JPMorgan Wins Fight Against Indictment in French Tax Probe
(Bloomberg) -- JPMorgan Chase & Co. won a decisive ruling at France’s top court in its bid to strike down an indictment that ordered the bank to stand trial for helping clients commit tax fraud more than a decade ago.
France’s Cour de Cassation ruled last month that a lower court should have thrown out the 2016 indictment after finding that investigators didn’t follow the proper procedures when they interrogated and charged the bank’s Paris unit in 2015.
When the lower court “concludes that a procedural act is invalid, all documents based on that faulty act must consequently be canceled,” the top court said. The actual reversal of the order to stand trial, however, will have to be formally decided by the Versailles court of appeals in the coming months as the Cour de Cassation ruled only on whether French law was properly interpreted.
The top court ruling comes as one of France’s most far-reaching tax trials kicked off Monday. UBS Group AG potentially faces billions of euros in fines as it stands accused of deploying tactics “worthy of James Bond” to encourage rich French residents to stash undeclared cash outside of the country. The two cases are part of a French crackdown on tax fraud that’s seen the conviction of a former minister and a 300 million-euro ($345 million) settlement with HSBC Holdings Plc last year.
In the case concerning JPMorgan, the bank was indicted almost two years ago after French investigators accused it of helping the former chief executive officer of Wendel SA, Jean-Bernard Lafonta, and other managers at the French firm commit tax fraud. Plagued by procedural issues since then, the case hasn’t hit the courts yet and last month’s ruling suggests authorities may have to consider pushing ahead by hosting a trial without the lender.
While the current order for JPMorgan to be tried will most likely be dismissed by the lower court, the bank isn’t completely off the hook. French investigators could reopen the investigation and re-indict the bank. But any such process would take months or years to complete.
Thierry Marembert, a JPMorgan lawyer, declined to comment as did representatives for the bank. France’s financial prosecutor, the Parquet National Financier, didn’t immediately respond to requests for comment on the Cour de Cassation’s decision.
Lafonta, who quit in March 2009 after a dispute among family members who control Wendel, allegedly dodged taxes on 2007 income of 116.3 million euros. About a dozen other executives have also been targeted in the probe and JPMorgan was accused of knowingly helping them set up a scheme to skip the taxes.
The latest Cour de Cassation decision comes after it was determined last year that the French lead investigator who questioned and subsequently charged the bank wrongly omitted to specify in the minutes of the interrogation that the lender was read its rights, including the right to remain silent.
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