OECD unveils global crackdown on tax arbitrage by multinationals

Countries outside the OECD such as India and China will be invited to take part in the revamp of the rules on an equal footing, in what experts said might be the last opportunity for the OECD to exert sufficient influence on the international tax system to reach a global accord.

The plan sets out more than a dozen proposals to block gaps between national tax systems and tackle practices that artificially separate taxable income from the activity that generates it. Will Morris, chair of the BIAC’s tax committee said: “In some areas, the international tax system has not kept pace with globalisation and changing business models, and it is appropriate to look again at those areas and consider, based on all the evidence, whether any changes are required.”

The effort to reshape the international tax rules was a chance to avert “global tax chaos”, according to the OECD, which said a failure to act could result in governments taking unilateral action. . . . He said: “The biggest risk to the . He said: “They know the golden age of ‘we don’t pay taxes anywhere’ is over.”

Richard Collier, tax partner at PwC, professional services firm, said the initiative could be “the biggest reform of global taxation in a lifetime” but warned that change would not be swift and depended on continued commitment of governments and business. project will be if momentum and buy-in now wanes.”

The action plan aims to tackle the selling arrangements known as “commissionaire” structures that are widely used by multinationals including digital companies such as Google and Amazon to limit their tax bills in countries where they make sales. would be like trying to plug the holes in a sieve.”

The impact of the project will depend on governments’ willingness to make compromises over the next two years as details of the proposed changes are hammered out. But broader issues around the taxation of the digital economy will be examined by a dedicated task force.

The wide-ranging action plan on tackling “base erosion and profits shifting” has been drawn up by the Paris-based Organisation for Economic Co-operation and Development for the G20 in response to sustained criticism of the low tax rates paid by some multinationals companies such as Google.

The Business and Industry Advisory Committee at the OECD said it welcomed a “considered and analytical” review of the rules but stressed the continued importance of relieving double taxation.

Story highlightsThe impact of the project will depend on governments’ willingness to make compromises over the next two years’The effort to reshape the international tax rules was a chance to avert “global tax chaos”The plan sets out more than a dozen proposals to block gaps between national tax systems

Plans for a global crackdown on tax arbitrage marking “a turning point in the history of international co-operation on taxation” were unveiled on Friday at the meeting of G20 finance ministers in Moscow.

Pascal Saint-Amans, the top tax official at the OECD, said the initiative would force up tax rates for multinationals that organise their affairs so they paid little tax. The Tax Justice Network, a campaign group that has been pushing for a radical change in the international tax rules, criticised the OECD for failing to deal with “fundamental flaws” in the system. . It includes proposals to tackle abuses of tax treaties, to prevent tax avoidance by shifting intangibles between group companies and to neutralise the impact of “hybrid” structures used to minimise billions of dollars of tax.. It said “piecemeal recommendations for states to apply patches to the increasingly leaky international tax system

UBS Writes Down Positions, Predicts an Overall Loss in Third Quarter, and Reorganizes Management

He originally worked for PaineWebber

Inc. A

glossary, containing definitions of some of the less-well known terms

used in today’s release, is also available at www.ubs.com/media.

Despite the unsatisfactory results for the third quarter, we still

expect to end the year with a good level of profits and in a strong

capital position. He is a Swiss citizen. We have a strong balance sheet, a strong franchise, and

leading positions in all businesses in all regions. UBS remains a formidable

competitor in financial services and is well positioned to deliver

long-term profitable growth.”

Where possible, holdings are marked at the quoted market price. He also has extensive

experience in solving institutional and corporate client problems using

derivatives.

Robert Wolf is the Chairman & CEO of UBS for the Americas. These securities are either AAA-rated or High Grade, and have a

short weighted average life.

UBS

When most mortgage backed securities positions were set up there were

offsetting positions in place, designed to mitigate risk in normal

market conditions. These have also been written down appropriately,

leading to a limited loss on these positions in third quarter.

