UBS Deal Shows Clinton’s Complicated Ties

Outlined in today’s Wall Street Journal:

A few weeks after Hillary Clinton was sworn in as secretary of state in early 2009, she was summoned to Geneva by her Swiss counterpart to discuss an urgent matter. The Internal Revenue Service was suing UBS AG to get the identities of Americans with secret accounts.

If the case proceeded, Switzerland’s largest bank would face an impossible choice: Violate Swiss secrecy laws by handing over the names, or refuse and face criminal charges in U.S. federal court.

Within months, Mrs. Clinton announced a tentative legal settlement—an unusual intervention by the top U.S. diplomat. UBS ultimately turned over information on 4,450 accounts, a fraction of the 52,000 sought by the IRS, an outcome that drew criticism from some lawmakers who wanted a more extensive crackdown.

From that point on, UBS’s engagement with the Clinton family’s charitable organization increased. Total donations by UBS to the Clinton Foundation grew from less than $60,000 through 2008 to a cumulative total of about $600,000 by the end of 2014, according the foundation and the bank.

The bank also joined the Clinton Foundation to launch entrepreneurship and inner-city loan programs, through which it lent $32 million. And it paid former president Bill Clinton $1.5 million to participate in a series of question-and-answer sessions with UBS Wealth Management Chief Executive Bob McCann, making UBS his biggest single corporate source of speech income disclosed since he left the White House.

The UBS matter involved her helping solve a problem for a foreign bank—not a popular constituency among Democrats—and stepping into an area where government prosecutors had been taking the lead.

………

UBS officials deny any connection between the legal case and the foundation donations. “Any insinuation that any of our philanthropic or business initiatives stems from support received from any current or former government official is ludicrous and without merit,” a bank spokeswoman said. UBS said the speeches by Mr. Clinton and the donations were part of a program to respond to the 2008 economic downturn.

UBS’s troubles began in 2007 when an American banker working in Switzerland told the U.S. Justice Department that UBS had recruited thousands of U.S. customers seeking to avoid U.S. taxes. The disclosure led UBS to enter into a deferred-prosecution agreement with the Justice Department in 2009. The bank admitted to helping set up sham companies, creating phony paperwork and deceiving customs officials. It paid a $780 million fine and turned over the names of 250 account holders.