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Interview with the New Chairman of UBS on Taxes, Libor and Politics

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Handelsblatt has an interview with the newly appointed (May 2012) chairman of the UBS board Axel Weber:

Interview with the New Chairman of UBS on Taxes, Libor and Politics

We have translated the interview from German to English so more readers can see. The interview covers tax evasion, German-Swiss relations and the LIBOR scandal. I bring the accessible part of the interview in my translation.
One should note that: Axel A. Weber is former CEO of Bundesbank (German CB) and stepped down a year before time and his position as chairman of the board was announced in 2011 and he relieved Kasper Villinger, that had been expected to retire in 2013


Q: Mr. Weber the government of Nordthein-Westfalen accuses the UBS AG (NYSE:UBS) of helping German customers with transferring black money to Singapore. Is that true?

A: I have a central role as chairman of the board of UBS in the strategy of the bank which is clear and unmistakable: The UBS AG (NYSE:UBS) is not helping any custoumer evade tax. The UBS AG (NYSE:UBS) obliges all employees in the transnational fund management business to remain within the legal limitations. Violations against that will be severely punished. On this issue I have zero tolerance.

Q: That was the rules. Can you gurantee that every UBS AG (NYSE:UBS)-employee always sticks to them?

A: I have asked the relevant managers information to this point and we have a clear answer from Jürg Zeltner EO of our global fund management business: The UBS does not aid and abet tax evasion. We do not aid circumvention of the German-Swiss tax agreement. We have testes internal procedures thoroughly. We have up to now no knowledge that supports the allegation, which we only know from the press.

Q: The emphasis is on the word “up to now”?

A: If the government of Nordrhein-Westphalia has incriminating evidence it will turn to the Swiss authorities. Then we can deal with the allegations. You can’t categorically exclude individual wrongdoing in a big business as the UBS. If that should be the case the UBS has a zero-tolerance-policy – up to immediate dismissal. We support the German-Swiss tax agreement. It is instrumental in solving the problems of the past. It is the correct way to finally draw line to the past. It also serves to enable the German IRS to make peace with their tax payers. The UBS does not transfer any money against this agreement. Singapore is a global finance center and the Singapore bank inspection has recently again emphasized that they do not tolerate illegal money flowing into the country. That is severely punished there. It is unfair to throw a general suspicion on Singapore.

Q: The tax agreement is very controversial. It basically serves to preserve the last remnant of Swiss bank secrecy. Will Switzerland not eventually have to agree on exchange of information?

A: The Swiss negotiation position was always that the agreement over a onetime tax with Germany, Great Britain and Austria would be equal in effect to an exchange of information. And Switzerland is in this agreement more radical than international standard. I think the strategy is right, but I have no influence on this political decision. I’m concentrated on the problems on our plate.

Q: One of these problems is the LIBOR scandal. The board of Deutsche Bank AG (ETR:DBK) (NYSE:DB) (FRA:DBK) has opened an internal investigation. Will You do that as well?

A: The UBS was in 2010 one of the first banks that reported reasons for suspicion. We have – after that – as one of the first institutions a limited immunity – a sort of protected witness status.

Q: How come then that Barclays PLC (NYSE:BCS) (LON:BARC) is the first that has been punished?

A: Barclays PLC (NYSE:BCS) (LON:BARC) was the first bank that settled out of court with the authorities. But the negotiations with Barclays had been underway for quite some time. We have, as one of the first, cooperated with the authorities. That also obliges us to defer from publicly discuss information. I can only tell You that we for quite some time have internal investigations to clarify events. In this work we use external legal counsel. This has been in progress since 2010. We are keeping the authorities informed on developments.

Q: Does that mean that when You took office in the beginning of May this year there was already an internal Libor-investigation? Or is the internal investigation still ongoing?

A: We have the big picture and the dealt with the events. The investiagation covers the whole time period from 2005 to 2010. We have concentrated on the different issues: First the Libor manipulation to support own trade positions. Secondly we have investigated if there have been systematic attempts since 2008 to manipulate the LIBOR to make us seem a more creditworthy partner on the market. We have checked if our internal control systems have worked. We are in constant contact with the control and trade authorities as to the results. The investigation has been very thorough and we have already drawn consequences.

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