UPDATE 2-France widens tax investigation of Swiss bank UBS
* UBS French unit already being investigated
* Tax evasion allegations at issue in the case
* UBS says accusations not new, wider deal needed (Adds UBS comment, details on settlement efforts)
PARIS, June 7 (Reuters) - Swiss bank UBS has been placed under formal investigation for alleged complicity in suspected illegal sales practices, the French prosecutor's office said on Friday, a week after the bank's French business suffered the same fate.
At issue is whether UBS offered potential French clients investments that prosecutors allege were designed to evade taxes.
Prosecutors had already questioned UBS France's chief executive Jean-Frederic de Leusse and placed the French unit under investigation. The action against the Swiss parent company is the latest sign of a widening of the French investigation into UBS that is part of a global crackdown on tax evasion following the financial crisis.
The resignation of former French budget minister Jerome Cahuzac over allegations he had an undeclared Swiss bank account has heightened political concern over the issue.
Cahuzac admitted to holding a Swiss bank account in March. He did not specify which bank, but French media reports have said investigators have a voice recording in which Cahuzac says he regrets having an account at UBS.
The bank was also given the status of "supervised witness" on two other allegations related to money laundering and tax evasion rather than being placed under investigation, the prosecutor's office said.
Under French law, being placed under official investigation means there exists "serious or consistent evidence" pointing to probable implication of a suspect in a crime. It is one step closer to a trial, but a number of such investigations have been dropped without trial.
"Supervised witness" is a lesser status meaning that a person must be accompanied by his or her lawyer if questioned further in the investigation.
UBS TO COOPERATE
UBS noted in a statement that the tax evasion inquiry was "not a new issue", and added:
"It has been reported on since early 2012. The decision of the court extends the investigation. We will continue working with the authorities in France within the applicable legal framework to arrive at a resolution to this matter."
The bank also said talks between the European Union and Switzerland were needed "to find a solution for the past".
Switzerland has agreed to let its banks hand over internal information to U.S. authorities in the hope of avoiding threatened criminal charges over allegations that they helped wealthy tax cheats, although Swiss lawmakers have at least temporarily halted a bill to do that.
In Europe, finance ministers recently gave the go-ahead to start broader talks with Switzerland and other countries about surrendering bank data on an automatic basis. This could presage a broader effort to settle its longstanding tax evasion conflict with the European Union. (Writing by Christian Plumb; Editing by Mark Heinrich)