Friday, June 08, 2012

International Tax Review: Explosive Julius Baer revelations to come

International Tax Review have, on request, kindly given us permission to republish this article

Key take-out quote:
"I only published 5% of the data on WikiLeaks," he said. . . . "When the CDs are unsealed it will be a lot more damaging than the original WikiLeaks publication," said Elmer."
Full story:
Swiss court's unsealing of whilsteblower CDs spell more trouble for Julius Bär
08 June 2012
By Salman Shaheen (ITR)

EXCLUSIVE: When Rudolf Elmer gave WikiLeaks the names of 2,000 tax evading clients of his former employer Julius  Bär, he was arrested for breaching Swiss banking secrecy laws. But evidence to be presented at his trial may make things even worse for Julius Bär.

In the latest twist to a case that has now lasted more than six years, the HighCourt of Zurich has decided to unseal the three CDs at the heart of the matter. But with the trial being held in public, the contents of the CDs could prove devastating for Julius Bär when they are revealed. Not least because Elmer only published 5% of the data on WikiLeaks and there may be much worse to come.

Elmer tells International Tax Review that the prosecution in the lower court had argued that because he had a Swiss contract with Julius Bär for two of the eight years he worked for the bank in the Cayman Islands, his leak broke Swiss banking secrecy laws.

While the lower court found him guilty, the High Court judge decided in November last year that because the data on the CDs had not been revealed, it was not known whether it was Cayman or Swiss data.

"If it's Cayman data, then it's not under the banking secrecy laws and they cannot find me guilty on a contract," said Elmer.

The fight was then on to find out what was on the CDs, one of which had been sent to the newspaper CASH. The prosecution had asked the paper to hand over the CD, but CASH instead sent the CD to Julius Bär on the grounds of protecting their sources.

Julius Bär was subsequently forced to hand over the CDs, but the bank tried to argue that
they should remain sealed to protect client privacy. The High Court dismissed this argument and opted to unseal the CDs.

Julius Bär had until May 31 to appeal the decision, but the deadline has now passed with no appeal, which means the contents of the CDs are set to be revealed against the bank's wishes.

The consequences could be disastrous for the bank and for tax evaders around the world. Client names will now fall into the hands of the Prosecution Office of Zurich. Because Elmer requested a public trial, the names will also be mentioned in open court. Foreign authorities will also have the option to request information from Zurich's Prosecution Office.

"The can of worms will be opened even more," said Elmer. "I believe it is very important for international clients to know that the CDs are now with the prosecution and an enormous risk arises that their names might be published, or even that information requests will be filed with Zurich's Prosecution Office."

Sources in the Swiss banking industry are dismissive of the dangers, arguing that Elmer stole the data from the Cayman Islands in 2002 and that it is now out of date. They point out that Elmer has been sending the information to tax authorities over several years, and that the data has already been published in WikiLeaks and the media. In effect, not much to worry about.

Not so, according to Elmer.

"I only published 5% of the data on WikiLeaks," he said.

Elmer argues that he did not release the other 95% because it is not his job to publish the client names, it is up to the tax authorities to chase cases of evasion.

"When the CDs are unsealed it will be a lot more damaging than the original WikiLeaks publication," said Elmer.

Julius Bär and their lawyer declined to comment.

Only time will tell whether or not the bank or its clients have anything to fear when the full contents of the CDs are opened up. But the fact that they fought so hard to keep them closed suggests they will not be looking forward to it.


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