Less than six weeks into his new job as CEO of UBS, Ralph Hamers is facing off against a Dutch corporate scourge. The specter of his leaving Switzerland just as quickly as he arrived is real.

Georg Wohlwend, chairman of Liechtensteinischen Landesbank (LLB), stepped down immediately last month when the principality's prosecutor opened an insider trading investigation again him last month. The preliminary probe – and the specter of a formal criminal proceeding – was enough for Wohlwend to bear the consequences and avoid any burden to the bank.

UBS boss Ralph Hamers doesn't seem to be thinking of falling on his sword, though the news that a court in The Hague had ordered prosecutors to revisit Hamers' role in a money laundering scandal at ING that culminated in a 2018 settlement is explosive for the Swiss lender. It sent chairman Axel Weber, who stole a march on rival HSBC in hiring Hamers, scrambling to control the damage.

Visibly Nervous Chairman

The Dutch legacy changes the dynamic dramatically for the 54-year-old banker, a feted CEO who is just 41 days into his tenure. Weber is visibly nervous – leading some to speculate that Hamers may not survive in the job to the 100-day mark. The date is widely viewed as a peg for him to signal his strategic view for UBS.

The reason is Pieter Lakeman, a 78-year-old Dutch activist who runs Stichting Onderzoek Bedrijfs Informatie, a foundation devoted to financial transparency and fair business. The conflict between Lakeman and Hamers hits at the heart of the Netherland's traditionally egalitarian society – and the idea that no one should be above the law.

Swiss Fitness And Probity

To be clear, it isn't clear that Hamers has done anything wrong – nor did UBS or outside investigators hired by the bank to vet him find anything. The 775 million euro ($938 million) fine for ING to settle the money laundering scandal two years ago was enormous by Dutch standards.

It didn't include sanctions against any executives or other individuals. That may change, if Lakeman has his way: the case remains settled for the bank, but Hamers faces potentially being formally investigated. According to Dutch law, fines for money laundering begin at 20,000 euros and habitual offenders face jail time.

Fomenting Fund Rinsing?

On a practical level, the scandal several hobbles Hamers' ability to delve into a much-needed rejuvenation of UBS: he has to be available to investigators potentially in a probe which may last years. He must comply with summons and subpoeanas in person. To be sure, he will also have top legal talent fighting his corner to remove the money laundering stain.  

Symbolically, Hamers has a responsibility to UBS, the world's largest wealth manager with $2.6 trillion in client money. A CEO who allegedly fomented a massive money rinse by ignoring internal and outside warnings – as Lakeman asserts – doesn't play well with a discreet, demanding billionaire clientele.

No New Developments

The idea of stepping aside can be the logical consequence of fully concentrating on extricating himself from the probe, or to limit potential spillover to UBS. This isn't an issue for the Swiss bank, where Hamers still enjoy his board's backing. 

It isn't clear whether Hamers will have to defend himself in court: Dutch prosecutors need to reevaluate a case without the facts or evidence having changed since 2018, when ING settled.

Fully Engaged In Job

The only ING executive to leave as a result of the money laundering scandal was finance chief Koos Timmermans (no bad feelings seem to have lingered: Timmermans appeared in a goodbye roast of Hamers). 

UBS is rightly surprised at the Dutch court's decision to put Hamers in the dock, despite the lack of new developments in the case. The CEO can still fully exercise his role in spite of the unexpected restrictions on his time, UBS said.

A New Zeitgeist

The elements that neither Weber nor Hamers can gauge is the momentum that cases like Lakeman's take on. The activist, who was instrumental on bringing down Dutch lender DSB in 2009 amid allegations of mis-selling, has already notched a remarkable victory by forcing the case against Hamers.

Lakeman is the public face of Holland's far greater sensitivity than Switzerland to issues of injustice or executives escaping culpability – often as their firms pay hefty fines. The Dutch court this week tacitly endorsed this sentiment, arguing that taxpayers «must be able to see that such actions are not accepted by the government.»

This is clear signal to open a formal criminal investigation into Hamers. Whether that actually happens or the matter is mothballed is likely to dictate the length of his tenure in Zurich.