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Rudolf Elmer: The man who blew the whistle on Swiss banks

A former employee of Swiss bank Julius Baer, Rudolf Elmer shot into limelight as a whistleblower in 2008.

He shared secret documents with WikiLeaks on the tax evasion activities of Julius Baer in the Cayman Islands.

Elmer was arrested in January this year for handing over a CD with 2,000 names of tax evaders to Julian Assange, the editor of WikiLeaks in 2008.

It had details of bank accounts between 1997 and 2002. The names of several Indians also figured in the list.

Meanwhile, Julius Baer alleged that Elmer tampered the evidence to suggest tax evasion.

Rudolf Elmer in an interview with rediff.com talks about the dark side of black money, financial secrecy and lashes out against Swiss banks who are encouraging tax defaulters.

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Rudolf Elmer: The man who blew the whistle on Swiss banks

Can you tell us about the Indian Clients of the Swiss Bank Julius Baer bank? What sort of operations do Indians have with the Swiss banks?

I cannot make a statement now as the Prosecution Office of Zurich is still investigating my case.

If I make a statement I might be in prison tomorrow. Unfortunately, I cannot raise my voice without taking the risk to be jailed again.

However, trusts, companies and funds including hedge funds have bank accounts in Swiss banks even though the trust, company or the fund is domiciled in Jersey, Cayman or any other tax haven or better secrecy jurisdiction.

It's clearly evident that the Indian clientele of various Swiss banks is high. What would be your rating, on a scale of one to five, of the Indian clients in terms of money that is being stashed away in the banks of Switzerland?

I would like to refer to the statement made by Dr P K Vasudeva of the National Institute of Science in India that about $1.5 trillion from Indians is deposited in Switzerland.

I have been working in the financial industry for 30 years in Switzerland, Cayman, Mauritius, Channel Islands. The truth is that no one really knows what the real figure is like because assets are not only in bank accounts in Switzerland but also in bank safes (gold coins) and properties.

Then you also have chattels (paintings, sculptures, etc) which might also be financed by black money and therefore represent untaxed assets. I would give a rating of 2 in terms of Indian clients.

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Rudolf Elmer: The man who blew the whistle on Swiss banks

Which other countries rank high in stashing away the black money into Swiss banks?

Generally speaking, countries which are not politically stable, and countries which are run by dictators.

A Russian high net worth individual and entrepreneur might run the risk of the government confiscating part of his assets. Another example is that of dictator Gaddafi who had millions of dollars stashed away in Swiss banks.

Is the Indian government doing enough to get the black money that has been stashed in various Swiss banks?

The United States is the only nation which has taken serious action against abusive banking practice in Switzerland.

All others, including India, have not taken effective action to tighten tax collection. Switzerland has signed a number of OECD-style information exchange agreements, however, Tax Justice Network considers these ineffective.

Therefore, most of it is a kind of lip service, even the tax agreement signed with India. If you look at the two tax agreements related to withholding which Switzerland is about to sign with Germany and the United Kingdom, the name of beneficial owner remains hidden even though European Union made a lot of efforts to expand automatic exchange of information.

It is clear that many of the latest tax information agreements, according to Tax Justice Network, is that they have taken the weakest form possible, in effect requiring tax authorities to know what they are looking for before they ask for information, rather than requiring full disclosure.

I hope the new Secrecy Index of Tax Justice Network acts as an alarm call, and warns that there is a new public mood against tax dodging by the wealthy and large corporations.

It might even simply make it clear that it needs global commitment, action to solve the issue about tax havens or better secrecy jurisdictions.

Switzerland still hides the beneficial owner and is quite relaxed if it comes down to provide information about tax evaders to other countries.

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Rudolf Elmer: The man who blew the whistle on Swiss banks

What steps can India take to get the money back into the country?

India is a powerful nation so there are ways to receive information similar to what exists in the European Union, automatic information exchange.

If there is an automatic information exchange particularly for assets of high net worth individuals, financial institutions and multinational conglomerates, globally India would be much better off.

India would need the support of the USA, the UK, Germany and even China to achieve this.

Have any of the Indian agencies, or Indian government representatives, or persons ever got in touch with you in connection with your expose?

