UBS dodges bigger bullet in tax pact
Though paying a hefty fine, the Swiss bank is paying ZERO punitive fines, despite conceding that they helped U.S. residents – estimated to number 250 — avoid paying income taxes over an eight year period.
The agreement announced on Wednesday specifies that UBS will give up $380 million of profit from eight years of cross-border business — of which $200 million will be paid to the U.S. Securities and Exchange Commission and $180 million to the Department of Justice — and $400 million for back taxes, tax penalties and restitution for unpaid taxes and interest .
But it will not pay a penalty. In addition to wining points for its cooperation, Uncle Sam evidently took pity on a bank that has already suffered billions of losses from fixed-income trades and investments during the credit crunch. Halfway down Page 3 of the agreement Reuters found this little nugget:
“In recognition of the current international financial crisis and after consultation with the Federal Reserve Bank of New York, the government will forgo additional penalties.”
Not bad considering the 43-page agreement spells out some seriously naughty behavior.
“Beginning in 2000 and continuing until 2007, UBS, through certain private bankers and managers in the United States cross-border business, participated in a scheme to defraud the United States and its agency, the IRS…”
Maybe the moral of the story is: if you have to get caught, do it during a financial slump.
UBS officials declined to comment on the absence of punitive damages.
(PHOTO: Swiss President and finance minister Hans-Rudolf Merz gestures during a news conference on UBS in Bern February 19, 2009. REUTERS/Pascal Lauener)