UBS and U.S. Report a Deal on Names in Tax Inquiry

UBS and U.S. Report a Deal on Names in Tax Inquiry
By LYNNLEY BROWNING
Copyright by The New york Times
Published: August 12, 2009
http://www.nytimes.com/2009/08/13/business/global/13ubs.html?_r=1&ref=global-home


The Swiss banking giant UBS and the Justice Department said Wednesday that they had reached an accord that would force the bank to disclose names of American clients suspected of tax evasion.

“The parties have initialed agreements,” Stuart Gibson, a Justice Department lawyer who is trying the case, said in a conference call on Wednesday with the judge overseeing the matter. Mr. Gibson told Judge Alan Gold of Federal District Court in Miami that both sides would move next week to have the legal case dismissed and file court documents outlining the settlement.

Mr. Gibson told the judge last week that he hoped a deal could be completed by Aug. 12.

It is unclear how many client names UBS will ultimately reveal or whether it will pay a fine. UBS and the Swiss government have been fighting efforts by the Justice Department to force it to disclose the names of 52,000 wealthy American clients of UBS suspected of offshore tax evasion, which came in a civil lawsuit filed by the Justice Department in February.

A number of wealthy Americans have approached the I.R.S. in recent months to disclose their offshore accounts, in exchange for reduced penalties.

In addition, the efforts have threatened to erode Swiss banking laws and have shaken UBS, the world’s largest private bank. They have also escalated into a diplomatic incident between Switzerland and the United States.

In February, UBS agreed to pay $780 million to settle charges that it helped wealthy Americans evade taxes on nearly $20 billion hidden in offshore accounts. One day later, the Justice Department filed a civil suit seeking to force UBS to disclose 52,000 client names. Of the names on the agency’s original list, prosecutors are focused on several thousand Americans with offshore accounts containing tens to hundreds of millions of dollars.

UBS had fiercely resisted disclosure, arguing that doing so would cause it to violate Swiss banking laws. The Swiss government has said it would block UBS from turning over the names if ultimately ordered to do so, while the Justice Department has said that it might consider indicting the bank if it ultimately refused to do so upon a judge’s order.