Posted on Dec. 2020 at 17:05Updated Dec 9, 2019 2020 at 17:06
The blow is hard for the new CEO of Swiss giant UBS, Ralph Hamers. The Court of Appeal in The Hague, the Netherlands, ordered the prosecutor to open an investigation into his role in the non-compliance with anti-money laundering rules, when he was CEO of Dutch bank ING between 2013 and 2020.
Under his leadership, ING avoided prosecution in 2018 by accepting a settlement of 775 million euros and admitting that the bank had not complied with anti-money laundering rules. At the time, the prosecution saw no reason to prosecute individual employees, but it is now being denounced by the Court of Appeal in The Hague. Financial activist Pieter Lakeman appealed the ruling and demanded that charges be brought against Ralph Hamers personally, which led to the court ordering an investigation.
Although ING has taken responsibility for breaches and improved its compliance efforts, “No settlement has been reached with the manager himself, nor has he assumed public responsibility for his actions”the court said, explaining its decision to order the investigation. The Hague Court of Appeal held in a statement that there is “Enough elements for effective prosecution of this former director who is de facto responsible for criminal offenses committed by ING”.
At the time, political pressure led to the resignation of ING CFO Koos Timmermans soon after the case was settled, but Ralph Hamers remained in office until his transfer to UBS in September.
UBS maintains its confidence in its leader
The case falls badly, when the Dutch 54-year-old has just succeeded Sergio Ermotti, in early November, at the head of the Swiss bank. UBS then described this specialist in digital transformation as the “Good general manager to guide our company to the next chapter”. The Swiss bank responded by saying on Wednesday that it had “Full confidence in his ability to lead UBS”.
According to the Swiss daily “Le Temps”, a conviction of Ralph Hamers in the Netherlands, or even revelations during an investigation of important facts, could lead the Swiss regulator to open its own investigation. Due in particular to the conviction of ING in 2018, UBS and the Swiss regulator had already carefully scrutinized the career of Ralph Hamers before his appointment, were keen to remind Finma and the banking giant on Wednesday.
An expert quoted by the Swiss daily, however, puts the risks into perspective, stressing that it is the decision of a Court of Appeal on an appeal by private investors against the decision of the prosecutor who waived proceedings against individuals . Therefore, it considers at this stage that the regulatory and reputational risk for UBS is “Relatively weak”.
ING regrets the decision of the Court of Appeal
In this file, which dates back to the period 2010-2016, ING was involved in several ways. In addition to a corruption scandal in Uzbekistan, the bank has been implicated in an organized network of tax evasion and fraud in Amsterdam from which dozens of European companies have allegedly benefited. ING said on Wednesday to regret “The decision to order the continuation of [son] former CEO, which goes against the assessment of public prosecutors that, based on the investigation, there are no grounds for prosecution against ING employees or former employees ”.
On the UBS side, this decision comes as the banking giant is faced with its own legal concerns. Sentenced in February 2019 to a record total fine of 4.5 billion euros in a tax evasion case in France, the Swiss bank is awaiting its appeal trial in March 2021 before the Paris Court of Appeal. The establishment is accused of helping wealthy French clients conceal undeclared funds from 2004 to 2012.