Unfortunately, I cannot answer this question without risking to be jailed again in Switzerland.

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Rudolf Elmer: The man who blew the whistle on Swiss banks

In one of your interviews you said that the laws of your country are the singular most reason for the multiplication of black money. Can you please elaborate?

I referred to the Swiss Bank Secrecy Law and the fact that Swiss banks perform a kind of self-regulation.

Besides this, if an employee violates Swiss Bank Secrecy the penalty is up to 3 years imprisonment and a fine of about $300,000.

In addition, as a banker coming across criminal conduct within the bank you are not allowed to file a complaint with the prosecution office or Swiss tax authorities without taking the risk violating Swiss Bank Secrecy.

You have to report the matter to a central office in Switzerland and then there may or may not be an investigation.

As a matter of fact I was found guilty in Court providing information about tax evaders and other criminals to the Swiss local and Swiss Federal Tax authorities.

It would have been in the favour of the Swiss government to collect additional taxes but the decision was taken to put me in jail and not to investigate tax evaders and criminal clients.

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Rudolf Elmer: The man who blew the whistle on Swiss banks

We understand extreme pressure tactics have been used to keep you silent. Is it true that you are under immense pressure? What kind of pressures are you facing?

There is pressure but today we can handle it. The pressure on my family since 2003 has been unbearable. A damaging record about my character (insane, criminal, etc) was build by bank and published in the media.

My family was threatened and isolated. Even family members were working for the police. I lost my job three times and we had to leave Switzerland in 2006 because there was no work for me anymore.

My career has been destroyed and I am blacklisted in the financial industry worldwide. On top of it, the prosecutors have been after me for six years and kept the pressure up because the investigations lasted for more than six years.

I was in jail for 30 days in October 2005 but the court trial was scheduled for January 2011.

The verdict was surprisingly mild: a penalty of $7,000 and no imprisonment. There were no pressure from Indian quarters even though we have received irritating emails.

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Rudolf Elmer: The man who blew the whistle on Swiss banks

What's your take on India's 'Amnesty Plan' to net black money?

I doubt any amnesty plan will work. In the last two years, there has been plenty of evidence that amnesty plan will not work.

The Liechtenstein CDs, HSBC CDs, the struggle between the UBS (Switzerland) -- USA in respect of tax etc brought so many tax evaders to light.

It is simply naive to believe that any Amnesty Plan related to tax matters will work in this world.

An Amnesty Plan is a farce to show governments have made a move in the right direction.

What is keeping back India from pursuing the issue of black money?

To be fair, I am not an expert on India. About the tax treaty between India and Mauritius, it seems the political will is missing to force corrective action. Again it needs global commitment and action to solve this issue. If not, too many loopholes remain.

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Rudolf Elmer: The man who blew the whistle on Swiss banks

What led you to expose the entire wrong doing of black money in the Swiss banks?

I worked for Credit Suisse, Julius Baer, Chinese Group Noble, as well as Standard Bank of Africa.

I discovered the financial industry helps people hide assets and cheat the taxation system.

The Swiss tax authorities and the Prosecution Office were not willing to investigate criminal clients (drug and weapon deals, defrauders and tax evaders). For them, I was definitely the culprit so I was sent to prison in 2005 and 2011 again.

There was no witness protection programme. The bank and the criminals were not even investigated even though I believed I did the right thing.

This was a scandal and morally not acceptable as a decent Swiss army officer and as a citizen of Switzerland, I feel it is not a Swiss attitude to cheat people or other countries.

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Rudolf Elmer: The man who blew the whistle on Swiss banks

You have shared two crucial CDs with the WikiLeaks. Can you please give us a broad sense on its content? Can you recall any Indians in the list?

My case is still under investigation so I cannot talk. I only can repeat what I have stated in the Frontline Club in London.

There are ultra-high net worth individuals, financial institutions and multinational conglomerates from all over the world. There are Indians also.

Do you see a possibility of black money routed through swiss banks being used for terror related activity?

I have no evidence, however, you have to understand that this routing is performed by highly qualified professionals who preciously know what they are doing and know the procedures in detail.

For instance if you do not see the entire transaction (why the payment is made, to whom, why a cash withdraws, etc) which is rarely the case in banking there is no way you can discover terrorist funds.

