"The conviction is not supported by any concrete evidence, but instead is based on the unfounded allegations of former employees who were not even heard at the trial."<doc-sep>Joseph Eid/AFP/Getty Images TOPSHOT - Former Renault-Nissan boss Carlos Ghosn looks on before addressing a large crowd of journalists on his reasons for dodging trial in Japan, where he is accused of financial misconduct, at the Lebanese Press Syndicate in Beirut on January 8, 2020. - Ghosn arrived at the venue, making his first public appearance since skipping bail in Japan. The fugitive tycoon, who denies any wrongdoing, skipped bail while awaiting trial on multiple charges of financial misconduct including allegedly under-reporting his compensation to the tune of $85 million. (Photo by JOSEPH EID/AFP via Getty Images)<doc-sep>PARIS (Reuters) - A French court found Swiss bank UBS AG guilty of illegally soliciting clients and laundering the proceeds of tax evasion, ordering it to pay 4.5 billion euros ($5.1 billion) in penalties. Shares in the Swiss bank fell as much as 3.2 percent after the ruling on Wednesday. UBS, which has denied any wrongdoing, said it would launch an appeal. “The court can only conclude that (UBS) consistently put its own financial interests over the sovereign rights of the French state,” the court’s president Christine Mee said in her ruling. “Hence, the crimes are exceptionally serious,” she added. The case shows how French courts are taking a hard line on financial misconduct in general, and tax fraud in particular. The trial will be scrutinized by European bankers who have come under pressure from regulators to tighten compliance with money laundering rules since the financial crisis. “This is a clear signal to all financial intermediaries: you will be punished severely if you don’t behave,” said banking law professor Thierry Bonneau from Paris Pantheon Assas University. “They will have to be excessively prudent on all these questions of tax fraud.” The penalties, which exceed the bank’s net profit last year, included a 3.7 billion euro fine and additional damages of 800 million euros to the French state. UBS last month reported a 2018 net profit of $4.9 billion. “This decision is incomprehensible, we will appeal,” UBS general counsel Markus Diethelm told reporters outside the courtroom. “We have seen no facts and no evidence.” An appeal could see the case drag on for years and the bank will not have to pay anything until all appeals are heard. The combined penalties are a record for France and more than double the $2.46 billion the bank has set aside to cover potential losses from litigation and regulatory requirements. The bank may have to increase its provisions in the coming weeks, Citi said in a note to investors and its plan to buy back as much as $1 billion worth of shares this year is at risk, it added. FILE PHOTO: The logo of Swiss bank UBS is seen in Zurich, Switzerland October 25, 2018. REUTERS/Arnd Wiegmann/File Photo “INDUSTRIAL” SCALE LAUNDERING The French trial follows a similar case in the United States, where UBS accepted a $780 million settlement in 2009, and in Germany, where it agreed to a 300 million euro fine in 2014. The penalty is high by European standards, although in the United States judges have levied higher fines including the $8.9 billion a U.S. court in 2015 ordered BNP Paribas to pay for violating U.S. economic sanctions against Sudan, Cuba and Iran. The size of the penalty in the UBS case will push banks to accept settlements in future cases, a standard practice in the United States that is rare in France, Bonneau said. The ruling marks the culmination of a seven-year investigation and aborted settlement negotiations. French prosecutors said UBS sent Swiss bankers to golf tournaments, classical music concerts and hunting parties to solicit new clients illegally and advised them to park their money in Switzerland and offered them methods to shield activities from the French taxman. UBS was “systematic” in its support to tax-evading customers and that the laundering of proceeds from the tax fraud was done on an “industrial” scale, the prosecutors had told the court. UBS’s lawyers have said the prosecution failed to show material evidence of specific cases of clients advised to evade tax payments. Under French law, those convicted of money laundering can be ordered to pay a fine totaling half the amount laundered. The prosecution estimates UBS’s customers hid billions of euros from the French tax authorities. Prosecutors told the court that UBS’s bankers would hand over business cards without any logo and used computers which carried software allowing data to be quickly erased. Lawyers for UBS have previously said the case had become politicized. The bank turned down a settlement offer of 1.1 billion euros. UBS’s French unit was also convicted to pay 15 million euros, while five of the six former UBS executives charged were given suspended prison terms and fines ranging from 50,000 euros to 300,000 euros.<doc-sep>
A French court ordered UBS to pay a fine of more than €4.5 billion ($5.1 billion) today, after finding the Swiss bank guilty of illegally soliciting wealthy French clients to help them evade tax. Of that total, €800 million in damages go directly to the French government, which intends to seek further penalties. Following the verdict, shares of UBS fell by more than 3%, a decline worth about $2 billion in market capitalization. It is the heaviest penalty ever imposed on a Swiss bank. The culmination of long-running negotiations over the case, during which UBS turned down smaller settlement deals, may also be seen as a warning to other financial institutions. UBS has set aside the equivalent of around $2.5 billion in provisions for legal fines, which would be entirely consumed (and then some) by the fine, putting a big dent in its 2019 profit. The bank’s spending on legal matters had been drifting down in recent years. The tactics employed by UBS are somewhat cinematic: Swiss bankers would allegedly be dispatched over the border to star-studded events such as concerts, tennis tournaments, and hunting parties (link in French). There, they targeted wealthy French residents who might have an interest in shielding their assets in Switzerland. Between 2004 and 2012, the bank is accused of illegally concealing some €10 billion in funds belonging to French clients. “The criminal wrongdoings were of an exceptionally serious nature,” said judge Christine Mee. “These acts were committed behind the veil of opacity.” Whether the bank pays up is another question. UBS intends to appeal the ruling, saying in a statement that “the charges of laundering the proceeds of tax fraud are without merit.” The appeal suspends the judgment of the court, under French law, and sends it up to the Court of Appeals for a retrial.