US seeks names of 52,000 suspected UBS tax evaders

UBS SHARES plunged 18 per cent yesterday as US authorities filed a civil suit demanding the names of 52,000 US citizens suspected of evading tax with the bank’s assistance.

The suit, involving accounts with a total value of $14.8 billion €11.74 billion), was filed hours after the bank agreed to pay a record $780 million (€618.41 million) fine for helping 17,000 clients hide $20 billion (€15.9 billion) in assets from the US authorities.

As part of the settlement, the bank has agreed to identify between 250 and 300 clients to the US Internal Revenue Service.

The second suit was interpreted by some analysts in Switzerland yesterday as the beginning of the end of its banking secrecy laws.

At a time of economic slowdown, that could have serious economic consequences for the country’s financial sector, which contributes 10 per cent of total Swiss economic output.

Shares in all major Swiss banks and insurance companies were down yesterday on the Zurich stock market amid uncertainty about who might be next in the cross-hairs of US investigators.

UBS closed down 12 per cent while rival Credit Suisse closed down 7 per cent. Insurance giants Zurich and Swiss Re were down 9.7 per cent and 7.3 per cent respectively.

The civil suit accuses UBS staff of making 4,000 trips to the US annually to find “extremely wealthy Americans” to invest in offshore companies with the purpose of tax evasion.

“At a time when millions of Americans are losing their jobs, their homes and their healthcare, it is appalling that more than 50,000 of the wealthiest among us have actively sought to evade their civil and legal duty to pay taxes,” said John DiCicco, acting assistant attorney general of the US justice department’s tax division.

UBS said that without proof of tax fraud or money laundering, Swiss law forbade them from releasing clients’ identities. “UBS believes it has substantial defences to the enforcement of the . . . summons and intends to vigorously contest the enforcement of the summons in the civil proceeding,” the Swiss bank said in a statement.

After supplying the first group of names with the blessing of the Swiss government, UBS can rely on political support from Berne in this new fight.

The first UBS settlement had itself divided Swiss public opinion, with the influential Neue Zürcher Zeitungcalling the deal a "capitulation". "If you give the US authorities a little finger, they take the whole hand," the paper's business editor, Marco Metzler, said on Swiss radio.

Free newspaper 20 Minuten warned that without its banking secrecy laws, “Switzerland could soon be a poor agricultural nation”. The Tages-Anzeiger said Swiss banking secrecy was “now only a myth” and it was likely that EU authorities would renew pressure on Switzerland to change its secrecy laws.

Last October, German finance minister Peer Steinbrück said Switzerland belonged on a “black list” of tax havens. Meanwhile it emerged yesterday that German authorities are investigating the finances of Prince Max von und zu Liechtenstein on suspicion of tax evasion.