UBS to take no legal action against former bosses

By Emma Thomasson

ZURICH (BestGrowthStock) – Swiss bank UBS, brought to its knees by the financial crisis and a U.S. tax probe, said it would not sue former management for fear it could compromise its position in U.S. class action lawsuits.

UBS Chairman Kaspar Villiger told a news conference bringing legal action in Switzerland against former managers could hurt the bank’s defense in the suits, in which billions of dollars are claimed, and increase any potential settlement sum.

Villiger was presenting a report ordered by Swiss parliament on why UBS ran up such big losses during the crisis and allowed its bankers to help wealthy Americans dodge taxes.

He said the bank was looking forward and not back.

“With our decision to refrain from legal proceedings, we do not want to gloss over the mistakes made by UBS or absolve those involved,” he said. “We have learnt the lessons of the past… It is important that we can now concentrate on the future,” he said.

UBS paid a $780 million fine in 2009 to settle a U.S. criminal investigation into its offshore business and was forced to hand over details of about 4,450 secret bank accounts to the U.S. authorities as part of a deal to end civil litigation.

“NO SMOKING GUN”

Peter Forstmoser, a retired Zurich University law professor asked by UBS to give his independent view alongside the report, told the news conference there were sufficient grounds to launch legal proceedings against former managers but the UBS board had good reasons not to do so.

Proceedings could last as long as a decade, he said, with any damages unlikely to be enough to assuage public anger.

“No smoking gun has been found in all the investigations so far and one would not be found with another investigation,” he said.

The UBS decision lessens the chances there will be a lawsuit against any of the executives as the government and large shareholders do not plan to take any action, and suits by individual shareholders would likely be prohibitively expensive.

Zurich state prosecutors said late last year they would not open criminal proceedings against UBS employees as there was no evidence there had been a breach of Swiss law.

In April, nearly 53 percent of shareholders took the unprecedented step of voting against discharging former Chairman Marcel Ospel, ex-CEO Peter Wuffli and all those who were board members in 2007 from responsibility for their actions.

The government had to bail out UBS in 2008 after more than $50 billion of writedowns due to ill-fated investments led to a record annual loss.

The failure-to-discharge vote raised speculation UBS might bow to public pressure and seek compensation from the ex-bosses.

UBS said in the report any damages recovered would be limited to the personal assets of the managers concerned or their insurance, adding that several top figures had “acknowledged at least their moral responsibility” by repaying salary and bonus payments of more than 70 million francs.

Chairman Villiger and Chief Executive Oswald Gruebel were brought in last year from retirement to clean up the bank.

Asked how long they planned to stay at UBS, Villiger admitted that neither he nor Gruebel were young and said the bank had set up a panel to define the profile of possible successors.

However, he added: “A certain amount of stability is called for so I don’t expect replacements tomorrow.”

(Additional reporting by Sven Egenter and Catherine Bosley; Editing by Karen Foster)

UBS to take no legal action against former bosses