Swiss bank UBS reveals tax fraud
Executives return CHF 70 million in bonuses and shareholders vote for government bailout.28 November 2008
LUCERNE - Switzerland's biggest bank UBS uncovered several tax fraud cases, its chairman said on Thursday, insisting that banking secrecy laws were not created to protect tax cheats.
"Our investigations have uncovered a limited number of cases of tax fraud under both US and Swiss law," Peter Kurer told over 2,000 shareholders during a general meeting.
"Bank secrecy... is not there to protect cases of tax fraud," he added, defending the bank against accusations that it violated bank-client confidentiality.
UBS is facing a US Justice Department investigation into whether it helped American clients evade taxes.
In July, it said that it was halting offshore banking services for US citizens.
The bank is also struggling to restore investor and client confidence after losing billions in the US subprime home-loan crisis, which forced the bank to ask the state for a rescue package worth almost USD 60 billion (CHF 72 billion).
In the aftermath of the steep losses, clients withdrew CHF 83.7 billion in the third quarter.
During the last week in November, the bank revealed a new advertising campaign with the tagline, "Everyone deserves a second chance. UBS too."
Kurer sought to calm shareholders at Thursday's meeting during which the capital injection from the state was approved, admitting that the bank could communicate better with investors.
"It is true that we should have been even more transparent," said Kurer.
He also addressed the millions of francs of senior executives' bonuses, another cause of anger for investors.
Former chairman Marcel Ospel was particularly criticised, with tabloid newspaper Blick running a campaign urging him to repay his bonuses.
On Tuesday, Ospel together with former board members Stephan Haeringer and Marco Suter returned CHF 33 million to the bank.
Earlier in November, Peter Wuffli, the former head of UBS's executive board, also refused CHF 12 million to which he was entitled.
Kurer revealed that in all, former senior executives voluntarily gave up about CHF 70 million in bonuses and wages, including CHF 22 million refused by other unnamed former senior executives.
"A total of approximately CHF 70 million in bonuses has been repaid by executives who have left the bank," Kurer said.
"Once again, UBS is a leader in this regard, as no other bank has seen so many former top managers agree to forego so much," he added.
But not all shareholders were satisfied.
Shareholder Thomas Minder was among many who said at the meeting that the sum returned was not enough.
He called the sum returned "a drop in the ocean," citing newspaper reports suggesting that executives received more than CHF 600 million since 2003.
Minder also said board members should not receive any pay in 2008.
In his reply, Kurer called to question the CHF 600-million figure and also rejected the call for zero-pay across the board for 2008, saying that it was "just not feasible".
In mid-day trading, UBS shares were showing a gain of 3.18 percent at CHF 15.27 on the Zurich stock exchange while the overall SMI index rose 1.39 percent.
[AFP / Expatica]