US Justice Dept. probing Swiss bank UBS in tax case
WASHINGTON (AFP) — Switzerland's largest bank, UBS, has disclosed that the US Justice Department is investigating whether its bankers helped wealthy Americans evade paying income tax on their investments.
The Justice Department declined to comment Thursday, after UBS made a securities filing on Tuesday which said it was the subject of a US government probe relating to advice its staff gave to affluent US clients.
"In particular, DOJ is examining whether certain US clients sought, with the assistance of UBS client advisors, to evade their US tax obligations by avoiding restrictions on their securities investments," the Swiss bank's filing said.
Banks often help wealthy clients to legally minimize their tax bills, but it is illegal in the United States to actively evade paying income tax on earnings.
The probe of UBS comes after US tax authorities opened an investigation of over 100 Americans in late February related to bank accounts held in the secretive European principality of Liechtenstein.
The Swiss banking giant said in its filing with the Securities and Exchange Commission that the SEC was meanwhile probing whether UBS Switzerland should have registered with the securities watchdog as a "broker-dealer and/or investment advisor" because of the advice it dispensed to some US-based clients.
The Zurich-based bank said it was cooperating with both the Justice Department and the SEC.
UBS had revealed Wednesday that one of its top executives had been detained in the United States as part of the tax-related probe.
The bank said the executive would remain in the United States pending "discussions" with the US authorities. UBS said it had been told that the executive, who it did not identify, was regarded as a "witness" in the case.
The Financial Times newspaper has named the detained executive as Martin Liechti, a Zurich-based executive who runs part of UBS's international wealth management business.
The newspaper said Liechti was detained in the US state of Florida late last month.
UBS's filing said the tax investigation was linked to services its advisors had provided American clients between 2000 and 2007.
The probe comes as the bank reels from vast losses tied to investments it made in US subprime mortgages, or home loans granted to Americans with poor credit.
UBS said Tuesday that it could cut up to 5,500 jobs as it announced a first quarter net loss of 10.97 billion dollars (11.54 billion Swiss francs, 7.08 billion euros).
