SWITZERLAND may be under unprecedented pressure to end bank secrecy and turn over names of its banks’ tax-evading foreign clients, but it continues to take a brutally hard line against leakers of financial information. The latest target in prosecutors’ crosshairs is Pierre Condamin-Gerbier, a former Geneva-based private banker, who stands accused of handing information about undeclared Swiss accounts to the French authorities. The leak led to the resignation of France’s budget minister, who was one of those found to have a secret stash in the Alps.
Mr Condamin-Gerbier cannot expect an easy ride, but he must be hoping to avoid being put through the same legal hell as Rudolf Elmer (pictured), one of Swiss banking’s earliest whistleblowers—and certainly its most vilified. The judicial assault on Mr Elmer, a former executive with Julius Bär, one of the country’s largest wealth managers, is now in its ninth year. Already bombarded by Zurich’s prosecutors and its courts—more than 40 (mostly procedural) rulings have gone against him since he first kicked up a fuss—Mr Elmer was earlier this month charged with crimes related to breaching financial secrecy. The experience has left the former banker battered and bruised, but he has shown remarkable resilience. He claims to be looking forward to having his day in court and “spring[ing] some surprises” on the prosecution.
Mr Elmer rose through Julius Bär’s ranks to become chief operating officer of its Caribbean unit, based in the Cayman Islands. But somewhere along the way he appears to have developed a conscience, raising concerns (first internally, later to the authorities, and later still in public) about the bank’s alleged acceptance of deposits linked to tax-dodgers and money launderers. Swiss officials accused Mr Elmer, not the bank, of wrongdoing when he approached them claiming to have information about domestic tax cheats. He later offered data on the accounts of tax-shy Germans to the government in Berlin. In 2011, at a theatrical press conference in London, he handed discs purportedly containing information on the Cayman unit’s clients to Julian Assange, Wikileaks’ founder.
To say that Mr Elmer has been hounded by Switzerland’s judicial authorities would be an understatement. Despite not yet having been found guilty of breaking secrecy laws, he has been imprisoned twice without charge, once for 187 days and once for a month, under an old Swiss law that permits extended spells of detention for police interrogation. Prosecutors have twice requested that he submit to psychological evaluation. (He refused to co-operate.) His wife was put under investigation several years ago for allegedly helping him to breach bank secrecy. That probe was quietly dropped this month.
Perhaps most disturbingly, Mr Elmer has said that for months he and his family were trailed and subjected to intimidation by private detectives who had been hired by Julius Bär, leaving his daughter traumatised. She received an undisclosed sum as part of a settlement with the bank over the alleged harassment in 2011, according to court documents. Julius Bär declined to comment on any aspect of the Elmer case. In the past it has argued that the he is engaged in a campaign to discredit the bank using inappropriately-obtained or fabricated documents.
The latest charges against Mr Elmer are expected to be fought over in court towards the end of the year. The crux of the prosecution’s case is that he broke laws that make it a criminal offence for a bank employee to reveal a client’s secrets, however dark. In his defence, Mr Elmer will continue to argue that the data he revealed is not governed by Swiss law because it came from Julius Bär’s Cayman subsidiary, which is legally separate from its Swiss parent.
He has another card to play. The data was apparently housed in a trust company owned by Julius Bär, not a banking subsidiary. As a non-bank financial firm, the trust unit should not be protected under bank-secrecy rules, Mr Elmer argues. He says that “several legal experts” support this view and describes the prospect of fleshing it out in court as “exciting”.
Still, he accepts that he faces an uphill struggle. He argues that the government’s case against him is driven by political considerations as much as legal principles, and that it is supported by a “morally corrupt” judicial system that “bends and stretches the law” to protect financial secrecy, even when it is used to shield those who knowingly break other countries’ laws.
Mr Elmer says he will take his case to the European Court of Human Rights if he loses at every stage in Switzerland. The prosecutor who brought the latest charges against him, Peter Giger, did not respond to our request for comment. He recently told Bloomberg: “Elmer sees himself as a whistleblower. He has a message he wants to bring across. I am convinced he broke the law in trying to do that.”
Mr Elmer believes there is less to the apparent erosion of bank secrecy than meets the eye. True, numerous Swiss banks have been roughed up by American prosecutors and the Swiss government has been arm-twisted into signing an OECD convention that will usher in greater tax transparency. But the ultra-rich and other sophisticated financial types continue to hide behind complex legal structures comprising trusts, shell companies and other secrecy vehicles. It often requires help from bankers, lawyers and other facilitators to expose those who stash away dirty money. But the OECD convention deals with only with the flow of information between governments; it offers no support to individuals who expose criminal activity. “To the man on the street it looks like much is changing. But the truth is less dramatic,” says Mr Elmer.
Moreover, the laws that underpin Swiss secrecy (in the Banking Act, the criminal code and stock-exchange rules) remain firmly in place. The American-led attack on the Gnomes of Zurich has produced a backlash: a right-wing party has almost collected enough signatures to force a referendum on whether to strengthen constitutional support for financial secrecy. Swiss bankers who spill the beans continue to do so at their peril.
