Naomi Fowler ■ Trial of whistleblower Rudolf Elmer breaks open Swiss banking secrecy at a new level
Swiss banking whistleblower Rudolf Elmer has done much to pierce the veil of banking secrecy that has protected financial criminal activity for so long. For that he has been imprisoned, victimised, and his family has been harassed. His reputation has been systematically ripped apart in a way that we believe has been intended as a deterrent to other potential whistleblowers. Now he has received the court’s written judgement in full.
As we have explained in detail here, the case against Elmer hinged on the question of whether or not he broke Swiss banking secrecy law. In essence, he was accused of disclosing client information from a Cayman subsidiary of the Swiss bank Julius Baer. In Switzerland, as in various secrecy jurisdictions, breaking bank secrecy is deemed a criminal offence, incurring penalties that include imprisonment and fines.
On 23 August, the Higher Court of Zurich rejected prosecution demands to convict Elmer for violating Swiss banking secrecy laws.
This appears to affirm the practical application of the principle that the long arm of Swiss bank secrecy does not, and cannot extend to the operations of Swiss bank subsidiaries in other secrecy jurisdictions.
However, as long as bank secrecy laws exist, practitioners will find means and ways to hide the wealth of the criminal elite. An employee of a Swiss-associated bank in another secrecy jurisdiction will still be subject to the bank secrecy laws of that jurisdiction. So our work continues, but Elmer’s case has provided a breakthrough at a significant level.
As TJN Senior Adviser Jack Blum notes, the court decision in Ruedi’s case is very significant because the prosecutors in Zurich were determined to make an example of him. Crucial to note in this context, is how Julius Baer Bank was fined by the U.S. Justice Department in early 2016 for colluding with clients to evade U.S. tax, as reported in this Forbes article:
“Bank Julius Baer of Switzerland will pay a $547 million penalty as two bankers individually plead guilty. The bank itself is charged with helping U.S. taxpayers hide billions in offshore accounts and cheating the IRS. The Bank’s deferred prosecution agreement admits that it knowingly assisted U.S. taxpayer-clients in evading taxes. The deal requires the bank to pay $547 million right away.”
In short, the bank was the criminal, not Rudolf Elmer.
Despite the fact that Elmer was acquitted of breaking bank secrecy on 23 August, the court has ordered him to pay legal costs to the tune of CHF 350 000. Elmer has also been given a 14-month suspended jail sentence for threatening his former employer and fabricating a letter to German Chancellor Angela Merkel from bank Julius Baer. According to Elmer he uploaded the letter to WikiLeaks in order to test their website. It seems very clear to us that the trauma and stress Elmer experienced as a whistleblower has not been taken into account. Again, the penalties imposed upon Elmer appear to us to be intended as a form of deterrent to other potential whistleblowers.
As Stéphanie Gibaud, whistleblower from the Swiss bank UBS, says in our Tax Justice Focus – The Whistleblowers Issue,
“Once you have blown the whistle in the private banking sector, well-trained managers will do all they can to crush you like an insect. Their techniques will vary in intensity from demotion and social isolation all the way through to discrimination and harassment. Your reputation will suddenly be ruined”.
And as TJN director John Christensen observes:
“The rich and powerful are at their most thuggish when their backs are up against the wall”.
Indeed. For further reading on Rudolf Elmer’s case this is well worth it: “How Switzerland corrupted its courts to nail Rudolf Elmer” and we also discuss recent developments with TJN’s John Christensen on the protection of whistleblowers in this Taxcast Extra, a TJN podcast special. You can watch Elmer in his own words on the blog of the European Parliament’s Committee of Inquiry into the Panama Papers: “Multinationals and rich individuals are cheating civil society”:
Whistleblowers on the tax justice frontline
Whistleblowers are occupying a vital, and dangerous place, right on the tax and transparency frontline. We welcome any decent lawmaking to protect them. The UN made recommendations this summer to enact legislation to create a charter on the rights of whistleblowers and adopt a “protected disclosure defence” to protect whistleblowers and witnesses. The United Nations Independent Expert on the Promotion of a Democratic and Equitable International Order Alfred de Zayas describes whistleblowers as human rights defenders in his recent press conference. A strong push for robust law making is now absolutely essential.
In the absence of proper legal protection, the Greens/Europe Free Alliance in the European Parliament have set up a new initiative called EU Leaks, a special portal where you can submit information in a highly secure and anonymous way, without leaving an electronic trail.
Something to watch out for in December 2016 is the LuxLeaks appeal. Whistleblowers Antoine Deltour and Raphael Halet, as well as journalist Edoard Perrin are going to be dragged back through the Luxembourg courts. While they’re apealing the previous verdict, so is the Luxembourg prosecutor, but for very different reasons: incredibly, he wants even stiffer penalties than the court already meted out. And so, in the heart of Europe we’re seeing whistleblowers potentially turned into prisoners of conscience – Antoine Deltour could, yet again, face up to ten years in prison. as we point out in our blog “Will Antoine Deltour become a prisoner of conscience?”
Citizens have a right to information relating to the secret, often unlawful and certainly deeply unethical deals whistleblowers are exposing which are being conducted by states in their name.
The US beneficial ownership law has its weaknesses, but it’s a seismic shift
Argentina keeps pushing to be at the vanguard of transparency. Now they need to make more information public
How a mini movement overturned secret US shell companies
Big Tobacco, big tax abuse
Taxing Wall Street: the Tax Justice Network December 2020 podcast
Researcher vacancies at the Tax Justice Network: Latin America and Francophone Africa
Tobacconomics: Measuring the value of cigarette taxes
The Corporate Tax Haven Index: a Joint Research Centre audit
$427bn lost to tax havens every year: landmark study reveals countries’ losses and worst offenders
The State of Tax Justice 2020
20 November 2020