American authorities are being assisted by a former employee of UBS as part of their inquiry into whether the Swiss bank helped wealthy US clients evade US tax.

UBS confirmed today that a senior employee at the bank had been detained last month by American authorties as part of the Department of Justice's investigation into the bank's cross border businesses.

While UBS declined to name the employee, it is believed that Martin Liechti, the Zurich-based head of North and South America for UBS’s international wealth management business, was detained as a "material witness" while visiting Miami late last month.

In a statement, UBS said: "Our understanding is that the respective employee, who has not been charged with any wrongdoing by the U.S. government, will remain in the United States pending discussions with the U.S. authorities regarding resolution of his status as a witness.”

It also emerged that American prosecutors are being helped by a former UBS employee who has leaked names of US clients of the Swiss bank. It is thought that the former employee may also be under investigation for potential wrong-doing.

The inquiry into the type of tax advice that UBS gave its clients, is being conducted by the US Attorney for the Southern District of New York. The investigation spans advice given to Anmerican clients about the aount of tax they should pay the US Internal Revenue Service between 2000 and 2007.

UBS said it was cooperating with the investigations. The DoJ declined to comment on whether the inquiry into UBS formed part of a wider investigation of the advice banks offer their US clients about tax owed to the IRS.

In November, UBS closed down its Swiss-based US banking operation with the loss of 70 jobs as part of a wider reshuffle of its global wealth management division.

Prior to that, in June, UBS published an eight page document, "Country Paper USA" that attempted to tighten up compliance for private wealth managers travelling to the America.

The paper, nearly three times larger than the previous document advising UBS' managers travelling abroad, stated: "Failure to comply with US rules and regulations may result in substantial civil, administrative and criminal sanctions against UBS and its employees and could have a substantial negative impact on UBS's reputation in the US."

The incident represents an unexpected fresh blow for the Swiss bank, which only yesterday announced a first quarter net loss of SwFr11.5 billion (£5.5 billion) and 5,500 layoffs as it struggles to deal with the impact of the credit crisis.

The bank also revealed that rich clients were deserting its wealth management business and business banking clients in its home market had pulled almost SwFr2 billion from their accounts in the first quarter.

UBS is also understood to be under investigation by America’s powerful Securities and Exchange Commission over allegations that UBS employees based in Switzerland offered advice to US-based clients for which they should have been registered with the SEC as a broker dealer or investment adviser.

Separately, prosecutors in Germany, are considering launching a criminal investigation into claims that UBS offered assistance to wealthy Germans seeking to avoid tax.

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