UBS Chief Comes Under Fire From Board

by Ulrika Lomas, Tax-News.com, Brussels

14 February 2002

It has emerged that British-born Luqman Arnold, who was fired as President of UBS's Executive Board in December, had rowed fiercely with Marcel Ospel, chairman of UBS, over Ospel's insistence on involvement in the rescue of Swissair. Now the board has told Ospel that he overstepped his authority in taking charge of the crisis and leaving members of the group executive board out of the loop.

Sir Peter Davis, chief executive of UK supermarket group Sainsbury, is said to have considered resigning over the matter, although he is remaining silent. UBS is due to announce its results today, but is most unlikely to refer publicly to the board-room storm.

Mr Ospel's leadership of the Swissair rescue attempt and his commitment of UBS funds for the effort apparently prompted a complaint from Mr Arnold to the board, and there is said to have been "a very frank discussion" at a subsequent board meeting. For the autocratic Mr Ospel, Arnold's fate was no doubt then a foregone conclusion.

Although Mr Arnold has not spoken out publicly on the issue, he must have thought that UBS involvement in the Swissair 'rescue' was simply throwing good money after bad. Mr Arnold had pioneered the group's global share listing on the New York Stock Exchange and had overseen a sharp reduction in the group's risk profile. His moves to improve the quality and transparency of UBS's financial reporting had been welcomed by the investment community.

Quoted in the Financial Times, one senior Swiss banker says: "This puts Ospel in very meaningful risk because the future of the group doesn't lie in expanding its Swiss operations and its Swiss investor base." But he will probably survive for now. Jacques-Henri Gaulard, an analyst at Lehman Brothers, said: "The risk to the stock now is a risk of corporate governance. You've had a major, major shock, and I don't think he will get away with another one. But the truth is UBS is in good shape - if you look at the franchise or even at cost control - and that's what counts."

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