UBS Honcho: Swiss Law Trumps U.S. Probe

March 4, 2009— -- A top UBS official told a Senate hearing on tax havens that the Swiss bank, which has been subpoenaed to turn over information on as many as 52,000 U.S. account holders, would not turn over the identities of possible U.S. tax cheats.

"UBS cannot disclose information to the IRS that would put its employees at serious risk of criminal prosecution under Swiss law," said Mark Branson, UBS' chief financial officer of wealth management.

"Because Swiss law prohibits UBS from producing responsive information located in Switzerland ... we believe that UBS has now complied with the summons to the fullest extent possible without subjecting its employees to criminal prosecution in Switzerland." Branson said.

Branson's comments came at a hearing in which senators tried to determine the extent to which U.S. taxpayers have used Swiss banks and other offshore accounts to evade the IRS, and expressed frustration with the Swiss government.

Branson's refusal to hand over the names is the latest entanglement UBS has had with U.S. authorities.

Last month, the Justice Department sued the Swiss banking giant and asked a federal court to enforce an IRS summons seeking the names and identities of as many as 52,000 clients who sheltered money in the bank's overseas accounts.

Today, Branson confirmed there were about 47,000 accounts that UBS had for U.S. clients, but he said the bank will not provide any identifying information.

Sen. Carl Levin, D-Mich., has looked into the prevalence of tax havens and had tough words today for UBS and Swiss officials.

"The Swiss hold out bank secrecy as a national value," Levin said. "In the way Americans prize freedom and democracy, the Swiss claim that bank secrecy is essential to protect the individual privacy and is more important than any law in the United States requiring the payment of taxes."

Levin said UBS sent bankers from overseas to visit as many as 3,800 clients in the United States to manage and establish their accounts.

"Swiss bankers aided and abetted violations of U.S. tax law," Levin said, "by traveling to this country with client code names, encrypted computers, counter surveillance training and all the rest of it to enable U.S. residents to hide assets and money in Swiss accounts."