PARIS -- Boxes at the Paris Opera. Prime seats at the French Open. Luxury hunting retreats in Normandy. The financial giant UBS spared no expense in enticing wealthy French people to open bank accounts in Switzerland.
The lavish spending caught up with UBS on Wednesday, when French judges ordered it to pay a record $4.2 billion fine for carrying out what prosecutors said was a long-running scheme to help French clients hide large sums of money from the authorities.
The penalty, the largest in French history, included $900 million to be paid to the government, which said it had lost revenue as a result of UBS' helping French citizens evade taxes from 2004 to 2012.
UBS said in a statement it "strongly disagrees with the verdict" and it planned to appeal. "The bank has consistently contested any criminal wrongdoing," the statement said, adding that the judgment was "not supported by any concrete evidence."
The ruling coincides with crackdowns on tax evasion in France and other countries that have put Swiss banks in particular on the defensive.
UBS paid a $780 million fine in the United States in 2009 to resolve accusations it had helped rich clients dodge taxes, and pledged to divulge the names of more than 4,450 people with Swiss bank accounts. Credit Suisse was fined $2.6 billion by the Justice Department in 2014, and $340 million by France in 2017 in similar cases.
The ruling Wednesday came after a seven-year investigation by French financial authorities that began when several whistleblowers at UBS France alleged that UBS bankers in France and Switzerland were engaging in illegal activity.
At a trial in Paris in October, prosecutors likened the scheme to the plot of a James Bond novel, with top bankers colluding to entice wealthy clients, shielding more than $11 billion from French tax authorities.
Prosecutors said bankers from UBS France, motivated by the prospect of lucrative bonuses, alerted their counterparts in Switzerland to potential "big potatoes" -- French citizens with assets of $500,000 to $10 million.
French law allows commercial bankers to put customers in touch with counterparts in other countries, but it prohibits foreign companies from soliciting clients on French territory.
UBS bankers organized expensive activities in France that included shows at the Paris Opera, art exhibits and hunting outings, where Swiss bankers could meet informally with prospects in hopes of slipping around French prohibitions, prosecutors said. The goal was to persuade people to open undeclared accounts in Switzerland.
UBS, in its statement, said the case was based on "unfounded allegations" lodged by former employees who had not testified at the October trial. "No evidence was provided that any French client was solicited on French soil" by a UBS Switzerland client adviser to open an account in Switzerland, the bank said.
Business on 02/21/2019