Another Banker Blows the Whistle


Strict Standards: Declaration of C_DataMapper_Driver_Base::define() should be compatible with C_Component::define($context = false) in /nfs/c06/h01/mnt/156219/domains/ on line 0

Swiss Banker Blows Whistle on Tax Evasion

By Lynnley Browning

Published: January 18, 2010

From his home in the quiet village of Rorbas, outside Zurich, Rudolf M. Elmer is chipping away at the centuries-old traditions of Swiss banking secrecy.

Mr. Elmer, who ran the Caribbean operations of the Swiss bank Julius Baer for eight years until he was dismissed in 2002, moved to Mauritius in the Indian Ocean and began parceling out to global tax authorities what he said were the secrets of his former employer.

Now back in his native country, he continues to disclose the inner workings of Julius Baer — one of many Swiss institutions that investigators say help clients evade billions of dollars in taxes by routing money through offshore havens in the Caribbean and Switzerland.

“It is a global problem, and I am only the messenger who provides the bad news, or even better, the truth,” Mr. Elmer, 54, wrote in a recent e-mail message. “Offshore tax evasion is the biggest theft among societies and neighbor states in this world.”

He said that he would fly on Tuesday to Düsseldorf, Germany, where the tax authorities are putting him up in a five-star hotel as he prepares to divulge client secrets.

Mr. Elmer joins a group of whistle-blowers that includes Bradley Birkenfeld, the former UBS private banker who disclosed the bank’s secrets, pushing it toward a settlement with the United States government, and Heinrich Kieber, a former data clerk at the LGT Group, the Liechtenstein royal bank, who stole client data and funneled it to American and European authorities.

Mr. Elmer’s disclosures are attracting particular interest as the Internal Revenue Service and the Justice Department embark upon a strategy of “it takes a rogue to catch a thief” to encourage insiders who engaged in wrongdoing to reveal the secrets of their employers.

Lawyers and Congressional investigators who have begun to review Mr. Elmer’s claims say that his internal bank and client documents provide fresh ammunition for American authorities as they take their crackdown on offshore tax evasion beyond UBS to clients of other banks.

Mr. Elmer has given documents to the I.R.S., a Senate subcommittee investigating tax evasion and investigators for Robert M. Morgenthau, then the Manhattan district attorney, his lawyer Jack Blum said. They cover more than 100 trusts, dozens of companies and hedge funds and more than 1,300 individuals, from 1997 through 2002, Mr. Blum said.

Mr. Elmer contends that his documents detail the undisclosed role of American investment management companies in funneling American, European and South American clients who wished to avoid taxes to Julius Baer; the backdating of documents to establish trusts and foundations used to evade taxes; and the funneling of trades for hedge funds and private equity firms from high-tax jurisdictions through Baer entities in the Cayman Islands.

“What he has is the confirmation of something very important: that a number of other banks in the voluntary disclosure process are turning up,” Mr. Blum said, referring to 14,700 wealthy Americans, many of them UBS clients, who came forward to disclose their secret accounts last year. The I.R.S. declined to comment on Mr. Elmer’s case but said in a statement that it was “investigating other banks that have enabled Americans to evade taxes.”

Nothing indicates that Julius Baer, a 120-year-old private bank, is under I.R.S. investigation. The bank is known for intense privacy. Its board chairman, Raymond J. Baer, told shareholders last April that “the fiction of citizens being fully transparent must never become reality.”

Julius Baer, based in Zurich, had profits of more than $245 million in the first half of 2009 on more than $200 billion in client assets. In 2004, it sold its American wealth management business to UBS, whose offshore private banking operations for Americans came under federal scrutiny and led the bank to pay a $780 million fine in 2009 and admit to criminal wrongdoing. The acquired business was folded into a group led by Raoul Weil, the top UBS private banker who fled to Switzerland in 2009, after being indicted in the UBS case touched off by Mr. Birkenfeld.

Mr. Elmer worked for Julius Baer nearly two decades, the first 15 years in Switzerland and then as chief operating officer of Julius Baer Bank and Trust in Grand Cayman, beginning in 1994. As far as his own role in helping clients evade taxes, he said, “I didn’t realize what was going on.” Mr. Elmer said he discovered the tax evasion in 2002 and decided to expose Julius Baer’s operations.

Julius Baer denies that version of events. It contends that Mr. Elmer stole internal documents and client data around 2002, the year he was dismissed after raising concerns about the bank in the wake of being passed over for a promotion. He moved to Mauritius a year later.

“Shortly after leaving the employment of the Julius Baer Group in 2002, Cayman-based Elmer, clearly annoyed at having been dismissed and unable to secure a financial settlement to his satisfaction, engaged in a campaign to seek to discredit the Julius Baer group and certain of its clients,” the bank wrote by e-mail in December.

SOURCE The New York Times

Read the full article here.



You can be the first one to leave a comment.


Leave a Comment


You must be logged in to post a comment.