Mr. Wolf graduated from the Wharton School at the University of

Pennsylvania with a B.S. From

1995-1999 he was the Joint Head of US Equities at the Investment Bank,

with responsibility for approximately 650 employees. Ferri began his legal career practicing corporate law at Seward &

Kissel, from 1991 to 1995. Suter was born on 7 May 1958. I have therefore taken

decisive action to be as transparent as possible.

Joseph Scoby’s first task as a member of the Group Executive Board will

be to review and refine our risk processes. Its business,

global in scale, is focused on growth. Ferri is also responsible for managing the product

pipeline, business development, sales and client services.

Commenting on these changes Marcel Rohner said:

There are other, smaller, losses in equities proprietary trading within

an overall satisfactory result.

In addition, UBS has taken significant write downs on positions in Super

Senior AAA-rated tranches of CDOs, based on level 3 valuation models.

Continued strong performance in other business areas

Mr. Marcel

Rohner, Group CEO, will reorganize senior management, take over as

Chairman and CEO of the Investment Bank, and accelerate structural

improvements to the firm.

“I am confident that, with these changes and

by properly absorbing the lessons of this quarter, we will become a

stronger bank. As an integrated firm, UBS

creates added value for clients by drawing on the combined resources and

expertise of all its businesses.

Commenting on these decisions, Marcel Rohner, Group CEO said:

 

In third quarter 2007, expected pre-tax loss for the Group between

CHF 600 million and CHF 800 million, due mainly to write downs and

losses in the FIRC business within the Investment Bank

For the first nine months of 2007 pre-tax profits for the Group in

the order of CHF 10 billion, and expect to end the year with good

level of profits and a strong capital position

All other businesses in the Investment Bank, as well as the Global

Wealth Management & Business Banking and Global Asset Management

business groups, performing very well

Management changes:

— Investment Bank Chairman and CEO Huw Jenkins to step down. He received a BS form Cornell University in

1988 and a JD from the University of North Carolina in 1991.

Short bio Robert Wolf

Mr. Pre-tax profits for the

first nine months of 2007 will be in the order of CHF 10 billion. Mr. Wolf is on the Undergraduate

Executive Board of the Wharton School and sits on the Athletics Board of

Overseers at the University of Pennsylvania. For most

sub prime holdings, this is not possible. A&Q currently has over USD

60 billion in assets under management. He has also been the head of O’Connor,

a specialist hedge fund provider within A&Q, with assets under

management of approximately USD 7.5 billion. This led to substantial valuation losses, including in

securities with high credit ratings. Wolf also participated as a panel member at

the inaugural Wall Street forum for HIV and AIDS alongside former UN

Secretary Kofi Annan.

Mr. Suter first joined the bank in 1974 as an

apprentice at SBC’s St. Clive Standish, Group Chief Financial Officer, will retire.

Results for third quarter 2007 will be announced on October 30, 2007 as

planned.

While the third quarter loss means that pre tax results for the full

year 2007 will most probably be below those for 2006, total earnings

should still be at a high level and UBS will finish the year in a strong

capital position.

Previously, he was General Counsel for the O’Connor

hedge fund and fund of fund businesses, and was on the O’Connor team at

its relaunch in 2000. In fact, conditions remained

turbulent, so we will make an overall pre-tax loss at Group level for

the quarter.

Our first quarterly loss in nine years is an unsatisfactory result,

especially after such a strong first half. Scoby has a BS from Wharton School and an MA from the

University of Pennsylvania, both earned with honors in a total of four

years of study and awarded in 1987.

A video containing an interview with Group CEO Marcel Rohner is

available at www.ubs.com/media as

well as at www.cantos.com. Mr. Mr. Valuations therefore mostly

use models with observable inputs, where possible, and level 3 valuation

models otherwise.

Short bio Marco Suter

Within the Investment Bank, Money Markets, Currencies and Commodities

(MCC) will be integrated into Fixed Income under the leadership of Andre

Esteves.

