A story that should be filed in the "should have been a bigger story" flie
http://www.ft.com/cms/s/0/0a481d6c-90b9-11dd-8abb-0000779fd18c.html UBS sets up committee to follow probes
By Haig Simonian in Zurich
Published: October 2 2008 20:43 | Last updated: October 2 2008 20:43
UBS on Thursday gave its clearest indication yet of how seriously it is treating US probes into its former Swiss-based private banking activities for wealthy American clients by announcing it had set up a special boardroom committee to follow the issue.
Peter Kurer, chairman, said the task would be undertaken by the board’s risk committee.
But, to underline the need for independence, Stephan Haeringer, a committee member and former UBS executive, had been replaced by Sergio Marchionne, the bank’s lead independent director, to ensure all participants were outsiders.
The announcement came as UBS adopted forthright language in recognising mistakes had been made at the operation, which is being wound down.
“Our own compliance rules have been broken . . .
e regret this extraordinarily,” Mr Kurer told investors.
UBS is also under investigation by the US Department of Justice and the Securities and Exchange Commission in separate, but linked, inquiries into whether bankers assisted clients in evading tax, or breached US rules on providing investment advice. The bank has said it is co-operating with the inquiries.
Mr Kurer, who became chairman in April, described the investigations as one of the group’s “largest” legal cases.
Since assuming office, he has tried to present a fresh start, whether in corporate governance or legacy legal issues.
Mr Kurer’s comments come against the background of increasing pressure from the US authorities on the bank to disclose the names of some of the roughly 19,000 US clients holding accounts in Switzerland. UBS has responded by unilaterally closing accounts with no securities holdings and balances of less than $50,000, believed to comprise a substantial proportion of the total.
The bank is also believed to have passed names of some customers suspected by the US authorities of tax fraud to the Swiss government, after formal requests for legal assistance from the US.
However, it is unlikely any such details have yet been transferred across the Atlantic. Bankers stressed that, under Swiss law, a client had to be informed before any such step. Moreover, such an account holder would have the right to appeal to the highest Swiss court before data was provided to the US.
Separately, bankers said Michel Guignard, a key executive in the US offshore unit, had left UBS. Mr Guignard was deputy to Martin Liechti, the operation’s head, who earlier this year was detained by the US authorities as a “material witness” in the investigations.
UBS said Mr Guignard, who is not involved in the investigation, was still employed. However, it could not confirm whether he was on “gardening leave”.
Mr Liechti, who has returned to Switzerland, is said by UBS to be still employed but “considering his career options”.