Thursday, January 20, 2011

Swiss Banker Whistleblower Reveals Key Customer Data on Wikileaks. White money, Black money or Tax evasion you decide!

Rudolph Elmer was arrested last week for suspected violation of secrecy laws when the ex-banker publicly handed disks over to Wikileaks, the whistle blowing website, which he said contained data on private banks in Switzerland and their affluent clients. Earlier in 2008, he supplied banking information to the website, raising Wikileaks’ profile internationally after the bank tried to shut down the site. The press coverage made interesting reading, particularly the few summarized points I have lifted from the news report in the Hindu titled Swiss banker re-arrested for secrecy breach to Wikileaks” dated 20 Jan 11.
a)   The former executive illegally divulged information about the banks customers and the bank, one of the country’s largest wealth managers after he was fired in 2002. The bank claims it sacked Elmer when he tried to extort money in return for not exposing the banks business practice
b)   The former executive claims he was a whistleblower whose main aim was to expose wrongdoings by the financial sector regarding tax evasion assistance to wealthy international clients and managed to avoid jail time paying a fine of 7500 USD. In addition, Elmer’s lawyers argued that Switzerland’s strict secrecy laws, which regulate the Swiss bank, did not apply in the Cayman Islands, where Elmer was based for eight years.
c)   At the time he sent the messages, he told the court, he was being followed by detectives hired by the bank, causing intense psychological pressure. His daughter, the former banker related, was afraid to go to kindergarten during that period because of the men who tracked the family’s moves.
d)   Banks in countries with confidentiality laws are facing heat, as more foreign governments, are agreeing to pay money for stolen disks that contain information on tax-dodging clients.
e)   In 2009, Bern agreed to relax its rules and allow more transparent international cooperation on tax matters, under heavy pressure from the world’s top economies on so-called tax havens and a scandal in which a Swiss banking giant was found to have aided wealthy U.S. clients evade paying their taxes.
It is seems to be a classic example of a blind eye being turned and laws enacted to support bad business practices. Of governments using underhand means to encourage stealing information to catch wrong doers, thereby violating their own bribery laws and supporting hackers. On the legal side, laws may differ based on the location of the bank branch and do not depend on the country of incorporation. I was also happy to see that the law took a lenient view of the whistleblower.

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