The future of UBS, the giant Swiss bank, rests on the outcome of tense negotiations with US investigators as its long-running multi-billion-dollar tax evasion case concludes this month.
A series of hearings in Washington over the next four weeks will determine whether UBS faces criminal prosecutions and possibly even the loss of its US bank licence.
The bank is being investigated by US authorities for its alleged part in what is claimed to be a massive tax evasion scheme. The US has accused UBS of helping rich Americans hide billions of dollars. Last November, a senior member of the executive board of UBS was charged by US authorities with tax evasion. He has resigned from the board to defend himself. UBS has been co-operating with investigators and has made it plain that it is taking the issue seriously.
The case dates back to when a senior UBS banker signed a US court statement seven months ago detailing how he smuggled diamonds in toothpaste tubes, destroyed offshore bank records on behalf of clients and helped a Florida property tycoon evade taxes of $200m on offshore assets worth $7.26bn.
In a seven-page deposition, the senior manager claimed that he was encouraged to win clients at UBS-sponsored tennis tournaments and art events. UBS bankers, according to legal papers, are accused of helping wealthy Americans conceal ownership of their assets by creating “sham” offshore trusts. In November, UBS stopped using offshore trusts on behalf of its US customers.
The Observer has been told by well-placed sources that the authorities are determined to force UBS to hand over account details of its 17,000 US clients. The bank has indicated it is willing to release details of only 300 of them.
UBS, according to Swiss newspaper reports, offered to pay a large fine to the US, thought to be more than $1bn, in return for immunity from prosecution.
The Swiss government is desperate to limit the number of clients’ details handed over to investigators to protect the cornerstone of its banking sector – secrecy. The US Internal Revenue Service and UBS declined to comment.
The expected conclusion of the UBS case comes as greater scrutiny is placed on the role of tax avoidance and evasion on behalf of the world’s richest individuals and companies.
New figures show that the UK is missing out on £18.5bn in taxes because of wealth and profits held in tax havens, enough to take 4.5p off the basic rate of tax. The figures combine estimates of tax avoidance from wealthy individuals, large companies and criminal activities. The figures will be included in a BBC Panorama programme tomorrow.
And tomorrow’s Guardian will expose the tax avoidance strategies of large multinational companies and name more than 20 leading British companies involved in avoiding paying millions in tax.
Sunday 1 February 2009
Nick Mathiason
Source: The Observer