UBS AG, Switzerland's biggest bank and the largest wealth manager in the world, seems to have taken its mandate of helping customers too literally, considering it is now under investigation by the US Department of Justice for helping rich clients evade taxes.
This news is just the latest in a list of misfortunes that has battered the financial institution, and comes only a day after it declared $11.4 billion in Quarter 1 losses, and a possible shedding of seven per cent of its workforce. The bank has already notched up collective losses of $38 billion over the past three quarters. (See: UBS reports $11.4 billion Q1 loss, may cut over 8,000 jobs)
UBS said on Wednesday that one of its senior executives had been detained by US authorities, as a ''material witness'', in relation to a tax evasion investigation.
Although it did not identify the employee in question, sources indicate the involvement of Martin Liechti, who was based in Switzerland and headed the bank's international wealth management business for North and South America.
''Our understanding is that the respective employee, who has not been charged with any wrongdoing by the US government, will remain in the United States pending discussions with the US authorities regarding resolution of his status as a witness,'' the bank declared in a statement. It declared that it was cooperating with the investigations.
In addition to the Justice Department's probe, the US Securities and Exchange Commission is also investigating whether the bank's employees in Switzerland who advised US clients failed to register with the agency as required.
As a further twist to the tale, this is not the first instance in recent times that UBS has found itself embroiled in tax evasion controversies. Only a month back, on 31 March, the Mannheim Prosecutors' Office had declared the possibility of opening a criminal probe into allegations that UBS offered Germans help in hiding funds from local tax authorities.