UBS hopes for supreme court in France case
Published: Monday, Nov 13th 2023, 10:10
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UBS is still fighting the guilty verdict in France for aiding and abetting illegal client solicitation and money laundering. The bank is to pay almost 2 billion euros. The country's supreme court will decide on the appeal next Wednesday.
The legal dispute has been dragging on for ten years now. The French authorities have been investigating since 2013. In February 2019, UBS was sentenced for the first time by the Paris Criminal Court for unauthorized money transactions and aiding and abetting money laundering to a hefty payment totaling 4.5 billion euros.
And the bank was also found guilty at second instance in December 2021. The French court of appeal found that the major bank had illegally solicited wealthy French taxpayers between 2004 and 2012. It had wanted to persuade customers to open undeclared accounts in Switzerland, according to the ruling.
Court of Appeal already reduced fine
Before the "Cour d'appel" in Paris, however, the fine was significantly lower. The court demanded a total payment of over 1.8 billion euros. This includes a fine of 3.75 million euros, the confiscation of 1 billion euros and a civil compensation payment of 800 million euros.
UBS also appealed against this ruling. At the end of September, a hearing was therefore held before the Court of Cassation - the highest court of appeal in France. The Supreme Court does not judge the case "de novo", but deals with questions such as whether the court of appeal applied the law correctly; it reviews judgments for legal errors. The parties made pleadings, but no new evidence was presented.
Next Wednesday - probably in the early afternoon - the court will now announce its verdict in writing. Should the French Supreme Court find fault with the verdict on Wednesday, the case would return to the Court of Appeal. There would be a new trial, so to speak. However, if UBS's appeal in cassation is rejected, the bank would also have lost before the court of last instance in France.
Will there be a new procedure?
In the first case - the new proceedings - the cards would theoretically be reshuffled. The court is under no obligation to hand down a more lenient sentence. However, according to the experience of experts, UBS can then hope for a lower claim. In the second case - in the event of a defeat in the last instance - the judgment of the Court of Appeal in France would be legally binding.
UBS apparently assumes that it could be successful with its appeal. Otherwise it would probably not have filed an appeal. However, a victory would also mean that this legal matter would remain in limbo for much longer. Some market analysts had already expressed the opinion after the ruling in December 2021 that it would have been better to accept the ruling and put the case to bed.
However, if UBS had accepted the verdict, it would also have accepted the guilty verdict. This would have meant that the bank would have admitted to helping criminals with money laundering, which also poses risks for its other global business activities. The bank denies any criminal misconduct. Lawyer Patrice Spinosi, who is defending UBS in France, described the case at the hearing in September as extraordinary: it was the first time in Europe that a Swiss bank had been convicted for managing client assets "in accordance with banking secrecy".
Less deferred
Meanwhile, whistleblower and former UBS employee Stéphanie Gibaud, who started the case, is making serious accusations against the French government. She was forced to cooperate with the authorities, she told the NZZ am Sonntag. And the government's fight against tax evasion turned out to be a pure masquerade in retrospect: "With the campaign against UBS, the government wanted to keep its own scandals about the illegal financing of the party away from itself."
If the proceedings before the Court of Appeal are actually reopened, this will absorb resources and energy for even longer. However, UBS is currently having to accomplish a tour de force with the CS integration, so it already has its hands full.
UBS has set aside 1.1 billion euros. There is therefore the threat of a high additional loss if the French Supreme Court confirms the judgment of the Court of Appeal. Of the other outstanding major legal disputes, UBS has recently brought three (RMBS, Archegos, Mozambique) - the latter two inherited from CS - to a conclusion.
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