UBS Begins Appeal of $5 Billion Penalty in French Tax Case
(Bloomberg) — UBS Group AG’s appeal of a 4.5 billion-euro ($5.3 billion) penalty began with the Swiss lender and bankers in the case proclaiming their innocence.
“I appealed because I’m innocent of the charges,” said Hervé d’Halluin, who used to head UBS France’s Lille bureau. While he was the first defendant Presiding Judge Francois Reygrobellet quizzed, the others repeated more or less what d’Halluin told the court.
The UBS case is part of a French crackdown on tax fraud and money laundering operated through Switzerland that’s seen the conviction of a former minister and HSBC Holdings Plc pay 300 million euros to settle a case. UBS’s record fine in February 2019 came after the bank decided to go to trial rather than settle.
The outcome of the Paris appeal should bring into sharp relief whose strategy — French prosecutors or UBS — was most successful. UBS has set aside 450 million euros in provisions for Monday’s case, indicating some confidence it can at least reduce the massive penalty.
The Swiss bank was convicted two years ago of laundering funds by providing French customers with banking services — such as numbered accounts or by setting up trusts — to hide assets from tax authorities. UBS was found guilty of covertly dispatching Swiss bankers across the border to encourage prospective clients to stash cash overseas.
While the bulk of the case revolves around the UBS appeal, prosecutors are seeking to overturn the lower court’s decision to clear Raoul Weil, the former CEO of UBS’s wealth management unit.
After the opening statements on the reasons for the appeal, lawyers for the bank and the former employees criticized various aspects of the case, with d’Halluin’s attorney, Thierry Marembert, complaining about the validity of the “imprecise” indictment.
Several of the arguments had already been raised and dismissed in the 2019 ruling. Still, lawyers reiterated that French investigators unfairly issued arrest warrants against three Switzerland-based UBS executives after artificially determining that they were fugitives.
Hervé Temime, a lawyer who joined UBS’s legal team for the appeal, took a swipe at the helicopter view taken by the prosecution to obtain the bank’s conviction for organizing a system to help rich French citizens dodge taxes.
“This systemic approach is contrary to the principles of the criminal trial,” Temime said. “It precludes answering the basic questions in any criminal trial: When, where, how and who?”
The lawyer also mentioned fresh guidance from France’s top court, which called into question calculations like those used to fine UBS in 2019 — and could mean a significant reduction from the appeals court.
The presiding judge is expected to start questioning the former UBS employees as soon as Tuesday. French appeals take the form of a retrial, rather than hearings solely focused on legal issues, which are common in other countries.