Under fire Swiss bank UBS faces further turmoil with the news that the US Department of Justice is investigating whether the firm helped clients evade US taxes.
The Financial Times reports that bank as saying one employee was “briefly detained” as a “material witness”.
According to the paper, the employee was Martin Liechti, the Zurich-based head of UBS’s international wealth management business for the Americas.
In March, German prosecutors had said they were considering a similar criminal investigation into whether UBS helped clients evade taxes.
The news comes after the bank announced job cuts of 5,500 yesterday – on the back of a further $17.3 billion of first-quarter losses at its investment-banking unit.
In total, the bank’s write-downs from the credit crunch are approaching $40 billion.
Edwin Merner, president of Atlantis Investment Research Corp, told Bloomberg the bank had been caught in a “perfect storm”.
“Clients may run away if they think they’ll leak information to tax authorities in Germany and the US,” he says.