Czech agency says suing UBS for $23 mln

PRAGUE, Nov 1 (Reuters) - The Czech state-run Consolidation Agency (CKA) said on Wednesday it was suing UBS AG <UBSN.VX> for 500 million crowns ($23 million), saying the Swiss bank failed to protect an account in the name of its Galileo affiliate. CKA said a former manager of Galileo had transferred the funds to its investment account at UBS, but the bank had allowed the money to be sent to the accounts of private individuals unconnected to either CKA or Galileo.

"The funds ... were removed beyond the reach of Galileo and CKA in March 2005 due to a series of errors that were committed -- and acknowledged as such -- by UBS," the agency, which manages bad debt taken over by the state, said in a statement.

It said UBS rejected all attempts to reach an out-of-court settlement, which led it to file a lawsuit with the Commercial Court in Zurich in June.

"The legal advisors of Galileo in the Czech Republic and Switzerland documented the case to such a degree that we consider the serious and repeated misconduct of UBS in the matter to be a proven fact," CKA Managing Director Zdenek Cap was quoted as saying in the statement.

Galileo's lawyer in Switzerland was quoted as saying in the statement that Galileo could have never lost control over the funds if UBS had complied with Swiss regulations and its own internal procedures.

When contacted by Reuters, UBS said it was not making any official statement about the matter. ((Reporting by Marek Petrus in Prague and Andrew Hurst in Zurich, editing by Greg Mahlich/Will Waterman; Reuters Messaging: marek.petrus.reuters.com@reuters.net; e-mail: prague.newsroom@reuters.com or marek.petrus@reuters.com; tel: +420 224 190 477)) ($1=22.05 Czech Crown)

Keywords: FINANCIAL CZECH UBS