Peter Kurer, chairman, UBS: calls to oust him
Updated 14:30 UBS shares Monday fell to a historic low of CHF10.30, down 3.5% since Friday closing. Swatch’s Nicolas Hayek told Swiss financial paper Agefi that his company has pulled some of its money out of Credit Suisse and UBS for fear they might go bankrupt, and put some of it into La Poste. He refers to the bankers as “robbers and idiots.”
Zurich, Switzerland (TSR, Fre) – UBS is accusing the US government of ignoring Swiss law, under which Swiss banks must operate or lose their licenses, in its response to a US court in Florida. The bank says that the court, which 19 February began civil proceedings against it to obtain the names of 52,000 American holders of UBS bank accounts, is expecting its employees to put themselves at risk of serious penalties including lengthy prison terms.
TSR reports that since the 19th the bank has been caught in a legal crossfire between US authorities who insist it must turn over the names, and Swiss authorities, including the Federal Administrative Tribunal, which 20 February forbade Finma, the Swiss banking supervisory body, to turn over any names to US authorities while legal sovereignty issues are under discussion.
As it turns out, the bank had immediately given names of the 250 account-holders, under investigation for fiscal fraud, to US authorities Wednesday 18 February after reaching an agreement with the US to provide them, with the understanding that in exchange the US would not ask for further names – which the US did, in a separate civil, rather than criminal, case the next day.
Le Temps, which is covering the UBS and political situation closely, reports that Swiss federal authorities were caught offguard by the timing of the US moves, adding to confusion over the legal situation. The newspaper also looks closely at a 300-page document published Thursday 19 February as part of US court records: it is the declaration of Daniel Reeves, an IRS (Internal Revenue Service) agent and includes internal UBS documents and correspondence which appear to be damning, particularly to UBS’s claims that authorities high in the bank were unaware of some activities.
Peter Kurer’s name appears in the documents, which were put together with help from Bradley Birkenfeld, a former bank employee who was arrested and is cooperating with US officials. Swiss politicians interviewed by German-language paper Sonntag are calling for Kurer, UBS chairman, and Marcel Rohner, the CEO, to resign (details, 24 Heures, Fre).
So, having engaged in tax fraud, notwithstanding having been caught out before and promised to be good, UBS now wants to cite Swiss law as a defence in the American courts. First of all it won’t work. We’ve been there before and not only in the Lawrence affair (some Cayman bank) where the names of the American tax cheats were duly revealed. Swiss bankers whose bodies have been in custody of the US marshals have been there too. And the whole recent dismal history of “foreign asset protection trusts” tells us these arguments are non-starters. They put the banker, the trustee, the beneficiary — whichever body they have — in prison, for a decade even in a recent marital case, until the judge gets what s/he wants.
Neither the banks nor the Swiss Government should have been surprised. The enactment of an automatic penalty of $10,000 (and a potential penalty up to $50,000) by the IRS for nonfiling of Form 5471 starting 1 Jan. 2009 ought to be enough warning that even “accidental Americans” in “situation irrégulière” however trivially, are being targeted. You gotta be on the scale of Marc Rich to get away with it (and even he’s not free of civil liability). The Anstalten and the Stiftungen are next.
[...] faces an uphill battle: bank shares have falled to historic lows this week while the bank fights a major court case in the US to protect client names as well as legal cases in Switzerland, where wealthy private clients have [...]
[...] among other matters, the legal situation of Switzerland’s largest bank, UBS, in the face of charges pressed by the IRS (Internal Revenue Service), the US tax authorities. Posted by :: Ellen [...]