French court cuts UBS tax fine to 1.8 billion euros

UBS has been ordered by a French appeals court to pay 1.8 billion euros for helping wealthy clients evade taxes, less than half the fine the Swiss bank initially faced in a long-running legal case. seven years for the lender.

After several delays in the case, a judge at the Paris court of appeal announced the sentence on Monday afternoon.

UBS was found guilty in 2019 of helping wealthy clients evade taxes after a landmark trial in Paris. The court also ordered the bank to pay a record €3.7 billion fine and an additional €800 million in compensatory damages, a penalty the bank appealed.

The penalty handed down by the French appeals court on Monday included 800 million euros in civil damages and a forfeiture order of 1 billion euros. UBS has five days to appeal the ruling and take it to France’s highest court.

“The bank acknowledges this decision,” said Herve Temime, a lawyer representing UBS.

“Compared to the judgment of first instance, there is a financial gain of 2.7 billion euros, but it is a criminal judgment and therefore we will make our decision very quickly.”

The 2019 ruling limits a seven-year investigation by French authorities that saw the bank allegedly use James Bond-like tactics to solicit customers illegally and help them launder money. .

Prosecutors said UBS bank employees used self-deleting methods of hard drives, business cards without logos and evasive tricks to secretly move back to France in order to gain illegal customers at the banks. company events.

The whistleblowers allege that UBS bankers solicited customers at musicals, on safaris and at the French Open tennis tournament.

UBS argued that although its bankers had traveled to France and attended social events, prosecutors lacked evidence of this solicitation.

At the time, Sergio Ermotti, then-chief executive officer of UBS, described “the superficial nature of the ruling [as] incredible” in a memo to employees.

The incident is a trailblazer in Ermotti’s nine-year record at the helm of UBS and has appealed to his successor, Ralph Hamers, who took over last year.

After appealing against the initial fine, UBS set aside only 450 million euros in contingency funds to meet legal costs related to the case.

During the appeal, the French authorities reduced the amount they requested to a maximum of 3.2 billion euros, including 2.2 billion euros in fines and up to 1 billion euros in civil damages.

Earlier this year, UBS tried to overturn the original ruling on constitutional grounds, but a French court rejected the challenge.

The French penalty follows similar tax rulings against UBS in the US, where it was ordered to pay $78 million in 2009, and in Germany, where it paid a fine of 300 million euros in 2014. A similar case in Belgium was settled last month, with UBS agreeing to pay €49 million.

Shares of UBS jumped nearly 3% following the announcement of the latest ruling.

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