IT whistleblower says lawyer took advantage of him
Philipp Hildebrand, former chairman of the Swiss central bank
ZURICH, SWITZERLAND – Swiss central bank chairman Philipp Hildebrand, age 48, has just resigned, effective immediately, but the scandal over the theft of private bank data and the financial transactions of Hildebrand’s wife is not likely to die down quickly.
He had worked for the bank since 2003 and was named the youngest ever chairman in January 2010.
Hildebrand said at a press conference last Thursday, 5 January, that he would remain in office as long as he had the support of the Swiss Federal Council, the cabinet. He called for reform in the wake of the scandal, including greater transparency on the part of central bank governors about their own financial transactions. Full text of HIldebrand press conference presentation (pdf)
He denied wrongdoing, saying that the CHF60,000 profit on currency transactions from August to October 2011 was his wife’s responsibility; a Bank Council investigation as well as one done by PricewaterhouseCooper’s support his claim. Hildebrand’s wife is a former currency trader who now owns a Zurich art gallery and the transactions were reportedly on behalf of her business.
But observers including a number of politicians have said in the past week that even if the central banker respected the letter of the law, and even if the law needs to be changed, he acted irresponsibly. Bloomberg/Business Week quotes Peter Kunz, head of business law at the University of Bern, as saying it’s “absolutely incomprehensible” that the relatives aren’t included in the regulations. “‘From a legal point of view, Ms Hildebrand’s dollar trade isn’t problematic,’ he said. “From the point of view of morality, experienced economic experts like the Hildebrands should know that a spouse’s trades are not without problems.’”
Kashya Hildebrand’s purchase of $500,000 in August, and sale of them in October, came during a period when the Swiss franc continued to climb against the dollar and the euro. Her husband had responsibility for Swiss monetary policy and capped the over-valued franc.
The banker is scheduled to issue a statement and copies of documents at 15:15 Monday, shortly after announcing his resignation. He was earlier scheduled to appear before parliament Monday afternoon to answer questions and share documents. Parliament still has a press conference scheduled for 18:00.
The unfolding story over the weekend centred, not around Hildebrand, but the man who stole the data, who contacted three Swiss media to say he has been abused.
UDC, lawyer and IT employer tell different tales
The 39-year-old IT worker says he turned to a lawyer with the information about Hildebrand’s accounts, not because he wanted to be a whistleblower or to have the information widely published, but because he wanted to understand the significance of the information he had viewed.
The man, who lost his job at Bank Sarasin after turning himself into police, copied data from the private accounts of Hildebrand and shared it with an old childhood friend, now a lawyer and cantonal politician in Thurgau, Hermann Lei. The man who is being investigated for taking the information has been hospitalized and is under surveillance in a psychiatric unit for fear he will try to commit suicide.
But the details of what happened differ depending on the source: the IT worker and Lei, through his lawyer, both say they met with Christoph Blocher, former head of the rightwing UDC People’s Party, who has had an abrasive relationship with Hildebrand. Blocher has remained silent on the affair, but the UDC denies such a meeting ever took place.
The IT employee says he did not give Lei permission to turn the material over to Weltwoche, a Swiss political weekly magazine that published details a week ago, information that Lei’s lawyer denies.
SNB rules tightened Saturday, but parliament wanted more answers
The Bank Council, which oversees the Swiss National Bank, announced after an extraordinary meeting Saturday that it was tightening rules to include family members of the governing board and to reduce to CHF20,000, effective immediately, the amount of foreign currency board members can trade without advance clearing.
See also: GenevaLunch background stories on Hildebrand and the SNB
GENEVA, SWITZERLAND – Bloomberg, the business news agency, and its partner Business Week, have put Caterpillar’s Swiss operations squarely in the spotlight with a lengthy article that is being widely picked up by US media: it questions whether the company’s use of Geneva for some tax savings purposes is legal under US law. The Peoria, Illinois company has had its European head office in Geneva for several decades and, like many foreign companies, it benefits from some tax exemptions organized through the Geneva Economic Development Office.
The debate was provoked by the 2009 case brought by Daniel Schlicksup, a Caterpillar whistleblower, who is a lawyer who was a global tax strategy manager for Caterpillar from 2005 to 2008, according to Bloomberg. He is asking for his old job and stock options back, saying he was demoted as a result of arguing that the company avoided some $2 billion in taxes by using its Swiss base illegally.
Zurich, Switzerland (GenevaLunch) – Former Bank Julius Baer employee Rudolf Elmer has given a CHF7,200 suspended fine but no prison sentence for stealing data from the bank and handing it to tax authorities, the media and whistleblowing web site WikiLeaks. He will pay CHF5,000 in court costs; the loser in Swiss court cases generally bears the cost.