All other UBS businesses remain strong. However, the deterioration in the US sub prime

residential mortgage backed securities market, especially in August, was

more sudden and more severe than in recent history, and markets became

illiquid. Group

CFO Clive Standish to retire

— Marco Suter, Executive Vice Chairman, UBS, to become Group CFO

— Walter Stuerzinger, Group Chief Risk Officer (GCRO), to become

Chief Operating Officer (COO), Corporate Center

— Joseph Scoby, Global Head of Alternative & Quantitative

Investments, UBS Global Asset Management, to become GCRO, UBS

Investment Bank changes:

— Robert Wolf, COO, Investment Bank, additionally appointed

President, Investment Bank

— Money Markets, Currencies and Commodities (MCC) to be integrated

into Fixed Income

— Initiation of cost reductions in Investment Bank

William Ferri is the Head of Business Development and Logistics for

Alternative and Quantitative Investments (A&Q), an alternatives platform

within Global Asset Management.

Joseph Scoby is Global Head of Alternative and Quantitative Investments

(A&Q), an alternatives platform within Global Asset Management with

approximately USD 60 billion in assets under management and 360

employees around the globe. All other businesses in the Investment Bank, and our

Global Wealth Management & Business Banking and Global Asset Management

businesses, continue to record good results. He is on the Executive

Leadership Council for the Multiple Myeloma Research Foundation, on the

Board of Trustees for the Children’s Aid Society, the Board of Directors

for the partnership for NYC and on the Board of Directors for the

National Sports Museum. I have also made

appropriate senior management changes, and will accelerate

already-planned changes to the firm. From 1996 until the merger of SBC

and Union Bank of Switzerland in 1998 he served as regional manager of

the Zurich-Eastern Switzerland-Ticino area for the corporate and

commercial banking activities of SBC. Gall office and later broadened his experience

with assignments in Nyon, New York, Basel, Zurich and London.

UBS is the leading global wealth manager, a top tier investment banking

and securities firm, and one of the largest global asset managers. There is also a smaller position of below USD 4 billion net

exposure to sub prime securities through warehouse lines and retained

CDOs. Mr. The one firm approach requires a

successful and profitable Investment Bank. Its shares are listed on the SWX Swiss Stock Exchange,

the New York Stock Exchange (NYSE) and the Tokyo Stock Exchange (TSE).

Following a write down of positions in fixed income, rates and

currencies (FIRC), mainly related to deteriorating conditions in the US

sub prime residential mortgage market, UBS is likely to record an

overall Group pre-tax loss of between CHF 600 million and CHF 800

million for third quarter, ended September 30. Ferri joined the UBS Investment Bank in 1998

as Director of Equity Compliance. He also

serves as Global Chief Operating Officer for the Investment Bank.

UBS has no material exposure to conduits.

Management changes

“On August 14, I said that if turbulent

conditions prevail throughout the quarter, we will probably see a very

weak trading result in the Investment Bank, offset by predictable

earnings from wealth and asset management. In Global Wealth Management &

Business Banking, all geographical regions continue to attract net new

money. He is a member of the

Global Asset Management Executive Committee and a member of the UBS

Group Managing Board.

In the third quarter, UBS will recognize substantial losses in FIRC

within the Investment Bank, mainly on its holdings of securities related

to the US sub prime residential mortgage (RMBS) market. Global Asset Management continues to perform well. Management action has been taken to

make certain these positions are appropriately valued and risk managed.

Marco Suter was elected to the Board of Directors at the Annual General

Meeting of UBS in April 2005 and thereafter appointed as Executive Vice

Chairman.

Working closely with other members of the management team and the key

investment professionals within A&Q, Mr. He served as Global Head of Fixed Income from

2002 – 2004, having joined the firm in 1994

after spending approximately 10 years at Salomon Brothers.

UBS is present in all major financial centers worldwide. We have thousands of

talented people throughout the organisation who, by working together,

will deliver further value to our clients and additional growth to our

shareholders.”

