBS France, was fined €15bm for conspiracy to commit illegal soliciting from 2004 to 2009 and conspiracy to commit aggravated money laundering of assets generated by tax fraud.

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