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Rudolf Elmer: The man who blew the whistle on Swiss banks

You are also quoted to have said that Switzerland banks sell additional masks to hide the identity of their rich clients. Can you elaborate what kind of masks are these?

These so-called masks are used by other countries as well. A Swiss asset manager offers personalised Cayman funds for instance which is not a lot of money involved, let's say a net asset value of $60 to 80 million but if you have plenty of those it really sums up.

What sort of Indian clientele deals with Swiss banks? Can you categorise them?

 You will find film stars, artists, politicians, cricket players and lawyers . . . I mean, generally speaking, people who earn high income and work internationally.

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Rudolf Elmer: The man who blew the whistle on Swiss banks

What is the procedure for an Indian to bank with Swiss banks? Does the bank conduct background checks?

According to Swiss law, the banks have to perform Know Your Client (KYC) tests and check the source of funds.

However, it is known that the source of funds is extremely difficult or even impossible to check.

KYC seems to be simple but once the client provided the assets it is difficult to request more information or the client uses for instance an agent such as a lawyer, a convenient settlor to add funds to the trust, etc.

There is a huge gap between what is said and what actually can be proven. Do not trust a banker in this respect. "My word is my bond" is a blast from the past.

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Rudolf Elmer: The man who blew the whistle on Swiss banks

How do you see this problem being solved?

It needs a global commitment from powerful countries such as the USA, India, Europe and China to end the business model of tax haven.

Secondly, it needs automatic information exchange because it is key for any tax authority or prosecutor to be ahead of the game.

The tax evader should not know that tax authorities requested information about him/her in the first place.

It might even take a global breakdown of the financial system before the society learns tax havens and the missing global financial transparency have been one of the main causes of the last financial crisis.

How do you plan to take you crusade further ahead?

My plan is to follow up my case at the European Court of Human Rights.

As a banker, I want to have free speech and if I come across serious criminal clients it should be possible without being prosecuted to make this information public.
It is in the public interest, if a bank manages serious criminal clients, bankers should be allowed to speak up.

This is one part of the crusade but more importantly, we need to raise public awareness in respect of those secrecy laws and secrecy jurisdictions by writing books, making documentaries, giving speeches and remaining a role model for fighting abusive practices without using violence.

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Rudolf Elmer: The man who blew the whistle on Swiss banks

How was your life in jail? Are you a more determined person today?

Even though the system tried to break me I studied a lot, wrote hundreds of pages, prayed and kept my spirit up.

The inmates and the warrants supported me because it was often stated that I should not remain in prison.

Some inmates stated that I am a political prisoner and that authorities or even the Swiss banks wanted to set an example in order to threaten other bankers who may like to speak up.

I am not more determined and I am not angry. I only know I did the right thing and I would do it again.

However, I feel sad or even guilty as my daughter and wife had to go through such a difficult time.

I have taught my daughter to stand up even against the most powerful for getting justice.

What has been your family's reaction?

I have a wonderful wife and a great daughter. They understand what I stand for and support me.

Obviously, they were disappointed about my imprisonment. But they know many people who tried to change the world for the better have been in prison too.

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Rudolf Elmer: The man who blew the whistle on Swiss banks

Do you find yourself alone in this fight? Are you getting a lot of support from various quarters?

It is a lonely fight and it has to be so up to a certain extent. I do not want someone else to fight for me or for my cause because I do not want others to suffer due to my action.

However, I would like to get financial support to fight these legal cases. I am bankrupt as I invested most of my funds, my time and my career in this battle.

I am a positive that I will win the court trial in Switzerland. There is a good chance of a victory at the European Court of Human Rights. This would be a big success for the society.

It would mean that public interest to expose serious criminal clients is more important than the famous Swiss Bank Secrecy laws.

It would be a breakthrough like the victory of Wikileaks over Bank Julius Baer & Co AG in 2008 in the Courts of California related to the American First Amendment of Free Speech and Free Press.

Have you gotten in touch with WikiLeaks during or after your jail stint? What is the status of the data that you shared with WikiLeaks?

Sorry, I cannot make a statement as the investigation is going on. For the moment, it is important that I stay out of jail and go on with my initiative.