Short bio Joseph Scoby

Third quarter results

Marcel Rohner, in addition to his duties as Group CEO, will for the

foreseeable future take over the role of Chairman and CEO of the

Investment Bank. Prior to his appointment to his current position in 2004, Robert

Wolf was Global Head of Fixed Income for over three years.

Biographies

As a result of the planned changes within the Investment Bank, overall

staff numbers will fall by about 1,500 by the end of this year.

These write downs are mainly of (a) legacy positions of the now closed

Dillon Read Capital Management subsidiary and (b) positions entered into

as part of the Investment Bank’s mortgage

backed securities business.

Mr. Huw Jenkins, Chairman and CEO of the Investment Bank,

will step down from his position and become a senior advisor to Marcel

Rohner.

UBS has only limited exposure to leveraged lending with commitments of

about USD 13 billion. It has offices

in 50 countries, with about 39% of its employees working in the

Americas, 34% in Switzerland, 16% in the rest of Europe and 11% in Asia

Pacific. Mr. Overall, FIRC

will record negative revenues in the order of CHF 4 billion.

ZURICH & BASEL, Switzerland–(BUSINESS WIRE)–Regulatory News:

Robert Wolf, Chairman and CEO, UBS Group Americas and Chief Operating

Officer Investment Bank, will additionally become President, Investment

Bank. Within the

Investment Bank, IBD has gained market share, the capital markets

business remains strong, and equities revenues –

though a bit weaker this quarter than a year ago, and in the context of

extremely difficult conditions – remain

healthy.

The marks take a cautious view of future developments in the US mortgage

market and UBS is content to hold these securities at this level of

valuation.

Marcel Rohner, Group CEO, said: “UBS operates on the principle that

management is accountable to shareholders. He is married with two children.

. These positions consist overwhelmingly of

AAA-rated tranches, 80% with a weighted average life of less than three

years. Ferri has overall

responsibility for managing the logistics platform and business

development effort of the group, ensuring the investment team’s

requirements are met while maintaining the appropriate control

infrastructure. Joseph Scoby’s record both as

head of A&Q and previously as Joint Head of US Equities within the

Investment Bank makes him an ideal successor to Walter Stuerzinger. Wolf is a member of the UBS Group Managing Board and the Investment

Bank Management Committee. In

Switzerland, UBS is the market leader in retail and commercial banking.

Mr. Mr. Scoby’s

experience includes portfolio management in commodity options,

convertible arbitrage, equities, equity derivatives, corporate bonds,

merger arbitrage, quantitative equity, real estate finance, and

fundamental based equity long short funds. These events have led to the

management changes announced today. in Economics. (since 1995) where positions held included Corporate Vice President

and Associate General Counsel to the Global Equities Division, and

Deputy Director of Compliance.

Walter Stuerzinger, Group Chief Risk Officer (GCRO), will become Chief

Operating Officer, Corporate Center, and hand over the GCRO position to

Joseph Scoby, currently Global Head of Alternative and Quantitative

Investments (A&Q), Global Asset Management. Prior to that, he held various

management positions in SBC’s investment banking operations, first as

the Continental European Head of Merchant Banking and later as the Chief

Credit Officer for EMEA. Suter has been with UBS and its predecessor, Swiss Bank Corporation,

since 1974. During 2008 we will continue

to focus on improving cost and balance sheet efficiency.”

In addition to his roles at UBS, Mr. William Ferri, currently

Head of Business Development and Logistics for A&Q, will be appointed as

the new Global Head of Alternative and Quantitative Investments.

With effect from today:

UBS is one of the world’s leading financial

firms, serving a discerning international client base. Between 1999 and 2005 he was Group Chief Credit Officer and

a member of the Group Managing Board. Scoby began his career with O’Connor and

Associates in 1987 and became a Managing Director in 1993. He also chairs

the Swiss Institute for International Studies (SIAF).

