UBS faces audit over Abacha money

swissinfo.ch

The Swiss Federal Banking Commission has ordered an audit of UBS after the bank uncovered funds linked to the late Nigerian dictator, Sani Abacha.

The commission said the on-site audit would assess the effectiveness of the controlling mechanisms in place at Switzerland’s biggest bank, although these had improved “significantly” in recent years.

In a statement, the commission said its investigations had shown that “UBS had failed to fulfil its duty to collect detailed information and review the economic background for unusual business relationships, in connection with the opening of an account in 1996”.

The Nigerian government is seeking to recover up to $3 billion in funds connected to the former dictator, who died in 1998. UBS announced in February that it had blocked accounts containing $60 million, which it believed were linked to Abacha and his family.

Criticism “justified”

Reacting to the announcement, UBS said it accepted the criticism and welcomed the chance to show what it had done to improve mechanisms for identifying and monitoring unusual business relationships and transactions.

“We believe the points made by the Federal Banking Commission are justified and we certainly accept their criticism,” UBS spokesman Christoph Meier said.

“We see this as a chance for UBS to present to the body [the commission] the measures that have been put in place,” Meier added.

UBS turned up the $60 million after carrying out its own investigation into a corporate account set up in 1996. The account holders were “a respected British client” and two of his Nigerian business partners, the bank said.

The fact that the two Nigerians had links with Abacha did not come to light until 2002.

“Politically exposed persons”

At the opening of the account and during the course of the relationship the bank had relied on the client’s declaration that his partners were not “politically exposed persons”, the commission said.

The commission statement said that funds were transferred to the account from banks in Kenya, Germany and Jersey.

It said UBS made three unsuccessful attempts between 1999 and 2001 to identify assets owned by persons linked to Abacha.

UBS was not one of the banks named by the commission in September 2000 as having taken money linked to Abacha.

Zimbabwe sanctions

Meanwhile in a separate incident, Swiss authorities said on Monday that they had frozen $10,000 in a bank account linked to the regime of Zimbabwe’s president, Robert Mugabe.

The State Secretariat for Economic Affairs refused to identify the account holders or provide other details, but said the money had been blocked following notification from the bank.

The move follows a Swiss decision in March to impose economic and diplomatic sanctions on Zimbabwe, including the freezing of assets and a ban on travel by senior government officials.

swissinfo with agencies