The Way UBS Handled $31 Million Lotto Winner Troubles Judge

The way UBS Group AG handled the case of a prospective client in Bordeaux who had just won 26 million euros ($31 million) playing the lottery troubled a Paris judge assessing the bank’s appeal of a record fine.

Judge Hervé Robert cited a letter sent by a UBS banker in Switzerland after a meeting with the jackpot winner in Bordeaux providing him a Swiss account number. A 2003 law prohibits UBS’s Swiss bankers from seeking out new clients in France.

UBS is challenging a 4.5 billion-euro penalty linked to charges that the Swiss lender also helped clients launder funds through numbered accounts and trusts that should have been declared to French tax officials. Five former UBS bankers were also convicted in 2019.

Jean-Frédéric de Leusse, the chief executive officer of UBS’s French unit, couldn’t say for sure where the documents to open the account about 15 years ago had been signed -- in Bordeaux or elsewhere -- but said it’s the prospective client who asked to open an account in Switzerland, as well as a French one.

“I don’t think this refers to an unlawful situation,” de Leusse told judges Monday at the Paris court of appeals during the final week of the trial. “I don’t think the law required setting up two distinct meetings” to handle the opening of the French and the Swiss accounts.

Robert also said the letter listed the Swiss UBS banker’s credentials in the header and those of the French unit in the footer, adding that he considers “it’s one of the most problematic documents” in the case.

De Leusse suggested that was “likely a printing error.” UBS France has been accused of serving as a vehicle to help its parent company unlawfully recruit wealthy French prospects.

The court’s mood -- much like at the trial level -- seemed to shift on Monday, with judges expressing more clearly their doubts.

Presiding Judge Francois Reygrobellet voiced his exasperation after UBS invoked yet again Switzerland’s banking secrecy to remain evasive about a question that concerned client data.

“Foreign law cannot apply to facts that took place in France,” the judge said.

He also told Christine Novakovic, a UBS executive testifying at the appeal, that she’s allowed to remain silent or even lie in court, suggesting that would be preferable to hearing once more about banking secrecy.

The atmosphere heated up shortly after Novakovic revealed a number UBS had systematically refused to provide in the past decade. She said that a Switzerland-based team of UBS bankers that focused on French clients managed as much as 11 billion Swiss Francs ($12 billion) at the height of their activity in 2007.

A first estimate emerged last week when Dieter Kiefer, the onetime head of wealth management for western Europe at UBS, told the appellate judges that the bank’s France International desk had 6 billion to 9 billion Swiss francs under management.

©2021 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.