The Swiss-based investment bank and financial services provider UBS has reached a settlement of €50 million with the Belgian tax authorities to avoid charges of tax evasion.
The bank was accused of helping Belgian clients avoid tax by channelling their money through bank accounts in Switzerland.
The case goes back to May 2014, when the Brussels prosecutor’s office received a notification from the National Bank that UBS was involved in some potentially unlawful practices in its role as a financial intermediary on behalf of clients.
That led to statements made by the bank’s former compliance officers, who had either been dismissed or decided to leave. They were able to provide investigators with detailed information.
The system worked like this, they explained:
Wealthy Belgians would be discreetly approached in Belgium by Swiss employees of UBS and convinced to open a bank account in Switzerland. The accounts could remain hidden from the Belgian tax authorities because they were registered in the name of a fencing company in a tax haven.
The problem was not unique to Belgium: An investigation into such practices against UBS had already been opened in 2007 in the United States. France and Germany took the same step in 2012.
Almost immediately, in June of the same year, search warrants were carried out at UBS offices in Woluwe-Saint-Pierre in Brussels, at the home of UBS Belgium CEO Marcel Brühwiler, and one of the bank’s wealthiest clients.
Brühwiler was charged with criminal conspiracy, money laundering, organised tax fraud and illegally offering services as a financial intermediary.
To make matter worse for USB, by early 2016 investigators, with help from colleagues in France, had gathered enough evidence to bring charges against the Swiss parent company.
However the legal and tax authorities have the option in Belgium to negotiate with the accused a settlement allowing them to avoid the option of a trial.
From the prosecution side, this sidesteps the need for a lengthy and extremely complex trial, where banks of defence lawyers aim to throw up as many smoke-screens as they can to complicate the issue even further – entirely legitimately, it has to be said.
From the defence side, a ruling in a French court on similar charges led to UBS being fined no less than €3.7 billion, not to mention damages of €800 million to the French government.
In light of those sums, the Belgian case appears to let UBS off relatively lightly. The decision of the tax authorities to move to a settlement now has to be confirmed by a court.