Ex-UBS Executive Sues Bank Over Bonus Lost in Film-Tax Scheme
(Bloomberg) -- A former UBS Group AG executive is suing the bank after claiming he was invited to invest in a “free punt” movie tax-break scheme that was eventually investigated by U.K. authorities.
Steven White, who was the bank’s global head of HR services, is seeking damages from UBS after investing 40,000 pounds ($56,700) in the Ingenious film investment scheme that’s been labeled as tax avoidance by the U.K. White, who said he couldn’t afford to gamble with his money, is among hundreds of individuals now suing the bank in London.
The lawsuit is the latest fallout from the decade-old British film partnerships tax scandal. Investment in the U.K. film industry ballooned after the government boosted tax credits for funding movies in 1997. But U.K. authorities tightened the rules a decade later after questions over the legitimacy of some of the productions.
The movie schemes attracted funding from dozens of celebrities and soccer stars, but have faced a string of court battles since British authorities cast doubt on their purpose. Investors are now turning their ire onto the intermediaries, including banks, claiming they gave bad advice.
‘Wholly Without Risk’
White -- who formerly ran UBS’s multi-billion Swiss franc internal compensation fund within the asset management unit, according to his LinkedIn profile -- said a colleague had called the investment “safe as houses” and “wholly without risk” when they discussed what to do with his bonus around the end of 2005.
He said the colleague assured White that he had injected part of his own bonus in a previous partnership affiliated with the investment fund and that other investors has received tax rebates.
“No reasonable adviser in UBS’ position would have portrayed” the film plan “as a ‘watertight’ investment,” White’s lawyers said.
A spokesman for UBS declined to comment. The bank is one of dozens of defendants in the Ingenious lawsuit, including HSBC Holdings Plc.
UBS has denied that the colleague would ever have labeled the investment as a “free punt” or “bet.” The bank never provided tax advice and relied upon Ingenious’ own advice, the bank said in a legal filing.
White was a “sophisticated investor with substantial financial experience,” the bank said, saying it sent him a letter about the scheme noting “his adventurous attitude to investment risk.”
White’s involvement in the lawsuit came to light at a court hearing this month to decide who should represent the group in the lawsuit. UBS had pushed to have White replaced while lawyers for the group argued that UBS was making a “subjective judgment.”
Ingenious involved a series of investments in blockbusters such as “Avatar” and “Life of Pi.” Ingenious has previously denied that the plans were set up as a tax dodge and is in its own legal battle with the U.K. tax authorities over the issue.
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