The judge found Elmer, who admitted to breaking Swiss banking secrecy laws, guilty of theft and of threatening his former employer, but charges of making a bomb threat and anonymously demanding CHF50,000 were dismissed.
The prosecution had called for a firm prison sentence of eight months, but the judge is not sending him to jail. The fine was higher than the CHF2,000 asked by the prosecution, but it was suspended, meaning that
Links to other sites: romandie (Fr), NZZ (Ger), swissinfo, TSR (Fr)
Admits he sent anonymous threats to former employer
(TSR video, Fr) Zurich, Switzerland (GenevaLunch) - Rudolf Elmer, famously photographed with WikiLeaks founder Julian Assange five days ago in London at a press conference, appeared in court in Zurich Wednesday morning to face several charges of threats against his former Swiss bank employer and theft of bank data.
Elmer admitted in court to some of the charges of threatening his former employer, but not others. His defense rests on the argument that he was a whistleblower who wanted only to reveal corporate corruption.
He acknowledged breaking Swiss bank secrecy laws, part of data protection laws in Switzerland, however, when he admitted that he shared the bank data with “authorities”. It’s not clear who is meant by this.
Elmer’s lawyer argued that he has not broken Swiss banking secrecy laws, since they don’t apply in the Cayman Islands, where he worked for Bank Julius Baer. A spokesman for the bank made the same point to GenevaLunch some months ago.
Elmer appears to have first shared the data, which dates from 1997-2002, with a Swiss business publication, Cash magazine in Zurich.
Elmer faces up to eight months in prison and a CHF2,000 fine if found guilty. Public television TSR reports that the prosecutor had initially requested eight month suspended sentence, but when Elmer was shown turning over yet more data to Assange, in addition to what he gave WikiLeaks in 2008, the prosecutor asked for a sentence that would have to be served, saying Elmer had learned nothing.
He admitted to sending anonymous, menacing e-mail messages to his former employer, but argued that this was because he felt “psychologically threatened” by the bank, that he was under surveillance and asked to take a lie detector test, which he refused to do.
The bank had discovered a data theft shortly before Elmer was fired and bank policy requires employees to take a lie detector test in such an event.
Elmer worked for Bank Julius Baer for 20 years, the last eight of which he was in charge of operations for the bank in the Cayman Islands.
He denied two other charges of threatening his employer, one a bomb alert in Zurich and the other an anonymous demand made from an Internet cafe for the bank to pay him CHF50,000.
Links to other sites: swissinfo, rsr/ats (Fre)
Zurich, where Rudolf Elmer goes on trial for stealing data from Bank Julius Baer
Update 18 January Zurich, Switzerland (GenevaLunch) - WikiLeaks founder Julian Assange was back in the headlines Monday 17 January with a much-publicized appearance with publicity-keen former Swiss banker Rudolf Elmer, who turned over to Assange, at a press conference in London, some 2,000 files with what he says are private bank account details.
Elmer goes on trial 19 January, not for breaking Swiss banking secrecy laws, as has been widely reported, but for theft, forgery and for harassing his former employer’s staff, Bank Julius Baer, Zurich police told GenevaLunch.
Elmer headed the bank’s Caribbean wealth management services for eight years when, according to the bank, his theft of data was discovered and he was fired.
He had worked at the bank for 20 years. Elmer became a whistleblower for WikiLeaks, leaking data with client accounts names in 2008, but the bank data he had access to was already old, from 1997-2002. Elmer had earlier leaked it to Cash magazine in Switzerland and the Wall Street Journal, which published the information in 2005 but without client names.
The bank claims that the data is not only old, but that some of the documents are forged. WikiLeaks technology assessment man Daniel Schmitt (Daniel Domscheit-Berg) has reportedly claimed that some of the information is from the time after Elmer left the Cayman Islands. Elmer, however, told swissinfo in a 3 December 2010 interview that forgeries may have played a role in the information published by WikiLeaks, but his remarks are puzzling:
“One thing that’s certain is that with Julius Bär, genuine and forged documents were published – the latter probably to spread disinformation since Julius Bär couldn’t shut down Wikileaks. Uploading fake data was the only way to question the credibility of the information on Wikileaks. Unfortunately this also shows that Wikileaks didn’t check the data professionally. This is a general weakness of Wikileaks.”
The former Julius Baer employee worked for the bank in the Cayman Islands, where accounts are not covered by Swiss banking secrecy laws, although they are covered by corporate theft laws. He was sought on charges by canton Zurich but not by the Swiss federal government.
