UBS New York headquarters

Zurich, Switzerland (GenevaLunch) – There will be no trial of the current and former heads of Swiss bank UBS, the Zurich prosecutor’s office announced Tuesday 15 December. Shortly afterwards, the UBS board announced that it would not press charges, either, against unnamed former senior executives. Swiss politicians have been calling for someone to take responsibility for the most serious banking debacle in Switzerland’s history.

The possibility that the bank might have collapsed at the end of 2008 in the wake of the US sub-prime catastrophe moved the Swiss government to inject billions of Swiss francs into the bank. The public prosecutor in Zurich said that in the case of the sub-prime losses and cross-border case that pitted UBS against US tax authorities, there was no evidence that Swiss law had been broken.

The lead public prosecutor in Zurich, Peter Pellegrini, said that his office has been monitoring the case carefully for months, but decided that it would be practically impossible to obtain enough evidence to bring the men to trial for willful incitation to commit tax fraud in a foreign country and other related crimes.

The Swiss Socialist Party, whose leader, Christian Levrat, lodged a formal complaint against the bank’s management with Zurich’s public prosecutor in August, said the prosecutor’s refusal was “absolutely scandalous.” The party has announced that it will initiate legislation in parliament to change the law.

UBS itself will not pursue its former top executives in court either, the bank said 15 December. A statement from the UBS board noted that “it will not initiate legal action against former senior executives in connection with UBS’s subprime-related losses and its former US cross-border business for private clients. The Board took its decision after a thorough review of these matters, which included consultation with external legal experts.The review concluded that there was no evidence of criminal conduct by former senior executives under Swiss law. Furthermore, there is no indication that they pursued personal interests to the detriment of UBS.”

The board says that the uncertainty about the outcome of a lawsuit is not in the best interests of “UBS, its employees, clients and shareholders” and that it wants to pursue a forward-looking policy. It has “already taken comprehensive and profound measures to ensure that nothing like this should ever happen again.”

A legal case against UBS’s top management, present and former, hinges on being able to prove, among other things, that while UBS client managers were asking US clients to break the law by hiding assets from the IRS (US tax authority), UBS’s top management was aware of this and sanctioned it.

Links to other sites: Financial Times, Le Temps, NZZ, Reuters, TSR, Wall Street Journal

You can leave a response, or trackback from your own site.