- The Washington Times - Thursday, March 5, 2009

A UBS AG banking official refused to reveal the names of its American clients in a widening U.S. probe into whether the Swiss-based banking giant helped thousands of Americans evade taxes.

Last month, UBS admitted to defrauding the U.S. government, but on Wednesday told a Senate panel that revealing the names of those clients would violate long-standing Swiss banking-secrecy laws.

“We deeply regret our breaches of U.S. law,” UBS Chief Financial Officer Mark Branson told the Senate Homeland Security and Governmental Affairs permanent subcommittee on investigations. “We believe that UBS has now complied with the summons to the fullest extent possible without subjecting its employees to criminal prosecution in Switzerland.”

In a case that has been defined in Switzerland as an American affront to Swiss law, UBS says it could only legally provide name and account information to the United States if given the names of the clients and proof that they did something more serious than evade taxes.

The company agreed to provide 12 names out of about 48,000 accounts held by Americans, both residents and expatriates.

“The bank has now done all that it can do to cooperate with the John Doe summons,” Mr. Branson said.

Sen. Carl Levin, Michigan Democrat and subcommittee chairman, said he intends to make an example out of UBS to tighten U.S. laws regarding Americans who keep money in offshore tax havens to avoid taxes.

“We may not be able to change your laws,” Mr. Levin said of the Swiss, “but we will do everything we can to pass a law here to make it more difficult for American citizens [to maintain offshore accounts].”

UBS is in the process of closing all accounts held by American nationals, except for an allowance for banking-only accounts held by American expatriates currently living in Switzerland. Justice Department documents show UBS took steps to conceal its activity while working in the United States or with American clients between 2000 and 2007.

Employees were instructed to tell U.S. officials they were traveling for pleasure, carry a generic UBS Power Point presentation to show authorities if questioned, use code names on client accounts and change hotels while in the United States, among other tactics. If interrogated, they were told to “protect banking secrecy.”

Last month, the company avoided an indictment by signing a deferred-prosecution agreement with the Justice Department, in which it admitted to defrauding the United States and the IRS. UBS agreed to close its accounts for U.S. clients, as well as pay a fine of $780 million.

In addition, the United States filed a civil “John Doe” summons in U.S. District Court in South Florida seeking the names and account information for all U.S. clients who had opened UBS accounts in Switzerland from 2002 to 2007. If UBS loses its summons case on appeal, the company has to turn over the names or the United States will resume its prosecution of the bank. A court date is set for July.

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