Verdict in UBS tax fraud trial in Paris with light and shade
Published: Wednesday, Nov 15th 2023, 18:30
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The UBS tax fraud trial in France is going into extra time. The country's highest court has finally found the major bank guilty of unlawful client solicitation and serious money laundering. However, the fines imposed by the lower court were overturned. This will lead to new proceedings.
The big bank has therefore been successful with its appeal to the Supreme Court. The proceedings will now be reopened - with an uncertain outcome.
On Wednesday, the Court of Cassation in Paris partially overturned the judgment of the lower court, according to the ruling published on Wednesday, which is available to the news agency AWP. The revision concerns all provisions relating to penalties and civil damages. However, the Court of Cassation upheld the fundamental conviction of UBS.
In December 2021, the French Court of Appeal also found UBS guilty in the second instance of illegally soliciting wealthy French people between 2004 and 2012. It had wanted to persuade clients to open black money accounts in Switzerland, according to the ruling.
"Violation of French law"
At the time, the court ordered UBS to pay a total of over 1.8 billion euros. This includes a fine of EUR 3.75 million, the forfeiture of EUR 1 billion and a civil damages payment of EUR 800 million.
With regard to the penalties, Wednesday's ruling states that these will be waived so that UBS's situation can be assessed as a whole. With regard to the claim for damages, it states that the lower court did not sufficiently justify the amount.
Hanging game continues
The decision by the French Supreme Court to send the ruling back to the lower court means that the legal dispute, which has already lasted around ten years, continues to drag on. The French authorities have been investigating the case since 2013.
In February 2019, UBS was sentenced for the first time by the Paris criminal court to pay a hefty fine totaling 4.5 billion euros for unauthorized money transactions and aiding and abetting money laundering. The fine was then significantly lower in 2021 before the "Cour d'appel" in Paris. However, UBS also appealed against this judgment, which has now led to new proceedings with the judgment of the Court of Cassation.
Cards are reshuffled
In a new procedure before the Court of Appeal, the cards will theoretically be reshuffled. This Court of Appeal must sit in a new composition, as decided by the Court of Cassation. The Court of Appeal is under no obligation to hand down a more lenient verdict in the second round. But according to the experience of experts, this is often the case.
Experts in French law assume that only the fine of 3.75 million euros will remain in place. As the civil damages payment of 800 million euros was overturned by the Court of Cassation, the state will have to pay the money back. And the confiscation of 1 billion euros is also off the table, which means that UBS should also get this money back.
However, today's decision also means that this legal matter will remain in limbo for much longer. Experts estimate that a new trial before the Court of Appeal could take place in around one and a half years.
UBS insists on its innocence
UBS intends to continue defending itself. It insists on its innocence and emphasizes that there is no concrete evidence of illegal conduct.
The bank is pleased that the Court of Cassation has overturned the payment of a total of over 1.8 billion euros. However, it is disappointed that the Court of Cassation confirmed the guilty verdict of the lower court for unlawful client solicitation and serious money laundering of proceeds from tax fraud.
In a statement, UBS maintained that it had acted in accordance with all applicable laws and regulations at all times and would defend itself in the upcoming trial. There is an agreement between Europe and Switzerland on the taxation of savings income and there is no concrete evidence of the alleged facts.
UBS share gains
Analysts see the ruling as a partial success for UBS. According to one market participant, the proceedings will continue to drag on. However, it is positive for UBS "that the fines are likely to be lower". On the Swiss stock exchange SIX, UBS shares rose by 2.3 percent by the close of trading.
UBS has set aside 1.1 billion euros. These provisions will not change. However, there is a risk of a high additional loss if the Court of Appeal also reaches a harsher verdict in the appeal proceedings.
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