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UBS Fate in Swiss Court Tax Case May Come Down to Show of Hands

UBS Fate in Swiss Court Tax Case May Come Down to Show of Hands

(Bloomberg) -- At 9:15 Friday morning high on a hill overlooking Lake Geneva, five Swiss Supreme Court judges will debate whether UBS Group AG must hand over data on its French clients to Paris tax authorities as part of a crackdown on suspected tax evasion.

The case, dating back to 2012, isn’t new. The hearing, however, will be the first chance the public will get to hear arguments in a case of huge importance for UBS and other Swiss banks. It will also be a rare event by local legal standards.

About 99% of the Lausanne-based Swiss Supreme Court’s cases are held behind closed doors. For a hearing to be open to the public, one of the five judges must request it, or there must be at least one dissenting opinion from the proposed verdict or methodology underlying the decision.

The Swiss Supreme Court will decide whether the bank must give French authorities the account details of thousands of French citizens suspected of hiding funds in Switzerland. That data could be used by prosecutors in Paris against UBS as it appeals the $5 billion penalty levied in February after the lender was found guilty of helping clients evade taxes.

UBS French Woes Could Deepen as Swiss Court Verdict Looms

Hans-Georg Seiler, the lead judge in this case, will begin by outlining the argument behind his proposed verdict before the other four judges take turns either endorsing or refuting that line of reasoning. It’s a debate that could take two hours, or double that. When the debate has closed, there is a show of hands before Seiler announces the verdict.

So while that means that just 1% of these is held before a public gallery, it also means that they’re unpredictable -- a far cry from the dry prepared rulings read out aloud in other jurisdictions.

The supreme court’s publicity-shy approach to court proceedings reflects Switzerland’s own tradition of discretion, where the names of convicted criminals are often not reported and violations of Swiss banking secrecy can land you in prison.

It doesn’t mean however that the Swiss Supreme Court will side with the bank in a decision that UBS Chief Executive Officer Sergio Ermotti said this week is important for the “entire financial center” in Switzerland.

In the supreme court’s last case involving a Swiss bank nine months ago, a former Julius Baer banker who leaked documents from a Cayman Islands subsidiary was found innocent of breaking Swiss banking secrecy.

--With assistance from Patrick Winters.

To contact the reporter on this story: Hugo Miller in Geneva at hugomiller@bloomberg.net

To contact the editors responsible for this story: Anthony Aarons at aaarons@bloomberg.net, Christopher Elser

©2019 Bloomberg L.P.