Heads roll as Vaud bank takes legal action

The cantonal bank of Vaud is taking former managers to court Keystone

The cantonal bank of Vaud (BCV) has launched criminal proceedings against a number of managers after an independent inquiry revealed that its accounts had been manipulated.

This content was published on January 30, 2003 - 11:16

Heads have already rolled at the bank, which has been plagued by financial problems for several years.

The loss-making bank said irregularities had been found as a result of the investigation, which began in November.

The canton, which is the majority shareholder, said in a statement that the inquiry - led by the former canton Ticino public prosecutor, Paolo Bernasconi - had revealed forgery of documents, breach of fiduciary duty, false information on commercial enterprises and breaches of the Swiss federal banking law.

Axe falls

Four men at the top - vice president Pierre Fischer, director general Ralph Ziegler, head of compliance Bernard Krähenbuhl and secretary general Jean-Pierre Launaz - have been ordered to leave the bank with immediate effect.

Others who may have been involved in the affair have already left. Former chairman Gilbert Duchoud stepped down last April.

Jacqueline Maurer, the head of canton Vaud's economics department, told French-language Swiss television that it was not known exactly how many people were implicated.

"Mr Bernasconi cited four in his report and there are certainly, probably others," she said.

"Figures manipulated"

"Our expert showed that the figures were manipulated on the basis of decisions taken by those in power, that is to say members of the board and apparently members of the internal committee of the bank at that time," she added.

Bernasconi's mandate was to check into possible breaches of the law with regard to losses and their "belated appearance" in the accounts between 1996 and 2000.

"It's the fourth biggest bank in Switzerland and it was an extremely complicated procedure. Other external investigations had been made before, but this was the first made inside the bank and to this extent," Bernasconi told Italian-language Swiss radio.

BCV made a loss of SFr381 million ($280 million) in 2001 after bad debt provisions rose to SFr1.7 billion. At the end of October, the canton announced it was injecting SFr1.25 billion into the bank to shore up its flagging capital base.

Shareholders' approval

An extraordinary shareholders' meeting on February 5 will tackle the problem of recapitalisation of the bank.

Shareholders will be asked to approve the terms of a participation certificate issue and accept a proposal to reduce the par value of registered BCV shares to increase the bank's reserves.

The BCV statement said that Bernasconi's investigation and the subsequent management actions had "no repercussions" on the bank's financial strength nor next week's special meeting.

swissinfo with agencies

Key facts

The BCV Group is Switzerland's fourth largest banking group.

The balance sheet total is SFr36 billion.

The BCV Group made a net loss in 2001 of SFr381 million.

The bank says its mission is to contribute to the economic development of the canton of Vaud.

The canton last November had to inject SFr1.25 billion into the bank to shore up its flagging capital base.

Paolo Bernasconi has prosecuted many high-profile business crimes and money-laundering cases, including the 1982 collapse of Italy's Banco Ambrosiano

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