Handing two disks to Assange in London, Elmer, who worked for the bank for 20 years, told reporters that “working in the Cayman Islands I realized that something was wrong.” He argues that he wanted “to let our society know what I do know because it’s damaging our society in a way that money is moved away by financial institutions, multinational conglomerates and high-net-worth individuals, money is hidden in offshore ventures.”
Background story, GenevaLunch, “Bank whistleblowers and thieves grab headlines”, 21 January 2010
Jailed banker claims US Dept of Justice hushed investigations into “super-rich and politically powerful” US figures with Swiss bank accounts
WRS Birkenfeld audio interview 26 August 2010
Bradley Birkenfeld
Geneva, Switzerland (GenevaLunch) – Bradley Birkenfeld is not taking his imprisonment for conspiring to defraud the US government sitting down quietly. The former UBS private banking manager in the US began serving a 40-month prison sentence in Minersville, Pennsylvania in January 2010. Birkenfeld accuses the US Department of Justice of having done a deal with his former UBS boss, Martin Liechti, in an interview with WRS radio Friday morning 27 August. The reason, he argues, was to protect “super-rich and politically powerful” US citizens. The DOJ, when contacted by WRS, refused to comment on his allegations.
The interview comes the day after Switzerland said it is delivering data on more than 2,000 suspect banks accounts, to the US government at its request.
Birkenfeld, who has on a number of occasions argued that it is unfair he is the only UBS banker to be jailed in connection with the investigations, told Reuters in April 2010 that the Swiss bank should be investigated further by the DOJ, saying “Pardon the expression, but they should have some balls here.” He has also been busy asking President Barack Obama to commute his sentence and trying to convince the IRS he should be paid as a whistleblower; in April Business Week ran a lengthy story detailing his history as a whistleblower in this and other cases, noting that the prosecutor who convinced the judge to jail him says he does not qualify.
Martin Liechti, onetime head of wealth management for UBS in North America, was arrested for questioning in the US in April 2008. In July 2008 he took the Fifth Amendment to protect himself, refusing to testify at a US Senate hearing. UBS announced at the start of the Senate hearings in July 2008 that it was shutting down its US wealth management activity.
Liechti, a Swiss citizen, remained in jail until August 2008 and then, unlike Birkenfeld, he was released. He returned to Switzerland, but officially lost his job with UBS in March 2009, when the bank took disciplinary measures against 24 of its offshore business employees.
Earlier this month, according to Tagesanzeiger (8 August) and Finews, Martin Liechti recently began working as a business coach.
Miami, Florida, USA (GenevaLunch) – Bradley Birkenfeld, the former UBS wealth manager in the US who set off a court case between the US tax authority, the IRS, and Switzerland’s largest bank, says he is ready to give more evidence. Birkenfeld, who stands to benefit from the IRS Whistleblower programme, is scheduled to go to prison 1 January to start serving a 40-month sentence. He has asked a Florida court to delay the start of his sentence in exchange for cooperating more extensively with the IRS, reports Swiss news agency TXT/TSR.
Background, GenevaLunch
Geneva, Switzerland (GenevaLunch) – The French public prosecutor in Nice, southern France, Eric de Montgolfier, has revealed that his office is in possession of confidential details of up to 130,000 clients from HSBC’s private banking branch in Geneva. The data was acquired by the French state when Hervé Falciani, a former IT employee of the bank, left HSBC with the details stored on his laptop. Journal de Dimanche reports that 3,000 of the bank’s clients are French citizens.
The whistleblower, who is reported to have received a new identity and is said to be in hiding in fear of his life, told French public television that he acted out of idealism: “Either you bury your head in the sand or you try to do something about it.”
Geneva, Switzerland (GenevLunch) – The French justice minister, Michèle Alliot-Marie, confirmed Thursday 10 December that Switzerland has asked for administrative assistance in the case of data theft from HSBC Bank in Geneva, and that French authorities would answer it, reports Swiss-German newspaper NZZ. A former employee of the British bank’s private banking arm has provided French authorities with client details, several media sources report. The former IT specialist, variously described as a dual French-Italian or French-Swiss national, has been given a new identity and is living under protection in the south of France.
Geneva, Switzerland and Washington, DC (GenevaLunch) - US Attorney General Eric Holder is being urged to review the case of Bradley Birkenfeld, the former UBS banker whose testimony was instrumental in the US government’s case of tax fraud against the Swiss bank. Birkenfeld was sentenced in August 2009 to 40 months in prison for his role in aiding his clients to avoid paying taxes in the USA.
