Tax Analysts -- Former Bank Employee on Trial for Violating S

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Worldwide Tax Daily

DECEMBER 11, 2014 Former Bank Employee on Trial for Violating Swiss Secrecy Law William Hoke

The trial of Rudolf Elmer, the former Julius Baer Group Ltd. employee accused of passing to WikiLeaks confidential information about the bank's clients, began December 10 in Switzerland.

However, Elmer, 59, collapsed during a court break and was taken to a Zurich hospital. As of press time, no information was available on his condition, or on when the trial will resume.

Elmer allegedly began uploading the bank's data to the WikiLeaks website in 2008. During a 2011 press conference, he presented to WikiLeaks founder Julian Assange two compact discs that he said would show that Julius Baer clients evaded taxes. However, Elmer testified December 10 that the discs had nothing on them, and at press time, Wikileaks had not responded to a request for more information.

Elmer, who worked at a Julius Baer subsidiary in the Cayman Islands from 1994 until 2002, is also accused of offering client data to the German government. Prosecutors have asked that he be sentenced to three and a half years in prison.

Elmer claims as a defense that Swiss secrecy laws don't extend to information taken from files maintained in the Caymans. Milan Patel, a former IRS attorney now with Anaford AG in Zurich, said that if the documents are from the Cayman Islands, that could prove problematic for the prosecution. "Can he be prosecuted under Swiss law for releasing documents that belong to a bank in a different jurisdiction?" Patel asked. "I'm not a Swiss lawyer but, under general rules

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of comity, the answer would be no."

Patel said he hasn't heard anyone deny that the documents came from the Cayman Islands, and that that defense appears to be Elmer's "number one card."

Elmer was fired from Julius Baer after being required to take a lie detector test following the disappearance of bank documents. He was convicted in 2011 for providing data to WikiLeaks in 2007 in violation of Swiss bank secrecy laws and for threatening Julius Baer employees. He was given a suspended sentence and fined CHF 7,200 (about $7,450), but was rearrested shortly after for allegedly disclosing additional banking information to WikiLeaks. (Prior coverage .)

Elmer has said he disclosed the banking information because Switzerland's bank secrecy protections were making widespread tax evasion possible and that the disclosures weren't motivated by possible financial gain. But during his December 10 testimony, Elmer declined to answer questions about his income.

Despite increasing pressure that Switzerland provide more information on foreigners who might be trying to evade taxes by holding assets in Swiss financial institutions, there has been a counter push to toughen Switzerland's bank secrecy laws. A group in favor of tighter restrictions recently gathered enough signatures to require within two years a nationwide referendum on whether to embed bank secrecy protections in the Swiss Constitution, and in November the Swiss legislature increased the maximum jail term for passing on stolen bank data from three to five years.

Patel said it's not surprising that Switzerland would seek to impose tougher sanctions for breaching bank secrecy laws at the same time it's becoming more open to exchanges of information with other countries . "They want to preserve the rule of law and take away the economic incentive to become a whistleblower," Patel said. "It's a tough balancing act because banking is such a big part of the Swiss economy, but the government wants to decide who the information will go to."

Tax Analysts Information Jurisdictions: European Union; Switzerland; Germany; Cayman Islands Subject Areas: Criminal violations Financial institutions Financial products and banking Fraud, civil and criminal

Information disclosure Information exchange Tax avoidance and evasion Tax havens Industry Group: Banking, brokerage services, and related financial services Author: William Hoke Institutional Author: Tax Analysts

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Tax Analysts Document Number: Doc 2014-29160 Tax Analysts Electronic Citation: 2014 WTD 238-3

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