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TAX FRAUD

French court hits Swiss bank UBS with record €3.7 billion fine in tax fraud case

A Paris court on Wednesday fined Swiss banking giant UBS 3.7 billion euros ($4.2 billion) in a tax fraud case, a record for France.

French court hits Swiss bank UBS with record €3.7 billion fine in tax fraud case
Photo: AFP

The bank was convicted of illegally helping French clients to hide billions of euros from French tax authorities.

The trial opened last autumn after seven years of investigations, launched when several former employees came forward with claims of unlawful conduct. 

The move came as authorities across Europe cracked down on tax evasion and dubious banking practices in the wake of the global financial crisis which erupted in 2007.

The pressure eventually forced Switzerland to effectively end its tradition of ironclad bank secrecy, by joining more than 90 countries which agreed to automatically share more client account information among each other.

In the UBS case, French authorities determined that more than €10 billion had been kept from the eyes of tax officials between 2004 and 2012.

The National Financial Prosecutor's office had urged a €3.7-billion ($4.2 billion) fine, the largest ever sought in France, saying the bank and its directors “were perfectly aware that they were breaking French law” by unlawfully soliciting clients and helping them evade French taxes.

They had also sought a €15 million fine for UBS's French subsidiary, and fines of up to €500,000 for six top executives, including Raoul Weil, the former third-in-command at UBS, and Patrick de Fayet, formerly the second-ranking executive for its French operations.

In addition, lawyers for the French state, which is a plaintiff in the case, asked for €1.6 billion in damages.

UBS, which was ordered to post €1.1 billion in bail, had denied the charges and said its operations complied with Swiss law.

It also said that it was “unaware” that some French clients had failed to declare assets in Switzerland, and that prosecutors have not produced any proof, such as client names or account numbers, to back up their fraud claims.

The case was closely watched by industry executives at a time when Paris and other European capitals are hoping to lure multinational banks from London as Brexit looms.

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TAX FRAUD

Nina Ricci heiress avoids jail for tax fraud

A French appeals court ruled Friday that the heiress to the estate of fashion designer Nina Ricci will not serve jail time over her conviction for tax fraud, reducing an earlier sentence.

Nina Ricci heiress avoids jail for tax fraud
Photo: AFP
The court handed Arlette Ricci, 76, a three-year suspended sentence and confirmed a one-million-euro ($1.1 million) fine and the confiscation of two properties.
 
In what was viewed as one of the toughest sentences of its kind in France, Ricci was handed a three-year prison sentence, two years of which were suspended, in April 2015 for hiding €18.7 million from the taxman for more than two decades.
 
She appealed the sentence last December.
 
The appeals court Friday confirmed the conviction but said the sentence of “three years' imprisonment is fully suspended”.
 
The heiress did not attend the hearing “for health reasons”. The Nina Ricci fashion house, founded in 1932 in Paris, is known for its luxury perfumes — especially the floral classic L'Air du Temps.
 
The case against Arlette Ricci began after revelations that the Swiss private banking arm of British giant HSBC had helped clients hide billions from the taxman, in what became known as the SwissLeaks scandal.
 
The original sentence in 2015 was considered exceptionally tough in France, where tax fraud is typically punished by fines and recovery of claimed sums, but hardly ever by jail.
 
But the court at the time said the heiress's actions had posed “an exceptional threat to public order” and that she had disguised her true wealth “for more than 20 years with particular determination.”
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