* U.S.-Swiss talks restart Tuesday
* Deal still seen before UBS case continues July 13
* 12 accords needed to comply with international standards
* Five agreements reached already, U.S. deal seen as key
By Jason Rhodes
ZURICH, June 15 A looming court case against
Swiss bank UBS AG (UBS.N) UBSN.VX could prove a stumbling
block to the United States and Switzerland clinching a tax
agreement this week.
Switzerland, whose private banks manage around $2 trillion
of foreign wealth, aims to secure 12 new bilateral tax deals by
the end of 2009 which could allow it to be removed from an OECD
"grey list" of states which need to improve tax cooperation and
avoid possible sanctions from G20 nations. [ID:nL679144]
It has already secured five agreements, with Denmark,
Norway, France, Mexico and one other unnamed country, and plans
to put the issue to a referendum. Talks between Swiss and U.S.
officials restart in Washington on Tuesday.
Swiss President Hans-Rudolf Merz has asked U.S. Treasury
Secretary Timothy Geithner to drop a tax evasion case against
UBS in return for a new tax accord, which might struggle for
ratification in Switzerland if the U.S. Internal Revenue Service
(IRS) persists with its pursuit of the bank. [ID:nWAT011341]
"We believe there has to be some kind of agreement before
July 13 when the IRS and UBS are due to take part in a
mini-trial," said analyst Teresa Nielsen at Vontobel, adding
this could even come in an 11th hour deal on July 12.
The U.S. government is suing the Swiss bank to retrieve
thousands of names of American clients who allegedly stashed
money in secret accounts in contravention of U.S. tax laws.
UBS is fighting the civil suit and says compliance would
require UBS employees to commit fraud in Switzerland, which
jealously defends its bank secrecy legislation.
UBS settled with the U.S. Department of Justice in February
to avoid criminal charges by agreeing to pay a $780 million fine
and providing a certain number of U.S. account holder names.
UBS has pledged to transfer all its U.S. offshore clients to
onshore accounts in the United States, a process that should be
completed by the end of this month, Nielsen said, removing
another barrier to cutting a deal.
A U.S. lawyer representing UBS clients facing investigation
for tax evasion said last week many were coming forward to
authorities in a voluntary disclosure programme. [ID:nN08316571]
Forcing UBS, the world's largest wealth manager in terms of
assets, to hand over the data would be against U.S. interests as
it would cause a conflict between U.S. and Swiss law on a wider
scale than just tax matters, Nielsen said.
"This would result in political war between the two
countries. Switzerland is a smaller country than the United
States but it has many friends worldwide and it could use this
power," she said.
"I don't think any more data will be handed over unless it
is on the basis of OECD standards," said Nielsen. "If there's a
specific case maybe, but not the 52,000 the IRS has asked for."
(Editing by David Holmes)