A former UBS banker pledged yesterday to reveal all about the internal culture of the Swiss bank in a move that could help American authorities with their investigation into whether it helped US clients to hide money from the taxman.

Bradley Birkenfeld changed his plea with the US authorities to plead guilty to helping a UBS client to hide $200 million (£101 million) from American tax authorities when he worked for the bank. His change of heart is part of a plea bargain whereby Mr Birkenfeld has agreed to reveal all about the bank, which he claimed in court yesterday incentivised him to help clients to reduce their US tax bill.

Mr Birkenfeld’s lawyer, Danny Onorato, said yesterday: “He’s going to tell the Government everything he knows about what was going on at UBS.”

The US Department of Justice and the US Securities and Exchange Commission are investigating the way UBS behaved towards clients between 2000 and 2007 and whether they helped customers to evade American taxes.

UBS is understood to be considering whether to disclose the names of 20,000 of its American clients as US authorities investigate the use of offshore bank accounts by rich Americans.

In a statement yesterday, UBS said: “UBS is treating these investigations with the utmost seriousness and will appropriately and responsibly address and correct any issues raise in the investigations, including taking appropriate disciplinary action.”

Last month, Mr Birkenfeld was charged with conspiring to defraud the US by helping a billionaire American property developer to create bogus companies to conceal ownership of offshore assets. Mr Birkenfeld was working for UBS at the time.

Yesterday, Mr Birkenfeld admitted that he and other bankers helped rich clients to set up sham companies to hold their assets in offshore investment centres such as Switzerland, Panama, Hong Kong and Liechtenstein.

In court papers released yesterday, he admitted that he filed false and misleading tax forms and helped clients to place cash and valuables in Swiss safety-deposit boxes, buy jewellery and artwork and use Swiss credit cards that they thought could not be traced by US authorities.

In the same papers, it was said: “On one occasion, at the request of a US client, defendant Birkenfeld purchased diamonds using that US client’s Swiss bank account funds and smuggled the diamonds into the United States in a toothpaste tube.”

Mr Birkenfeld faces up to five years in jail and is to be sentenced on August 13.

News that Mr Birkenfeld is to reveal details of the way UBS conducts itself come at a difficult time for the Swiss bank. It has suffered more writedowns than any other European bank following the mortgage crisis in the US.

Mr Birkenfeld was told that if he provides “substantial assistance”, the US Government could recommend a cut in his eventual sentence. Kevin Downing, an attorney with the Department of Justice, told the court that Mr Birkenfeld’s help was expected to assist the Government “nationwide.”

In court yesterday, the judge asked Mr Birkenfeld whether his actions worried him at the time. Mr Birkenfeld said he “did have doubts” and that he later resigned from UBS.

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