UBS Ex-Banker Unveils Long-Sought Number at Trial: $9.7 Billion
(Bloomberg) -- A Swiss-based team of UBS Group AG bankers that focused on French clients managed as much as $9.7 billion of their wealth, a former executive trying to overturn his conviction testified at a landmark trial in Paris.
The figure, which authorities have been after for years, was disclosed on Tuesday by Dieter Kiefer, the onetime head of wealth management for western Europe at UBS. Kiefer, who left UBS in 2008, told the appellate judges that the bank’s France international desk had 6 billion to 9 billion Swiss francs ($6.5 billion to $9.7 billion) under management. During a French investigation that led to the first trial, UBS refused to provide that number.
While it doesn’t reveal which of those assets were concealed from French tax authorities, judges could use the figure to calculate any fine if UBS’s own conviction is confirmed. Based on a settlement in the U.S. in a similar case and witness statements, French investigators say about 80% of such assets were undeclared.
UBS declined to comment on the figure Kiefer gave.
‘Don’t Want to Remember’
Earlier on Tuesday, Philippe Wick, who ran the France international desk before leaving UBS more than a decade ago, told the Paris appeals court his memory of the assets managed by his team wasn’t precise.
“It’s something that goes way back that I don’t remember and don’t want to remember,” Wick told the court. He said he didn’t “cultivate memories” of his time at UBS.
Kiefer and Wick are among a group of former UBS bankers who are appealing convictions linked to charges that the Swiss lender helped clients launder funds through numbered accounts and trusts that should have been declared to French tax officials. The bank, convicted on the same facts two years ago, is challenging a 4.5 billion-euro ($5.4 billion) penalty as part of a guilty verdict.
Kiefer told the judges that under Swiss law and in line with internal rules, UBS was under “no obligation” to verify the tax situation of its clients.
“Were there fraudsters among our clients? Probably,” Kiefer said. “We had no clue about their tax situation.”
The two former executives and UBS were also found guilty of covertly dispatching Swiss bankers across the border to seek out new French clients even though they lacked the paperwork to offer such services in France.
While UBS’s French unit, set up in 1999, was focused on gaining new clients, Wick said the France international desk’s goal was to maintain longstanding relationships. It’s that aspect of his job he remembers much better, he said.
“I’m very attached to meetings, people,” he added. “Emotion, empathy were important values for us.”
Judge Hervé Robert replied that “that’s not how I imagined the banking world.”
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On Monday, defendant Hervé d’Halluin, a former banker at UBS’s French unit, recounted how a pair of hunting trips he organized more than 15 years ago was a “clever” way to approach a businessman. While the events were funded by a Swiss colleague, who wasn’t charged in the probe, d’Halluin denied ever helping him unlawfully recruit new clients in France.
Patrick de Fayet, the former head of front office and then general manager at the French unit, also tried on Monday to minimize the importance of events such as hunting, golfing or opera trips that were co-organized with colleagues across the border.
Wick said on Tuesday that UBS-sponsored events in France were designed to build up a positive image of the bank and its wealth management staff.
“An event, be it golf or music, isn’t a platform to recruit new clients -- it’s a platform for emotions,” the former executive said. “The guests, when they go back home, we want them to think, ‘Gosh, UBS is amazing. I want to go see Mr. d’Halluin again.’”
Concerning the setting up of foundations or trusts, Wick said UBS bankers never proposed such services unless a client made a specific request. He also dismissed the notion that the term “complex money” was ever used by colleagues to refer to undeclared accounts, but instead referred to clients wishing to invest in a less traditional fashion.
“Tax issues were never our concern,” Wick said. “We weren’t tax experts. We were wealth managers.”
The trial is set to last until March 24.
Another defendant, Olivier Baudry, who took over from Wick shortly after his departure but left UBS amid the 2008 financial crisis, told the court on Tuesday that he’s hopeful for a favorable outcome.
“I want to thank you for going, for once, in depth into the issues with your questions,” Baudry said. “It wasn’t my ambition to join a mafiosi company, and UBS wasn’t one.”
Presiding Judge Francois Reygrobellet immediately tempered those hopes.
“You’ll see later whether you should thank us,” the magistrate said.
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