Financial Regulatory Forum

UBS chair says clients ‘not harmless victims’-paper

August 24, 2009

UBS/TAX   ZURICH, Aug 23 (Reuters) – Clients of UBS facing disclosure of their accounts to U.S. tax authorities were not harmless victims, and legal cases against former UBS bankers did not affect the bank, its chairman told Swiss Sunday newspapers.
   “The clients are not just harmless victims. They knew what they wanted to evade,” Kaspar Villiger, chairman of the world’s second-largest wealth manager, said in an interview with SonntagsBlick.
   “But they trusted the bank that it would work. Now we have to correct that,” said Villiger, adding it was still not the responsibility of UBS<UBSN.VX><UBS.N> to make sure clients paid their taxes.
   Switzerland last week agreed to reveal the names of thousands of UBS’s rich U.S. clients to Washington, settling a tax-avoidance dispute that had battered the bank’s reputation and damaged Switzerland’s prized bank secrecy. [ID:nLJ718259]
   Villiger did not believe systematic tax evasion had been a problem in countries other than the United States, he said in a separate interview with NZZ am Sonntag, adding that legal action against former U.S. bankers did not affect the bank.
   “The personnel consequences have been solved in so far as those responsible no longer work for UBS. We have not discovered any misdeeds relevant to Swiss criminal law,” Villiger said. “That means we have no reason to take action against individual employees.”
   Under Swiss law, tax fraud is a criminal offence, while tax evasion is punishable only with a fine.
   Villiger did not expect the introduction of an automatic exchange of client data between countries in future.
   “If Europe took unilateral action to introduce an information exchange and also forced this on Switzerland, money would flow to Asia in a big way,” he said.
   Switzerland sold its 9 percent stake in UBS, making a solid profit on last year’s rescue of its largest bank, the day after the historic agreement with Washington. The buyers were international investors, showing confidence in the bank, Villiger told SonntagsBlick. [ID:nLK353972]
   Serious, systematic tax evasion should not be protected by bank secrecy, said Villiger, but Swiss banks would face increased competition in future as a result of the agreement.
    “Swiss banks hid behind bank secrecy for years,” said Villiger. “The competition has got bigger with the disappearance of the difference between tax fraud and tax evasion.”
   Switzerland’s Foreign Minister, Micheline Calmy-Rey, told SonntagsZeitung that the Swiss state could hand over the data of other clients to U.S. authorities if requested given cases of “tax fraud and the like” as set out in the agreement over UBS.
   “Accounts would only have to be disclosed in cases that are absolutely of the same kind. That can not be ruled out,” she said in the interview.
   UBS should pay for the costs of the Swiss government to reach the agreement with the U.S., though the legal basis for doing this still had to be cleared up, she added.
   “If the Federal Government wants to have the costs reimbursed, then we will do that,” Villiger told SonntagsBlick.
   Villiger was pleased with the progress UBS had made in recent months on key issues like the U.S. tax case and improving its capital base, but said the bank, which booked the biggest loss in Swiss corporate history in 2008, still had a way to go.
   “The majority of the work is still in front. We have to return to profitability,” he said. (Reporting by Jason Rhodes; Editing by Rupert Winchester) ((jason.rhodes@thomsonreuters.com; +41 58 306 7312; Reuters Messaging: jason.rhodes.reuters.com@reuters.com))
 Keywords: UBS/TAX
  
Sunday, 23 August 2009 14:16:06RTRS [nLN268010 ] {C}ENDS

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