UBS and France are headed for a high-stakes public trial in a long-running tax dispute. Another prominent trial is playing out in in Paris, casting another bank in an equally unsavory role.
On Monday UBS will have to defend itself in Paris against charges of tax fraud, amongst other things. The process in the worst-case scenario could cost the large Swiss bank billions of francs. Accepting undeclared assets from clients: by comparison with another case in a Paris court, this is a relatively mild accusation.
In this trial, the charges involve bankers operating out of Switzerland. They allegedly laundered assets worth some 12 million euros ($13.8 million) through offshore accounts between 2010 and 2012 - monies which it is alleged emanated from drug dealing.
«Just» Undeclared Funds
The case involves three brothers: Nessim, Meyer and Mardoché El Maleh, according to «Bloomberg». Nessim worked previously at HSBC private bank in Geneva. Meyer ran his own asset management firm GPF in the city; he is still in Switzerland and not directly involved in the case.
The «white collar» case kicked up a storm in Switzerland’s neighbor, comparable to the controversy surrounding the fraudulent Société Générale trader, Jérôme Kerviel. Ironically, the banking brother claimed last Monday he didn’t know the funds stemmed from drug dealing – he assumed they were simply undeclared assets.
Smuggling Ring
French investigators stumbled on the brothers while probing the smuggling of marihuana from Morocco to Paris. The investigation identified Mardoché, which led them to the firm GPF in Geneva.
The proceeds from the drug trafficking flowed through a broker in Morocco and restaurants in Paris, and the former HSBC banker claimed he assumed the funds were from French companies seeking to evade the tax authorities. The monies ended up in the Swiss accounts of prominent French tax evaders, who will now face tax evasion charges in the Paris court.
Swiss Cooperation
The brothers’ main line of defense involve Swiss officials. They had cooperated closely with French police in exposing the cannabis-dirty money-ring. As a result Nessim was given a two-year suspended sentence in Switzerland. His brother Meyer spent six months in prison and the Swiss justice officials confiscated some 1 million francs ($1 million) from him.
The brothers’ defense attorneys maintain their clients cannot be sentenced twice for the same offense. According to «Bloomberg», the former HSBC banker is again active in Geneva in asset management – but the court ruling, expected on October 12, could end his financial career for a second time.
