UBS AG (UBSN) said it will appeal a Paris court’s demand it pay a 1.1 billion-euro ($1.5 billion) guarantee after being charged with covering up tax fraud, branding the process “highly politicized.”
UBS must deposit the money by the end of September after two French judges today charged the bank following a probe of its activities from 2004 to 2012, according to the prosecutor’s office. In a statement, UBS called the demand “unprecedented and unwarranted,” adding that the legal basis for the demand was “deeply flawed.” The demand is to cover the cost of any potential penalties and damages.
The Swiss bank has been the focus of efforts by French regulators and prosecutors to step up their investigations of alleged tax evasion. The company was fined 10 million euros by France’s banking regulator for control failures that could have allowed clients in the country to dodge taxes.
“We have done everything we can to bring this matter to a close,” the Zurich-based bank said. “We have also taken significant and broad steps to ensure tax compliance of our clients and will continue to do so. It is not acceptable to us that this has become a highly politicized process.”
UBS’s French unit was alerted in the fall of 2007 to “serious suspicions” that bank personnel may have been involved in illicit marketing and the covering up of tax fraud, according to French regulators. The bank waited more than 18 months before setting up the controls required to monitor and stop such activities, the regulators said in June 2013. UBS said at the time it disagreed with “many” of the regulator’s conclusions.
UBS was last year placed under formal investigation by the two judges for illicit solicitation of clients. The bank was also given the status of material witness in covering up tax fraud and illicit marketing. That classification placed the company between a simple witness and a target of the probe.
The stock rose 0.2 percent to 16.50 francs in Zurich trading today, for a market value of about 63 billion francs ($71 billion).
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