Marco Suter, Executive Vice Chairman, UBS, will leave the Board of

Directors to become Group Chief Financial Officer, and join the Group

Executive Board. Following these actions, UBS is in

a strong position to continue to grow its client businesses.

Short bio William Ferri

The remaining relevant positions in direct sub prime RMBS have a current

net value of USD 19 billion. His long experience and knowledge of UBS, including as

Group Chief Credit Officer, make him extremely well qualified for this

position. UBS’s financial businesses employ more than 80,000 people

around the world

Review: Richard Gere too good to ignore in ‘Arbitrage’

And it resonates in his exceptional screenplay, which potently captures the gleaming seduction of Robert’s world and the fear that festers underneath.. And Gere nails every nuance in a role that holds up a dark mirror to the way we live now. Gere digs so deep into this flawed tycoon that we come to understand Robert’s actions without for a minute forgiving them. Credit Jarecki, whose combustible directing debut gives “Arbitrage” the charge of a thriller and the provocation of a moral fable. No Academy love, not even for his sinister brilliance in “Internal Affairs,” “American Gigolo” and “The Hoax,” or for the battered heart he brought to the cheated-on husband in “Unfaithful.”

“Arbitrage” is such a movie, a sinfully entertaining look at the sins committed in the name of money. Despite his box-office success in crowd-pleasers such as “An Officer and a Gentleman,” “Pretty Woman” and “Chicago,” Gere has long been underrated. But Robert keeps his cool until the sudden death of one of these women has him dodging a possible murder rap with the grudging help of Jimmy Grant (a terrific Nate Parker), the son of the family chauffeur and the only black man in Robert’s circle of white privilege. At 62, he is at the peak of his powers. She can’t rock his composure. Gere’s Robert Miller is the picture of unflappable elegance. That’s when NYPD detective Michael Bryer (Tim Roth) smells a rat and Robert’s world begins to unravel.

Jarecki knows the territory. True, this territory has been covered from Wall Street to last year’s “Margin Call.” But Gere and first-time director Nicholas Jarecki put a tantalizing spin on what goes on in the head of a fraudulent hedge-fund manager when he decides to stick it to the rest of us, including his own family.

Gere’s performance in “Arbitrage” is too good to ignore. As the son of two commodities traders, Jarecki has Wall Street in his DNA. And the glamour in his field of vision — cheers to cinematographer Yorick Le Saux (I Am Love) for the sheen and composer Cliff Martinez (Drive) for the seductive mood — is tempting enough to make us all complicit.

Story highlightsRichard Gere stars as a fraudulent financier in the filmCritic says Gere’s performance is “a thing of toxic beauty”The movie also stars Susan Sarandon and Laetitia Casta

It’s instructive to note what a killer actor Richard Gere can be when a movie rises to his level.

Like the best movies, “Arbitrage” persuades us to ask tough questions about ourselves. Good job on that, since he’s just lost $400 million in a bad copper-mine investment, and if he can’t cover it up and unload his company on a major bank, his career will go kaput along with his fortune. And Gere knows the man, inside and out. For proof that we’re in financial hell, look around. His rapt, watchful performance is a thing of toxic beauty. It’s an implosive tour de force.

There’s enough plot here to stuff a miniseries or three, yet “Arbitrage” never descends to bland and predictable. Wearing the trappings of wealth like a second skin, Gere invites us to see what Robert sees. Watch him in the scene when Sarandon — in full, feisty flower — hits Robert with a lifetime of resentments. Fraud puts pressure on Robert’s skill at deceiving wife Ellen (Susan Sarandon), French mistress Julie (Laetitia Casta) and chief accountant Brooke (Brit Marling), who also happens to be his daughter. Docs run in the Jarecki family, with half brothers Andrew (“Capturing the Friedmans”) and Eugene (“Why We Fight”) making notable contributions to the genre. Jarecki has an eye for the telling detail, not surprising given his start with the 2005 documentary “The Outsider” (about rogue director James Toback). But Gere gives us a window into the soul of a man who finally realizes that even money will no longer help him lie to himself