Financial Regulatory Forum

SPECIAL REPORT – How the U.S. cracked open secret vaults at UBS

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By Lisa Jucca

ZURICH, April 9 (Reuters)- After the collapse of Lehman Brothers in September 2008, Switzerland’s largest bank was teetering. UBS, which was more than three times bigger than Lehman in terms of assets, had to write down some $50 billion during that tumultuous period.

Investors the world over breathed a sigh of relief on Oct. 16 when the Swiss government rescued UBS. But unbeknownst to them at the time, the bank faced a potentially devastating crisis on a very different front.

One day after the bailout, top executives from UBS and Swiss regulators were summoned to a closed-door meeting in New York by U.S. officials who were conducting a wide-ranging tax fraud investigation that centered on the bank.

The UBS delegation, led by newly-appointed Group General Counsel Markus Diethelm, arrived armed with the results of an internal report highlighting instances of tax fraud within the bank, insiders told Reuters. The plan was simple: admit guilt, settle the case quickly and move on.

But Kevin Downing, the U.S. Department of Justice Tax Division Attorney who had been investigating UBS since the middle of 2008, chose that meeting to drop a bombshell: he wanted the bank to disclose names of U.S. tax evaders as a condition for a settlement.

Swiss say to be removed from tax haven list

Swiss President and Finance Minister Hans-Rudolf Merz speaks to members of the National Council during the autumn parliament session in Bern September 22, 2009. REUTERS/Pascal Lauener (SWITZERLAND POLITICS) By Lisa Jucca and Sven Egenter
ZURICH, Sept 24 (Reuters) – Switzerland expects to be taken off the OECD’s list of tax havens after the country signed the required 12th tax deal on Thursday.

(more…)

Switzerland nears removal from tax haven “gray list”

ZURICH, July 15 (Reuters) – Switzerland said on Wednesday it had agreed a new tax treaty with Austria, bringing the total of tax deals to 11 and leaving it only one step away from being removed from an OECD list of tax havens. (more…)

UBS will ‘pay a price’ in US tax case, Swiss minister says

   By Kim Dixon
   WASHINGTON, July 7 (Reuters) – Swiss bank UBS AG has made mistakes and will likely have to pay a price to settle the U.S. government’s tax case against it, Switzerland’s domestic economy minister said on Tuesday. (more…)

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