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Former Swiss Banker Offers Up Valuable Information on Swiss Banking Giant, Julius Baer
February 16, 2010
Topic: International/Offshore
Rudolf Elmer, originally from a quaint village outside of Zurich, had been managing the Caribbean locations of Julius Baer since 1994 where he handled transactions from Switzerland to the Caribbean, but he had been working for Julius Baer for nearly two decades. That is until he was fired in 2002. His first 15 years of working for Julius Baer were spent in Switzerland before he became the chief operating officer of Julius Baer Bank and Trust in Grand Cayman. Now back in Switzerland, Mr. Elmer has been carefully navigating his way through almost a decade's worth of knowledge about his former employer. The result, says Elmer, is centuries-old secrets at the tip of his fingers. In a recent e-mail from Mr. Elmer, he wrote "It is a global problem, and I am the only messenger who provides the bad news, or even better, the truth. Offshore tax evasion is the biggest theft among societies and neighbor states in this world."
Julius Baer, based in Zurich, is a 120-year-old private bank. In 2009, Baer had profits of more than $245 million in the first half of the year alone. Julius Baer sold its American wealth management business to UBS in 2004. UBS is now under investigation by the IRS and was recently fined $780 million in 2009 for criminal wrongdoing and involvement in helping clients evade taxes through offshore investing.
Mr. Elmer is included with other whistle-blowers in an effort by the IRS to uncover the banking institutions that have helped clients evade billions of dollars in taxes by routing money through offshore havens in the Caribbean and Switzerland, among other tax havens throughout the world. The other most recent whistle-blower is Bradley Birkenfeld, the former UBS banker who came forth with UBS's secrets which ultimately resulted in a settlement between UBS and the U.S. government. Along with Birkenfeld is Heinrich Kieber, a former LGT Group data clerk who stole data from the Liechtenstein royal bank and funneled the information to authorities in countries at risk including the United States.
The documents that Mr. Elmer has gathered have been turned over to the IRS, and are drawing particular interest at the Department of Justice. The IRS is employing a "it takes a rogue to catch a thief" strategy in hopes that more insiders will come forward with crucial information that will put a stop to international tax evasion. Those who have seen Mr. Elmer's disclosures confirm that these documents provide fresh ammunition for American authorities as they begin to expand their investigation to other havens, countries, and international banking institutions.
Mr. Elmer's disclosures include information on more than 100 trusts, dozens of companies and hedge funds, and more than 1,300 individuals in the years spanning from 1997 through 2002. He contends that his documents show that American investment management companies have been funneling American, European, and South American client's money to Julius Baer in order for said clients to avoid paying taxes. Furthermore, there is evidence of backdating the same documents to establish trusts and foundations to evade taxes. And finally, his disclosures will show the funneling of trades for hedge funds and private equity firms in high-tax jurisdictions to Julius Baer entities on the Cayman Islands.
Julius Baer denies Rudolf Elmer's claims that they are involved in such practices and claims that Elmer stole internal documents in order to raise concerns about the bank due to being passed over for a promotion. Respite of being jailed by Swiss authorities, Elmer published some of his documents on Wikileaks, a site devoted to whistle-blowing information about government and corporate activity.
The United States and other countries seeking the demise of international banking secrecy are hoping that by publicly making examples out of major financial institutions like UBS and Julius Baer, other whistle-blowers like Elmer and Birkenfeld will come forward and disclose information that will lead to the breakdown of international tax evasion and international banking secrecy. Elmer is definitely not the first person to disclose valuable information on a banking giant and thanks to the IRS's recent interest in tracking down offshore account holders, he will most likely not be the last informant either.
