UBS boss Peter Kurer reveals all to IRS

When Peter Kurer, the chairman of the Swiss bank UBS, announced today that he was settling the long-running tax evasion dispute with the US Internal Revenue Service (IRS), many of the bank's secret account holders must have breathed a collective sigh of relief. But that will have been short-lived because he then delivered a body blow: in addition to UBS paying a $780m fine, the bank would also be disclosing the names of selected clients.

According to sources, Kurer, 59, has agreed to immediately turn over the names of about 250 people who, until now, enjoyed the anonymity of a simple account number. In gaining those names, the IRS will, for the first time ever, pierce the veil of Swiss bank secrecy. "UBS sincerely regrets the compliance failures," Kurer said, adding: "Client confidentiality, to which UBS remains committed, was never designed to protect fraudulent acts or the identity of those clients, who, with the active assistance of bank personnel, misused the confidentiality protections."

The trouble for clients is that IRS's deal with UBS does not make them immune from prosecution. Who exactly will be investigated is likely to emerge soon.

UBS bankers have been talking freely to IRS investigators for some time about their account holders in an effort to evade prosecution, or lessen the sentences they receive. In November, Raoul Weil, chairman of UBS global wealth management, was indicted in Miami of conspiring to help 17,000 US clients of the bank evade taxes by hiding more than $20bn in secret offshore accounts. Soon after, another UBS banker, Bradley Birkenfeld, pleaded guilty on similar charges. He was just one of the private bankers at UBS who look after an estimated 222 American billionaire clients with a combined net worth of $706bn.

Last December, as reported by The First Post, some UBS clients were anxious that they might become victims of a sting operation by the FBI - working in tandem with the IRS - if they attended the annual Art Basel Miami Beach dinner, hosted by UBS in its capacity as the fair's chief sponsor.

It hasn't been a good week for holders of numbered Swiss bank accounts. Gordon Brown made it clear yesterday that he intends to spearhead a clampdown on tax havens from Switzerland to the Cayman Islands in an effort to boost tax revenues during the recession. Speaking at his monthly press conference in Downing Street, the PM said: "We want the whole of the world to take action. That will mean action against regulatory and tax havens in parts of the world which have escaped the regulatory attention they need." ·