Court of Human Rights Denies UBS Appeal Regarding 1.1 Billion Euro Bond in French Tax Case

01/12/17 07:12 AM EST

By John Letzing

 

ZURICH-UBS Group AG has lost a bid to appeal its treatment by France's legal system at the European Court of Human Rights, which ruled that the Swiss bank had not had its right to be presumed innocent violated.

The Strasbourg-based ECHR said in a decision issued on Thursday that a French court was within its own rights to require Zurich-based UBS to post a 1.1 billion euro ($1.2 billion) bond as part of an ongoing probe of the bank's alleged aiding of tax evasion among French clients.

In 2014, French investigating judges had ordered UBS to post the bond, which could ultimately be put toward fines and restitution, as part of an expanding examination of the bank's alleged facilitation of the laundering of the proceeds of tax fraud.

UBS responded by calling the bond amount "unprecedented and unwarranted," and in 2015 filed its relatively unusual appeal with the ECHR, arguing that it was being denied a fair trial.

The ECHR decision on Thursday said the bond "did not prejudge the outcome of the proceedings" against UBS, and was based both on material gathered during the course of an investigation and "thorough reasoning."

A UBS spokesman said in a statement that, "We regret the court's decision and disagree with its reasoning."

The spokesman added: "We value the fact that the court accepted this case for consideration. This already shows the unprecedented nature of this matter."

France is one of a number of countries in which UBS and other Swiss banks have run into legal trouble as a result of the alleged--or acknowledged--aiding of tax evasion by providing accounts shrouded behind Switzerland's bank secrecy laws.

UBS has faced related issues in Germany and Belgium. In 2009, the bank acknowledged helping American clients evade taxes and agreed to pay $780 million.

Bradley Birkenfeld, a former UBS employee and whistleblower who assisted the U.S. case against the bank, has also aided the French investigation.

Last year, Switzerland's tax authority ordered UBS to hand over identifying information about French clients, following a request for assistance made by the Swiss authority's counterpart in France. The French request was itself based on data received from tax authorities in Germany, who had seized the information during their own tax-related probes.

 

Write to John Letzing at john.letzing@wsj.com

 
 

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January 12, 2017 07:12 ET (12:12 GMT)

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