UBS Enlists More Firepower for Parisian Appeal
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Swiss bank UBS secured a coterie of Europe’s political and legal elite for its side, as it heads into the appeal of a high-stakes criminal verdict in France.
On March 8, UBS’ legal team under chief lawyer Markus Diethelm and Allen & Overy’s Denis Chemla head back to criminal court in Paris, in an attempt to overturn a 2019 guilty verdict attached to a 4.5 billion ($5 billion) fine against the wealth manager.
Much like UBS’ 2008 settlement in the U.S. for $780 million, the French case represents a watershed for Switzerland’s wider banking industry. Others including crosstown rival Credit Suisse are closely watching UBS’ case, which is expected to set precedent for other Swiss wealth managers.
UBS is enlisting European political nobility including ex-European Commission head Jean-Claude Juncker and former German finance minister Wolfgang Schaeuble and Peer Steinbrueck on its side.
It is hard to overstate the importance of the French trial for UBS: besides the huge financial impact, the case caused shareholders to deny the Swiss bank’s top management and board a key backing two years ago. UBS is pulling out all the stops as a result.
“for $780 million, the French case represents a watershed for Switzerland’s wider banking industry.”
The influential politicians join an armada of advisers to UBS, including ex-German politician Theo Waigel. The addition of Steinbrueck is especially ironic: the German politician in 2012 threatened to send a financial cavalry to Switzerland to root out tax dodgers and cheats – a tone that was perceived as tactless by Swiss diplomats.
The reason the politicians are so key to UBS’ appeal is that the bank plans to make a European Union guideline from 2003 a key part of its argument to the court, which hears the entire case anew. The directive safeguarded cross-border interest payments and required Swiss banks to notify EU member states if their citizens were earning interest in wealth held in Switzerland.
It was superseded four years ago when Switzerland began adopting automatic data-swapping agreements with the bloc. A big part of UBS’ new defense plan is that a large portion of French wealth held at UBS wasn’t undeclared – the bank had also been passing on withholding tax to France, though French officials wouldn’t have known who the money stemmed from.
Waigel, an ally of former German chancellor Helmut Kohl, was instrumental in drafting the EU directive in the late 1990s. Together with his former negotiating partners, the ex-politico is reportedly being deployed to reconstruct the decades-old plan in order to support UBS’ defense. The trial was set for last June but postponed to 2021 due to the pandemic.
This agreement allows Swiss banks to manage foreign assets while maintaining banking secrecy,» Swiss lawyer and academicPeter Nobel, who is also advising UBS, told the Swiss outlet. If the French justice system retroactively criminalizes this as money laundering, it is violating an agreement of international law.
Questions & Answers
Q.What is the key argument UBS is using in its appeal against the verdict?
What is the key argument UBS is using in its appeal against the verdict?
UBS plans to argue that a significant portion of French wealth held with them was not undeclared. They will cite a 2003 EU guideline regarding cross-border interest payments and withholding tax.
Q.Who are some of the influential figures UBS has enlisted to support its appeal?
Who are some of the influential figures UBS has enlisted to support its appeal?
UBS has enlisted European political figures including former European Commission head Jean-Claude Juncker, ex-German finance ministers Wolfgang Schaeuble and Peer Steinbrueck, and former German politician Theo Waigel.
Q.What was the outcome of the 2019 criminal verdict against UBS in France?
What was the outcome of the 2019 criminal verdict against UBS in France?
UBS was found guilty in 2019 and received a criminal verdict, which included a substantial fine of 4.5 billion ($5 billion) against the wealth manager.
Q.Why is the French trial considered so important for UBS and the wider banking industry?
Why is the French trial considered so important for UBS and the wider banking industry?
The trial is crucial due to its huge financial impact and its potential to set a precedent for other Swiss wealth managers. It also led shareholders to deny backing to UBS's top management previously.
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