Swiss bank UBS secured a coterie of Europe's political and legal elite for its side, as it heads into the appeal of a high-stakes criminal verdict in France.
On March 8, UBS' legal team under chief lawyer Markus Diethelm and Allen & Overy's Denis Chemla head back to criminal court in Paris, in an attempt to overturn a 2019 guilty verdict attached to a 4.5 billion ($5 billion) fine against the wealth manager.
Much like UBS' 2008 settlement in the U.S. for $780 million, the French case represents a watershed for Switzerland's wider banking industry. Others including crosstown rival Credit Suisse are closely watching UBS' case, which is expected to set precedent for other Swiss wealth managers, as finews.asia reported.
German «Cavalry»
UBS is enlisting European political nobility including ex-European Commission head Jean-Claude Juncker and former German finance minister Wolfgang Schaeuble and Peer Steinbrueck on its side, according to Swiss weekly «NZZ am Sonntag» (behind paywall, in German).
It is hard to overstate the importance of the French trial for UBS: besides the huge financial impact, the case caused shareholders to deny the Swiss bank's top management and board a key backing two years ago. UBS is pulling out all the stops as a result.
The influential politicians join an armada of advisers to UBS, including ex-German politician Theo Waigel. The addition of Steinbrueck is especially ironic: the German politician in 2012 threatened to send a financial «cavalry» to Switzerland to root out tax dodgers and cheats – a tone that was perceived as tactless by Swiss diplomats.
Agreement In Defense Plan
The reason the politicians are so key to UBS' appeal is that the bank plans to make a European Union guideline from 2003 a key part of its argument to the court, which hears the entire case anew. The directive safeguarded cross-border interest payments and required Swiss banks to notify EU member states if their citizens were earning interest in wealth held in Switzerland.
It was superseded four years ago when Switzerland began adopting automatic data-swapping agreements with the bloc. A big part of UBS' new defense plan is that a large portion of French wealth held at UBS wasn't undeclared – the bank had also been passing on withholding tax to France, though French officials wouldn't have known who the money stemmed from.
Decades-Old Plan
Waigel, an ally of former German chancellor Helmut Kohl, was instrumental in drafting the EU directive in the late 1990s. Together with his former negotiating partners, the ex-politico is reportedly being deployed to reconstruct the decades-old plan in order to support UBS' defense. The trial was set for last June but postponed to 2021 due to the pandemic.
«This agreement allows Swiss banks to manage foreign assets while maintaining banking secrecy,» Swiss lawyer and academicPeter Nobel, who is also advising UBS, told the Swiss outlet. «If the French justice system retroactively criminalizes this as money laundering, it is violating an agreement of international law.»
