Former Banker to Go on Trial for Allegedly Breaking Swiss Bank Secrecy Law
Rudolf Elmer Could Face Jail Over Case Involving Julius Baer Group and WikiLeaks
By John Letzing
Dec. 9, 2014 4:56 a.m. ET
WikiLeaks founder Julian Assange, left, is given two CDs containing information about bank clients who may have evaded taxes, by former Swiss banker Rudolf Elmer, right, at a news conference in London in January 2011. Ben Stansall/Agence France-Presse ZURICH—Many Swiss bankers are under fire for providing secret accounts. Now one former banker could face a lengthy prison sentence for his bid to poke holes in Swiss secrecy.
Rudolf Elmer, 59 years old, is scheduled to go on trial Wednesday for allegedly violating Switzerland’s bank secrecy law by offering private banking group Julius Baer Group AG ’s internal data to foreign authorities and WikiLeaks, the whistleblower website. He faces up to 3½ years behind bars if convicted.
Mr. Elmer, who worked for Julius Baer in Switzerland and the Cayman Islands from 1987 to 2002, has been pursued by private detectives and detained by Swiss police following a prior complaint by the bank that he distributed pilfered information. He has sought to use his nearly decadelong legal battle to criticize bank secrecy as an outdated means to aid tax evasion.
“It’s the golden calf,” Mr. Elmer said during a recent interview with The Wall Street Journal at Zurich’s airport.
The prosecution of Mr. Elmer underscores efforts in Switzerland to maintain bank secrecy in the face of pressure from foreign governments, including the U.S. That pressure has provoked moves to bolster the law.
Last month, the Swiss Parliament passed legislation creating severe penalties for people who financially benefit from violating bank secrecy, including up to five years in prison. A separate effort aims to strengthen bank secrecy for Swiss clients.
Swiss law safeguards bank data including names of clients, and can be a daunting obstacle for foreign authorities. During a hearing last February, Sen. Carl Levin (D., Mich.) expressed anger with the U.S.’s inability to identify American customers of Zurich-based Credit Suisse Group AG who may have evaded taxes. “You hide behind Swiss secrecy,” he said to the bank’s chief executive. The CEO replied that the bank would hand over information it “can legally provide.”
Mr. Elmer denies the charges against him, and argues that he shouldn’t be prosecuted under Swiss bank secrecy laws because his data came from Julius Baer’s Cayman Islands subsidiary. He says he has only shared a small portion of that data with WikiLeaks, and the rest is hidden in undisclosed locations.
Mr. Elmer’s history with Julius Baer stretches back to his childhood, when, he said, his mother worked as a maid for a part of the Baer family that relinquished control of the bank a decade ago. When he was 20, Mr. Elmer won his first banking job as an apprentice at what is now Credit Suisse.
His legal crusade has strained relationships that were forged during those early years. Konrad Hummler, the former head of Wegelin & Co.—a Swiss bank that pleaded guilty to aiding U.S. tax evasion last year—served his mandatory military service together with Mr. Elmer. But Mr. Hummler said he has avoided discussing his friend’s “approach” to bank secrecy with him.
In 1987, Mr. Elmer was hired as an auditor at Julius Baer in Zurich. Seven years later he transferred to the Cayman Islands and became a top executive at the unit. He said his job required him to take backup data home daily, as a safety precaution.
Mr. Elmer said he grew uneasy over the ways he saw the bank facilitating tax avoidance and evasion, and his attitude created problems with his superiors. In 2002, Mr. Elmer and other employees were given lie-detector tests after internal documents went missing. Mr. Elmer said he didn’t take the documents, but he refused to complete his test because of the confrontational way he says it was administered—and he was fired.
He returned to Zurich, laid up with a bad back. He said he spent his time digging into backup data that he had taken home and never returned.
Soon, Mr. Elmer said he saw the bank had been facilitating more “tax avoidance, or worse” than he’d realized, which irritated him, he said. By 2004, he said he had sent his data to the Swiss tax authorities.
A spokesman for the Swiss Federal Tax Authority declined to comment.
Eventually, Mr. Elmer sent the data to the Swiss media. Julius Baer, he says, then sent him a message: “We know what you’re doing.”
Private detectives put Mr. Elmer under surveillance. He filed complaints with police and says he had trouble sleeping. He said he also continued sharing the data.
In 2005, Julius Baer filed a complaint and has said a subsequent police search of Mr. Elmer’s house turned up some of its data. He spent 30 days in a Zurich prison.
The following year, Mr. Elmer moved to Mauritius, an island near the African coast. But his legal troubles persisted. So did his anger toward Julius Baer.
In a court filing, Julius Baer said its employees received threatening emails from Mr. Elmer in 2007. One was allegedly addressed to “dirty pig” and warned that “my hunter is after you.”
Mr. Elmer acknowledges sending threats, but blames “post-traumatic stress disorder” caused by the bank’s harassment.
In late 2007, Mr. Elmer contacted WikiLeaks, which had only recently been started. In early 2008, hundreds of documents related to Julius Baer appeared on the site. Julius Baer unsuccessfully filed a suit in the U.S. to prevent publication of the data.
Mr. Elmer returned to Switzerland in 2009 to tackle his legal issues. At roughly the same time, he says he discussed offshore banking and the use of secrecy with the U.S. Justice Department.
The U.S. was starting a push to find hidden accounts in Switzerland that are ensnared in a significant portion of the country’s banks.
Julius Baer is one of roughly a dozen Swiss lenders still under Justice Department investigation for allegedly aiding U.S. tax evasion.
A Justice Department spokeswoman declined to comment.
In early 2011, Mr. Elmer was slated to appear in a Zurich court for allegedly violating bank secrecy—a charge he denies—in a continuing case separate from his impending trial. A few days prior, he traveled to London to appear at a news conference with Julian Assange. The WikiLeaks founder had recently been accused of sexual assault in Sweden, allegations that he has denied.
“We had half the press in the world in this room because they were waiting for Assange to show up,” said Jack Blum, an attorney who has advised Mr. Elmer and who attended the event. During the news conference, Mr. Elmer handed Mr. Assange two compact discs.
Mr. Elmer now says the discs were empty and that he just wanted to draw international attention to his legal case. But the move drew further scrutiny from Swiss authorities.
“I’m not sure what that stunt was,” says Daniel Domscheit-Berg, a former WikiLeaks spokesman. A spokesman for Mr. Assange didn’t respond to a request for comment.
After Mr. Elmer flew home, the Zurich prosecutor’s office opened a new case against him. He was detained and spent 187 days in a prison outside Zurich. Last July, the Zurich cantonal prosecutor’s office filed related charges that Mr. Elmer will soon face at trial. A spokeswoman for the office declined to comment.
Mr. Elmer says he is encouraged by growing public skepticism about bank secrecy. For now, though, he is distracted by the possibility of more consequences of his transformation from banker to whistleblower.
“What I wanted to have was an interesting life,” he said. “Maybe not as interesting as it is today.”
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