UBS defies US demands

5th March 2009, Comments 0 comments

The bank refuses to name Americans holding secret accounts in Switzerland.

WASHINGTON - Banking giant UBS Wednesday defied pressure to name about 50,000 Americans holding secret bank accounts in Switzerland.

US senators accused bankers at UBS of helping wealthy Americans to defy US tax law through a variety of methods including encrypted laptops and lies to US customs officers.

But while acknowledging wrongdoing in a deal February between UBS and US prosecutors, a top executive with Switzerland's biggest bank said it could provide no more than 250 to 300 names of US account holders already made available.

Mark Branson, the Zurich-based chief financial officer of UBS Global Wealth Management and Swiss Bank, said the group was already closing US-owned securities accounts and paying a USD 780 million (CHF 920 million) fine to the US government.

"We believe that UBS has now complied with the summons to the fullest extent possible without submitting its employees to criminal prosecution in Switzerland," he told a hearing of the Senate investigations subcommittee.

Questioned by the panel's Democratic chairman, Carl Levin, Branson said up to 48,000 accounts were held in Switzerland by US clients but that Swiss law precluded UBS from providing any more names.

But Levin, accusing the British-born banker of being "needlessly evasive," said UBS made a "declaration of war... against honest, hard-working taxpayers" through its illegal practices in the United States.

Expanding the conflict to include the Swiss government's protection of its banking secrecy law, the senator said, "We're determined to fight back and end the abuses inflicted on us by those tax havens."

Under its settlement with the US Justice Department, UBS in February admitted to tax fraud by inviting rich US clients to open accounts in Switzerland and evade declaring their income to the Internal Revenue Service.

Under its interpretation of the two nations' tax treaty, UBS said it could only provide the identities of 250 to 300 US account holders.

Dissatisfied, the US government the day after the settlement filed a new lawsuit demanding that UBS name as many as 52,000 US customers.

The case angered the Swiss government, which refused to send a representative to Levin's hearing, but it is now struggling with not just President Barack Obama's administration but other European nations.

Addressing a joint session of Congress earlier Wednesday, British Prime Minister Gordon Brown suggested before the G20 summit in London in April that tax havens should be dismantled.

"You are also restructuring your banks. So are we," Brown told the US lawmakers.

"But how much safer would everybody's savings be if the whole world finally came together to outlaw shadow banking systems and outlaw offshore tax havens?"

Levin said he was supported by Obama and US Treasury Secretary Timothy Geithner for a new bill that would make it "difficult if not impossible" for Americans to open accounts in offshore financial centres.

"It is absurd that any country wants to make money out of our loss or tax revenue," he said, arguing that the annual cost to the Treasury amounted to USD 100 billion.

AFP / Expatica

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