The Swiss government is selling its stake in UBS AG after concluding a deal that appears to end the bank’s year-long tax-evasion probe in the US.
A consortium of banks has been asked to place the government’s 332.2 million mandatory convertible notes with institutional investors. The sale should be completed yesterday, the government said.
The move came hours after the government announced it had signed an agreement with the US under which UBS will disclose the names of 4,450 US clients suspected of hiding assets in Swiss accounts. In return, Washington agreed to drop a civil case against the Swiss bank seeking the handover of some 52,000 client names.
PHOTO: AFP
UBS shares closed at 16.74 Swiss francs (US$15.70) on the Zurich exchange on Wednesday, valuing the government stake at about SF5.56 billion (US$5.22 billion).
The sale also requires UBS to pay the government SF1.8 billion in interest that would have been due when the notes mature in 2011.
Wednesday’s agreement breaks through the famed Swiss tradition of banking secrecy and is expected to prod thousands more UBS clients in America to voluntarily disclose their financial details to the Internal Revenue Service (IRS), lest they be pursued later.
“This is no mere keyhole into the hidden world of bank secrecy,” IRS Commissioner Doug Shulman said. “This agreement represents a major step forward with the IRS’ efforts to pierce the veil of bank secrecy and combat offshore tax evasion.”
Shulman said the accounts held US$18 billion at one time, though many have since been closed.
The Swiss, known worldwide for keeping bank accounts secret, said UBS had no real choice in turning over the names.
Swiss Justice Minister Eveline Widmer-Schlumpf told a news conference in Bern that the deal lifts the threat of criminal prosecution, which not only would have endangered the bank’s existence but would have dealt a severe blow to the Alpine country’s economy.
“There was no alternative to this solution,” she said.
Tax experts said the agreement should terrify Americans who had been able to hide assets in offshore accounts for generations with little fear of being caught.
“This is critically important because the Swiss caved,” said Tom Cardamone, managing director of Global Financial Integrity, a Washington-based group that advocates tougher policies against international money laundering. “They agreed to give up names, so in that context, this is a real body blow to Swiss banking secrecy.”
Tax advisers at several US firms said they are seeing many more customers with undeclared assets seeking information about their legal options.
The IRS long has had a policy that certain tax evaders who come forward before they are contacted by the agency usually can avoid jail time as long as they agree to pay back taxes, interest and hefty penalties.
In March, the IRS began a six-month amnesty program that sweetened the offer with reduced penalties for people with undeclared assets. Shulman said the response has been unprecedented, though he declined to say how many people have applied.
“What this does is creates an overwhelming incentive for virtually everyone of those account holders to come forward,” said Peter Zeidenberg, a litigation partner at the law firm DLA Piper in Washington. “If there had been a steady stream, there is now going to be an absolute flood.”
Robert McKenzie, a Chicago-based lawyer who represents dozens of American clients of Swiss banks, said some will still try to avoid the taxman.
“Some will say ‘Let’s wait and see if I get a letter,’” McKenzie said. However, he said, waiting too long “is really playing a game with the devil.”
NO HUMAN ERROR: After the incident, the Coast Guard Administration said it would obtain uncrewed aerial vehicles and vessels to boost its detection capacity Authorities would improve border control to prevent unlawful entry into Taiwan’s waters and safeguard national security, the Mainland Affairs Council (MAC) said yesterday after a Chinese man reached the nation’s coast on an inflatable boat, saying he “defected to freedom.” The man was found on a rubber boat when he was about to set foot on Taiwan at the estuary of Houkeng River (後坑溪) near Taiping Borough (太平) in New Taipei City’s Linkou District (林口), authorities said. The Coast Guard Administration’s (CGA) northern branch said it received a report at 6:30am yesterday morning from the New Taipei City Fire Department about a
IN BEIJING’S FAVOR: A China Coast Guard spokesperson said that the Chinese maritime police would continue to carry out law enforcement activities in waters it claims The Philippines withdrew its coast guard vessel from a South China Sea shoal that has recently been at the center of tensions with Beijing. BRP Teresa Magbanua “was compelled to return to port” from Sabina Shoal (Xianbin Shoal, 仙濱暗沙) due to bad weather, depleted supplies and the need to evacuate personnel requiring medical care, the Philippine Coast Guard (PCG) spokesman Jay Tarriela said yesterday in a post on X. The Philippine vessel “will be in tiptop shape to resume her mission” after it has been resupplied and repaired, Philippine Executive Secretary Lucas Bersamin, who heads the nation’s maritime council, said
CHINA POLICY: At the seventh US-EU Dialogue on China, the two sides issued strong support for Taiwan and condemned China’s actions in the South China Sea The US and EU issued a joint statement on Wednesday supporting Taiwan’s international participation, notably omitting the “one China” policy in a departure from previous similar statements, following high-level talks on China and the Indo-Pacific region. The statement also urged China to show restraint in the Taiwan Strait. US Deputy Secretary of State Kurt Campbell and European External Action Service Secretary-General Stefano Sannino cochaired the seventh US-EU Dialogue on China and the sixth US-EU Indo-Pacific Consultations from Monday to Tuesday. Since the Indo-Pacific consultations were launched in 2021, references to the “one China” policy have appeared in every statement apart from the
A clandestine US Navy special missions unit colloquially known as SEAL Team 6 has been training for missions to assist Taiwan’s defense against an attack by China, the Financial Times said in a report yesterday. The navy commando team famous for killing Osama bin Laden in Abbottabad, Pakistan, has been conducting training to take part in a Taiwan conflict at its Dam Neck headquarters in Virginia Beach for more than one year, it said, citing sources familiar with the matter. “The secret training underlines the increased US focus on deterring China from attacking Taiwan, while stepping up preparations for such an event,”