Weil walks

“WE HAVE A VERDICT!!” was the jury’s emphatic message, scribbled in large capital letters on a piece of paper and delivered little more than an hour after it had started its deliberations. Minutes later a federal court in Florida acquitted Raoul Weil, the former number three at UBS, a giant Swiss bank, of conspiracy in relation to revelations that the bank had helped American tax evaders to move undeclared income offshore. Mr Weil, who had been indicted in 2008 and arrested at an Italian hotel last year, clenched his fists when the verdict was announced. Afterwards he told an interviewer that he was happy his “six-year nightmare” was over, and was looking forward to returning to Switzerland to see his dog.

The acquittal is a setback for America’s international crusade against offshore tax-dodging. The Department of Justice is particularly keen to bring more individuals to account, having successfully forced numerous banks to settle related charges (UBS, for example), plead guilty to them (Credit Suisse), or to close down completely (Wegelin). As the former head of wealth management at UBS, Mr Weil was the most senior of the three dozen bankers, lawyers and advisers charged to date.

The prosecution’s main witness was Martin Liechti, a former head of banking in the Americas for UBS, who won legal immunity for his co-operation. He testified that Mr Weil was aware as far back as 2002 that thousands of accounts held by Americans did not comply with American tax law. But lawyers for the defence cast doubt on his reliability and that of other witnesses, accusing them of lying to save their own skins. Mr Weil, they said, did not know what rogue underlings were up to. “Who are the criminals here? Who are the ones that should be punished instead of getting sweetheart deals?” asked Matthew Menchel, one of Mr Weil’s lawyers.

The acquittal is the second blow in less than a week for the Department of Justice. On October 31st a former employee of Mizrahi Tefahot, an Israeli bank, was cleared by a court in Los Angeles of charges of helping Americans to cheat the Internal Revenue Service by preparing false tax returns. That case, too, rested on testimony from co-operating witnesses.

However, the setbacks are unlikely to slow America’s pursuit of the tax-shy. A Department of Justice spokeswoman said that the collapse of the case against Mr Weil “will not impact the department’s ongoing commitment to holding offshore tax evaders and those who aid them accountable.” Over the past few years, prosecutors have had many more wins than losses, in large part because they have threatened to deprive recalcitrant banks of access to America’s all important capital markets.

What is more, UBS and a number of its current and former executives are also under investigation in several European countries, including Belgium, France and Germany. The most damaging probe, in France, is also based largely on information provided by a former employee. Investigating magistrates have proposed that UBS pay a fine of €4.9 billion ($6.1 billion), based on a calculation that the bank helped French clients hide double that amount of money. Criminal indictments of individuals could follow. A judge is yet to decide if UBS has a case to answer.