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Business

US court extends deadline in UBS banking secrecy case

Text by NEWS WIRES

Latest update : 2009-08-07

Swiss bank UBS and the US administration have secured a one-week extension to find an out-of-court agreement over government efforts to obtain the names of UBS clients holding offshore bank accounts.

AFP - A US tax secrecy trial involving Swiss bank UBS has been delayed at least until Wednesday to allow the parties in the case more time to try reach an out-of-court settlement, a court official told AFP Friday.
  
US District Judge Alan Gold delayed the trial, set to open in Miami Monday, pending further talks, said Lynn Surowiec, judicial assistant to Gold.
  
Discussions were "continuing" and a conference call with the court to discuss the status of the talks was scheduled Wednesday at 1300 GMT (9:00 am), she said in a phone interview.
  
"The parties, the counsel indicated to the court that they would advise on August 12 at 9:00 am whether they have reached a settlement," she said.
  
The case stems from a US government lawsuit filed earlier this year seeking to force the Swiss bank to identify Americans holding offshore bank accounts to evade taxes.
  
The case could affect as many as 52,000 Americans who hold UBS accounts and could be prosecuted for tax evasion.
  
UBS has argued that it cannot comply with the US demand without violating Swiss banking secrecy law, which would make it liable for prosecution in Switzerland.
  
US and Swiss authorities and Swiss banking giant UBS had been widely expected to announce a final out-of-court settlement in the diplomatically sensitive case in a conference call Friday morning.
  
However, the judge agreed at the request of US Justice Department lawyer Stuart Gibson during the brief conference call to hold another call, at 1530 GMT, to allow discussions to continue.
  
A week ago Gibson told Gold the parties had reached an agreement in principle. At the request of the lawyers, the judge postponed the August 3 trial to August 10 to give the parties more time to hammer out a final deal.
  
Gold had already postponed the case once at the request of the bank and the two governments to allow negotiations in a case with massive political and diplomatic repercussions.
  
After the case was delayed last Friday, a UBS spokesman said that the parties "expect to resolve the remaining issues in the coming week."
  
The Swiss bank, under a settlement earlier this year with the US Justice Department, admitted to tax fraud by inviting rich US clients to open accounts in Switzerland and thus avoid declaring their income to the US.
  
UBS paid 780 million dollars to settle that case.
  
In the current case, US authorities are asking the court to order UBS to reveal the names of American offshore account holders, saying the Swiss bank "systematically and deliberately" violated US laws in promoting offshore accounts.
  
Legal analysts say the case calls for a diplomatic rather than courtroom solution because it involves conflicting laws from two countries, but that a settlement could be difficult.
  
The US government could in theory ask the court to seize UBS assets in the United States until the bank complies, but some analysts argue this would send a chilling message to international financial institutions.
  
Last month the Swiss government said it would "use its legal authority" to prevent UBS from handing over information in violation of Swiss bank secrecy laws.
  
This includes "if necessary by issuing an order taking effective control of the data at UBS that is the subject of the summons and expressly prohibiting UBS from attempting to comply" with the US authorities, the government said on July 8.

Date created : 2009-08-07

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