Swiss bank UBS, its French unit and six executives faced charges of aggravated tax fraud and money laundering on Monday, the first day of a trial into allegations they helped wealthy clients avoid taxes in France.
After seven years of investigation and aborted settlement negotiations, UBS will also answer allegations that it illegally solicited clients in France.
France’s national financial crimes unit estimates at least €9.76 billion ($11.2 billion) was not reported to the French tax authorities. The bank’s staff allegedly approached French clients, from wealthy businessmen to sports stars, at receptions, golf and tennis tournaments or concerts to convince them to hide their money in Switzerland. If convicted UBS could face fines of up to half the amount of money laundered, or nearly €five billion.
On the first day of the court hearing on Monday, the defendants’ lawyers raised technicalities to try to get the court to drop the money laundering charges and limit the proceedings to tax fraud, which carries lighter penalties.
UBS’s lawyer Jean Veil said the French state was asking for 1.6 billion euros in damages, which he told the court was excessive. “They are asking crazy amounts,” he told the court.
UBS, Switzerland’s largest bank, has said it intends to firmly defend its position.
“After more than six years of legal proceedings, we will finally have the opportunity to respond to the often unfounded allegations that were frequently leaked to the media, in clear violation of the presumption of innocence and the legal confidentiality of the process,” UBS said in a statement ahead of the trial. The bank said it would reserve its arguments for the court.
Banks have become more rigorous after the 2008 financial crisis and the banking scandals that followed, while tighter regulations have forced the industry to become more cautious, analysts say.
The whistleblower in the case, Nicolas Forissier, was sacked by UBS in 2009 for alleged “gross misconduct”.
“My honour will finally be cleared,” Forissier, a former internal auditing chief, said last year when judges ordered the trial after prosecutors and bank executives failed to reach a plea deal
According to documents provided by German authorities to French investigators, deposits from some 38,000 French clients with UBS amounted to a total of around 13 billion Swiss francs (11 billion euros, $13 billion), a source close to the case told AFP.
The court hearing is due to resume on Thursday and the case is scheduled to continue until Nov. 15.