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UBS finds some tax fraud by US clients
2008-11-27
LUCERNE, Switzerland - The Swiss bank UBS AG has uncovered cases of tax fraud by some of its U.S. clients, Chairman Peter Kurer said Thursday. UBS examined its files as a result of investigations by the U.S. Justice Department and others into cross-border services the bank provides to American clients, Kurer told shareholders. "Our investigations have uncovered a limited number of cases of tax fraud under both U.S. and Swiss law," he said. He gave no further details. Kurer suggested UBS will provide information to U.S. authorities on those cases because they are unprotected by Swiss bank secrecy. "Contrary to the idea conjured up in public discussions, bank secrecy is not absolute," Kurer said. "It is not there to protect cases of tax fraud. Such an absolute pretense would only damage bank secrecy." U.S. authorities sent a request for assistance to the Swiss tax office July 17. Lawyers for the affected clients say the request constitutes an illegal "fishing expedition" because it contains no names or account numbers and appears designed to catch a few tax cheats by obtaining information on all customers. They have filed complaints in Switzerland to block Swiss cooperation with the U.S. investigation. Swiss law distinguishes between tax fraud, which it regards as a crime, and tax evasion, which is an administrative offense. Under banking secrecy, Swiss authorities can cooperate with other countries' investigations into tax fraud but not into tax evasion. Kurer said the bank had been accused in connection with the U.S. investigation of having violated bank-client confidentiality. "I want to make it very clear that bank-client confidentiality is an important institution. We do not take it lightly and we have not violated it," he said. The Swiss Finance Ministry said Thursday it had handed over no UBS client data to U.S. authorities yet. Switzerland's strict banking secrecy rules have come under sustained pressure from the United States, France and Germany in recent months. Earlier in November a senior UBS executive was charged in the United States with conspiring to hide $20 billion in assets from the Internal Revenue Service. The indictment charges that from 2002 and 2007, Raoul Weil, as chief of UBS's wealth management business, helped about 20,000 U.S. clients conceal assets in offshore accounts. It says about 17,000 of the customers hid their identities and their Swiss bank accounts from the IRS and many of them filed false income tax returns. ______ Associated Press writer Balz Bruppacher in Bern contributed to this report.
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