UBS renders help in US tax probe

By Frank Jordans  |   2008-6-21  |     NEWSPAPER EDITION

SWISS bank UBS AG said yesterday that some of its rich American clients may have broken United States tax reporting rules by channeling funds through offshore shell companies.

The disclosure comes after the Zurich-based bank said it was cooperating with a US investigation into whether its employees helped clients evade taxes from 2000 to 2007.

The investigation centers on 20,000 UBS clients in the US who are required to fill out a supplementary tax form giving foreign banks their American tax identification number if they hold any US securities in their accounts abroad.

"A fraction" of those customers are being investigated for possibly breaching the rules by using offshore companies to hold US assets without filling in the supplementary form, known as W-9, UBS spokesman Serge Steiner said.

UBS said in a statement that it is working with Swiss and US authorities to "promptly provide information concerning instances in which the establishment and operation of such offshore entities and their UBS securities accounts appears to have been part of a scheme to defraud US tax authorities."

"UBS is treating these investigations with the utmost seriousness and will appropriately and responsibly address and correct any issues raised in the investigations, including taking appropriate disciplinary action," it added.

UBS disclosed in May that the US Justice Department is investigating whether the bank was helping clients evade taxes from 2000 to 2007.

The bank said at the time it was cooperating with the investigation and a separate probe into whether its bankers failed to meet registration rules set by the US Securities and Exchange Commission.

Swiss law prevents banks from divulging the names and details of their clients except in cases of outright tax fraud. Tax evasion or non-reporting is not considered sufficient grounds for the Swiss government to aid another government's investigation.

Last week US authorities sent a request for legal assistance to their Swiss counterparts to lift the anonymity of certain clients.

Meanwhile, a spokesman for the Justice Ministry in Bern confirmed media reports that a Swiss government delegation was to meet with US federal authorities in the US yesterday to discuss the case against UBS.

The US investigation has already affected the Swiss bank's operations in that country, where it manages some US$710 billion for rich American clients.