US, Switzerland urge delay to UBS tax secrecy trial

WASHINGTON – The US and Swiss governments Sunday called for the postponement of a court showdown seeking to force Swiss financial giant UBS to reveal thousands of offshore accounts held by US clients.

By (AFP)

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Published: Sun 12 Jul 2009, 9:56 PM

Last updated: Thu 2 Apr 2015, 7:35 AM

‘The Department of Justice, UBS and the Swiss government have requested a stay with a rescheduled hearing date of Aug. 3, 2009, in the proceedings for enforcement of the summons ordering UBS to turn over records of account holders,’ the Department of Justice said in a statement.

‘The stay was requested in order to provide the parties additional time to discuss a possible alternative resolution of the matter.’

A showdown had been set to begin Monday in a Miami court pitting UBS against American tax authorities in a key test for Switzerland’s long tradition of bank secrecy.

US authorities are asking a federal court to order UBS to reveal the names of American offshore account holders, saying the Swiss bank ‘systematically and deliberately’ violated US laws.

The case stems from a lawsuit filed earlier this year and affects as many as 52,000 US taxpayers suspected of holding UBS offshore accounts to avoid paying US taxes.

But the Swiss government has vowed to prevent UBS from releasing client data to US tax authorities and argued that the effort aimed to ‘provoke international conflict’ because it could force UBS to violate Swiss laws.

‘The parties have agreed that any alternative resolution reached would necessarily include a provision requiring UBS to provide the Internal Revenue Service information on a significant number of individuals with UBS accounts,’ the Justice Department said Sunday.

‘If an alternative resolution is not reached, the Department of Justice will continue to vigorously pursue enforcement of the summons through the court.’

Judge Alan Gold, who is charge of the case, has yet to rule whether he will agree to putting off the hearing.

UBS employed 26,934 people in the United States at the end of March this year, more than in its home country of Switzerland, where 25,889 were employed.

Its Wealth Management Americas division managed a massive 618 billion dollars (673 Swiss francs, 444 billion euros) worth of assets at the end of the first three months of this year, making up about 30 percent of total assets managed by the bank.

UBS has argued that it cannot comply with the US demand without violating Swiss banking secrecy law, which would make it liable for prosecution in Switzerland.

Ross Albert, a former Securities and Exchange Commission enforcement lawyer who practices with the Atlanta firm Morris, Manning & Martin, argued that ‘both countries have a strong interest in reaching a mutual accommodation.’

‘What is frightening is that this is the financial equivalent of Armageddon,’ Albert said.

‘UBS is one of the largest financial institutions in the world and if it loses the ability to conduct business in the United States, it’s going to fail.’



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