"Whistleblower" Promises More Julius Baer Disclosures on Wikileaks

Christopher Owen

5 March 2008

The source for the documents at the centre of the court action between Swiss bank Julius Baer and the "whistle-blowing" web site Wikileaks is Rudolf Elmer, former chief operating officer of Bank Julius Baer & Trust in the Cayman Islands. The records pertain to clients from 1997 to 2002. Mr Elmer claims they came lawfully into his possession because he was the employee at the bank responsible for taking a tape copy of bank data home so that it could be reconstructed in case of a fire. He says he was also responsible for dealing with hurricane emergencies, when his duties included taking the bank's data to safety. As a result Mr Elmer says he would always leave the Cayman Islands with a security backup of the bank's server whenever the weather service issued a warning. His employment contract, Mr Elmer claims, was cancelled while he was on leave in a hospital in Zurich for spinal surgery. "That's why I had a copy in my possession when the bank fired me," said Mr Elmer. No one, he claims, asked for this data and he therefore asserts that the data was lawfully obtained from the Cayman Islands. The bank alleges it was theft. Mr Elmer used his data as a bargaining chip in the dispute with his former employer. He sent anonymous emails to Julius Baer customers, threatening to disclose that their accounts contained unreported taxable income. "I did it to protect myself and my family," he told German newspaper Der Spiegel. The conflict escalated in 2005. A Swiss financial newspaper was anonymously sent a CD with customer records dating from 1997 to 2002. The US Internal Revenue Service also received a copy, but the full names of the bank's clients were missing. The bank filed charges and Mr Elmer spent 30 days in pre-trial confinment. Legal proceedings are ongoing in Switzerland. But once in circulation, the flow of data continued and a few weeks ago, records purporting to come from Julius Baer's Cayman branch appeared on Wikileaks. The bank's lawyers took legal action against the site's operators and, on 15 February, obtained an injunction in the US District Court in California, which ordered that the web site was taken offline. But last Friday, US District Judge Jeffrey White reversed his decision, dissolving the injunction and refusing to extend a restraining order that required Wikileaks and its server to remove the documents. On the same day Mr Elmer published a "whistleblower letter" on the site, which he alleges, "details the offshore structures of the Bank Julius Baer group, explains workings of several of Baer's hedge funds and outlines how Julius Baer employs these to avoid paying taxes in the home country of the group." He promises to post two further "whistleblower letters" which will be dedicated "to the topic of 'tax-ruling' of the Zurich tax department and the role of a well-known law firm in the Bahnhofstrasse, Zurich in this", and "the 'practices' pertaining to single formerly existent cases to demonstrate in what ways external asset managers use offshore vehicles". Julius Baer claimed last week that its “sole objective has always been limited to the removal of these private and legally protected documents from the website. The documents in question are protected and prohibited from unauthorised publication under US, California and foreign consumer banking and privacy protection laws. The posting of confidential bank records by anonymous sources significantly harms the privacy rights of all individuals.” The bank further denied the authenticity of the material and rejects the “serious and defamatory” allegations which it contains. Coming on top of the ongoing global tax evasion investigation sparked by data sold by a former employee of Liechtenstein-based LGT Bank to the German authorities last year, this latest breach of banking confidentiality threatens to further undermine the edifice of offshore banking secrecy.