UBS prosecutor calls bank arguments a ‘festival of hypocrisy’ in tax evasion case

A prosecutor at a high-profile Paris trial said UBS Group AG must be “punished” by a court for helping wealthy French clients hide money from tax authorities.

Eric Russo, a prosecutor at the Parquet National Financier, said UBS “used illegal means” to encourage residents in France to place funds in undeclared Swiss accounts and provided services to launder their money.

“The banks that take part in tax fraud deserve to be punished,” Russo said Thursday during his closing arguments at the month-old trial. The prosecution is set to reveal later in the afternoon how big a fine it considers appropriate if UBS is found guilty.

UBS building entrance in Zurich
Entrance to the UBS building in Zurich, Switzerland on Saturday, February 4, 2006. Photographer: Adrian Moser/Bloomberg News

The case is one of many legal obstacles Zurich-based UBS has faced since the start of the financial crisis a decade ago, including a $1.5 billion fine in 2012 for rigging the Libor benchmark. Tax-related investigations have also cut into the bank’s reserves: it paid $780 million in the U.S. nearly a decade ago and about 300 million in Germany in 2014.

The French state, which is a plaintiff in the Paris trial, is seeking 1.6 billion euros from the bank in addition to any court-imposed fines. Before the court case started, UBS had to post 1.1 billion euros in bail.

Later Thursday, a second prosecutor detailed the methods UBS allegedly used to launder French clients’ money. Serge Roques listed a series of services UBS offered to Swiss account holders such a setting up offshore trusts and providing numbered accounts to “increase the level of opacity” and hide the funds from the taxman.

He dismissed the arguments of the various defendants — that the services were designed to protect privacy — as “laughable.” Roques said he wasn’t convinced that customers asked the bank not to send mail about their accounts to their homes to avoid family feuds.

“The explanations given by the UBS representatives — past and present — were a veritable festival of hypocrisy,” the prosecutor said.

The trial is set to run until Nov. 15, with closing speeches from defense lawyers next week. A ruling in the case is expected several weeks later.

— With assistance from Patrick Winters