By John Letzing And Noemie Bisserbe
ZURICH-- UBS AG failed to win relief from having to pay a 1.1
billion euro ($1.37 billion) bond as part of a French probe into
assistance provided by the Swiss bank to French tax evaders,
prompting the lender to take its case to the European Court of
Human Rights.
UBS said in a statement on Wednesday that the Cour de Cassation,
France's highest appeals court, has rejected the bank's appeal of
the bond amount. UBS had lost an initial appeal in September and
posted the bond, which is meant as a down payment on potential
penalties resulting from the investigation.
An attempt to reach the Cour de Cassation for comment wasn't
successful.
UBS has said previously it would challenge the bond decision at
the European Court of Human Rights, an international court
established in Strasbourg to rule on alleged violations of civil
rights including entitlement to a fair trial. The bank said in a
statement Wednesday that it will now pursue that option, adding
that the basis for calculating the bond amount in France is
"exaggerated, speculative and not based on facts."
French judges have been investigating whether UBS unlawfully
solicited clients in France to open Swiss accounts, which were used
to hide undeclared assets. Earlier this year the probe expanded to
include charges of money laundering, resulting in a bond amount
that far exceeded UBS's prior estimates for settling the case.
As recently as June, UBS believed it might be able to settle the
French case for less than 100 million euros, according to a person
familiar with the matter. However, the bank has vigorously sought
to avoid having to enter a guilty plea as a part of any deal, the
person said, due to the potential ramifications for its
business.
Rival Swiss bank Credit Suisse Group AG pleaded guilty in the
U.S. last May to a criminal charge of aiding tax evasion, and as a
result was forced to seek an exemption enabling it to continue
managing billions of dollars in assets for pension plans. The U.S.
Department of Labor has scheduled a January hearing to determine
whether Credit Suisse should receive the exemption. The bank is
currently operating under a temporary exemption.
The French case is one of a number of legal snags hit by UBS in
recent years, as its foreign clients have come under scrutiny for
evading taxes by keeping money in UBS accounts potentially obscured
by Switzerland's bank secrecy laws. Last July, UBS settled related
allegations in Germany for roughly 300 million euros. The previous
month, UBS's Belgian branch had been raided by local police on
suspicion that it had helped Belgians evade taxes.
In 2009, UBS acknowledged helping American clients evade taxes,
and agreed to pay $780 million as part of a deferred prosecution
agreement with U.S. authorities.
Write to John Letzing at john.letzing@wsj.com and Noemie
Bisserbe at noemie.bisserbe@wsj.com