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London court dismisses UBS' appeal in corruption case

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London court dismisses UBS' appeal in corruption case

The Court of Appeal in London dismissed UBS Group AG's latest attempt to reverse a ruling in a 2014 legal case involving complex derivatives contracts sold to German water utility company Kommunale Wasserwerke Leipzig GmbH, the Financial Times reported Oct. 16.

UBS claimed that it was owed approximately $140 million in damages relating to losses on the derivatives contracts, but KWL argued that the deal was invalid as former UBS banker Steven Bracy had an "improper" relationship with Value Partners, a Swiss-based consultancy that was advising the Leipzig-based firm on the contracts.

The utility firm also claimed that Value Partners paid a $3 million bribe to its former managing director, Klaus Heninger, while cash was secretly appropriated by two partners at the consultancy firm, as well.

A high court in London had already ruled against the Swiss lender, and now the appeals court upheld the decision by a majority of two judges to one on the basis that it would be unfair for UBS to enforce the contracts against KWL, as it found that the utility firm was not liable under the contracts, according to the FT.

The appeals court also noted that UBS should bear the costs of the bribe paid to Heninger, as the bank had signed an agreement with Value Partners where the consultancy would direct clients toward complex derivatives contracts with the lender.

UBS said it had noted that the court's decision was not unanimous and that it would take its case to the Supreme Court, according to the FT.