Grand Cayman News
February 20, 2008
In the latest round of a saga that could have come from the pen of best-selling writer John Grisham’s novel, Bank Julius Baer (BJB) has succeeded in temporarily shutting down one outlet of Wikileaks, an international online transparency group.
According to internet reports, the Swiss banking giant has tried to silence their former Cayman Islands Chief Operating Officer, Rudolf Elmer, by using a court injunction to shut down the Wikileaks website, which contains what are alleged to be highly damaging documents about the bank’s offshore activities.
The Temporary Restraining Order, issued by the California Northern District Court in San Francisco, is aimed at a Domain Name Registrar, rather than just the actual publishers of controversial material, who are based outside US legal jurisdiction.
At the centre of the dispute are several hundred documents, purportedly showing offshore tax evasion and money laundering by extremely wealthy and, in some cases, politically sensitive BJB clients from the US, Europe, China and Peru, reportedly released by a Swiss whistleblower.
While the former Cayman Islands employee is apparently being targeted as the source of the material, he is not only reported to be emphatically denying releasing any documents but, according to all current reports, has not been connected with the leaks.
The original release of documents dates back to at least 2002/3 when secret BJB files relating to Cayman Islands accounts were sent to US tax authorities.
A further release of documents in 2005 targeted German account holders, whose details and account balances from US$5 million to over US$100 million, initiated a probe by the country’s authorities into possible tax evasion.
As a result, bank customers, who are understood to regard themselves as victims of a conflict between the bank and a former employee, may be forced to pay millions in taxes and in some cases could lose their entire investments.
While Mr Elmer is currently the target of BJB investigations, the whistleblower has apparently only ever been identified as ‘Teddy Baer’ or the ‘tax fraud revealer’.
Despite claims that the documents were “stolen” from the bank’s Grand Cayman office, there is no indication in any of the current reports that BJB filed any formal complaint with the Royal Cayman Islands Police Service (RCIPS), even though the removal of the documents certainly broke Swiss law and probably, according to one source, broke Cayman Islands’ law.
However, published reports suggest that BJB has conducted their own thorough, and sometimes robust, internal investigation into the leaks, including the use of private detectives.
One phase of this was subjecting Cayman-based employees to a polygraph, or lie detector test.
Mr Elmer has apparently, and without response, complained to the Cayman Islands government about the conduct of this test, which was, unlike in the USA where clear regulations exist for the conduct of polygraph tests, allegedly conducted without any statutory controls in place.
He also is reported to have claimed that his life was threatened and anonymous phone callers suggested the family should return to Switzerland “for their own good.”
Following the polygraph test, Mr Elmer was ‘laid off’ by BJB and returned to Zurich with his family. There, he claims to have been subjected to unrelenting pressure, including what he states was a half-million Swiss francs bribe, to stop doing something that he denies ever doing in the first place. In December 2007, he even took an unsuccessful anti-stalking case before the Swiss courts in an attempt to prevent BJB’s investigators following him.
Even though the documents and reports have been in the public domain for some time, BJB sought the California injunctions, stating the disclosures “constitute violation of trade secrets, conversion and stolen documents by former employee in violation of a written confidentiality agreement and copyright infringement, among other wrongful and tortuous conduct.”
Ironically, the move has not prevented access to the documents, and Cayman Net News had no problem reading the documents, along with Wikileaks’ comments on them, online.
Amongst the allegations Wikileaks makes against BJB are that the documents show evidence of deliberate tax evasion and, in one case, an account was allegedly used to handle bribery funds.
The latest high profile scandal comes at a time when the Cayman Islands, despite extensive work to ensure the offshore banking industry is properly regulated, is coming under renewed pressure from US legislators, who are claiming the islands represent an unacceptable haven for tax evaders. The revelation that bribe money may be flowing through accounts based in Grand Cayman will, although no official comment has so far been forthcoming, also be causing concern as the draft anti-corruption laws as still a long way from reaching the statute books. These laws, which are already in place in other offshore jurisdictions, would allow for the seizure of funds obtained by, or used for, bribery.
While this saga plays out in California, the RCIPS are currently investigating the death of another Swiss banker working in Grand Cayman. Frederic Bise was found dead in the back of his burning Mitsubishi Outlander on Friday, 8 February.
First appeared in the: Grand Cayman News
I’m just curious as to who the federal judge is that granted the restraining order. Considering the number of cases protecting the rights of publishers in situations like this, I don’t understand how he/she could have granted it in the first place.
The fact that an ENTIRE website was shutdown appears very strange. Why not cause removal of the alleged offending material rather than shut an ENTIRE website down. That is like shutting all of BP of some other oil company because an explosion happened at one of their plants.
- that would have been his honorable Jeffrey White.
- This is not a 1st amendment case. There are various laws restricting what is allowed to be published in the United States. Since Wikileaks was not represented at the trial the judge had no choice but to accept the Bank’s statements as true. The judge was unable to issue an injunction to Wikileaks to remove particular documents because he did not know the identity of the owners of Wikileaks. Hence, his only available alternative was to use brute force and issue an injunction to the DNS register.
Date
Shouldn’t the date of the press release be February 20th, 2008, not 2007? I’m new here and didn’t feel comfortable editing it myself, but it seemed to be erroneous to me.
Real Questions
Who is responsible for making the decisions that are affecting Wikileaks, Rudolph Elmer, and others? Does anyone have any feedback to provide?
Someone in this group is clearly one of several people responsible for the reprehensible behavior of this company. Do your civic duty and lawfully show these people that people who do the right thing still exist, and, our voices do not go unheard. Maybe it is time Wikileaks and their users started digging more deeply on those who don’t like their business exposed.
Answer to “real question”
It is very likely that Dr. Raymond J. Baer and Johannes de Gier, CEO, are the drivers behind all of this because it is now all about the Bank’s reputation!