Published November 14, 2008

Senior UBS exec indicted in US tax probe

He stands accused of helping clients hide assets

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(MIAMI) A senior executive with Swiss banking giant UBS AG was charged in a federal indictment unsealed on Wednesday with conspiring to hide US$20 billion in assets from the US tax agency using secret overseas accounts for thousands of customers.
Raoul Weild: A Swiss citizen, he faces up to five years in prison if convicted. His attorney says he is innocent and plans to fight the charges

Raoul Weil, chief executive officer of a UBS division handling cross-border business and private banking, is charged with one count of conspiring to defraud the US through income tax evasion. But the indictment also says other UBS executives at high levels of the company took part in the conspiracy.

In a move that could spell bigger trouble for UBS, the indictment also referred to unindicted co-conspirators who 'occupied positions of the highest level of management within the Swiss bank'.

'Every American who pays his or her taxes should be offended that a select few use anonymous offshore accounts to avoid paying their fair share,' said US Attorney Alexander Acosta of Miami.

The indictment charges that from 2002 to 2007, Weil, as chief of UBS's wealth management business, helped about 20,000 US clients conceal assets in offshore accounts. About 17,000 of the customers hid their identities and their Swiss bank accounts from the Internal Revenue Service (IRS) and many of them filed false income-tax returns.

At the same time, the cross-border business earned about US$200 million for UBS from 2002 to 2007, according to US authorities.

Prosecutors said Weil referred to the business as 'toxic waste' because it put UBS at odds with US tax law. 'The IRS is aggressively pursuing anyone who helps wealthy individuals hide their assets offshore and dodge the tax system,' said IRS commissioner Doug Shulman.

UBS aggressively marketed its tax-evasion business to wealthy people in the United States, making some 3,800 visits in 2004 alone to discuss accounts with clients. The bank used encrypted laptops, numbered accounts and other 'countersurveillance techniques' to guarantee secrecy, the indictment says.

Weil, a Swiss citizen who turned 49 yesterday, faces up to five years in prison if convicted. His attorney, Aaron Marcu of New York, issued a statement declaring that Weil is innocent and plans to fight the charges.

The Weil indictment follows the guilty plea in July in federal court in Fort Lauderdale by former UBS executive Bradley Birkenfeld to a similar charge of conspiracy to defraud the US. Birkenfeld has yet to be sentenced and has been cooperating with federal investigators looking into UBS practices.

Earlier this year, a Miami federal judge authorised the IRS to obtain information from UBS about American taxpayers who have accounts with the bank but whose identities were unknown.

UBS pledged to cooperate in the investigation and disclosed earlier this month in corporate filings that the probe was focused on management of the cross-border business. UBS no longer offers these cross-border services in the US.

The bank is struggling to preserve its centuries-old tradition of Swiss banking secrecy amid the scrutiny.

The offshore banking services brought in annual revenue of US$200 million before UBS said it shut them down this year. -- AP, NYT