On October 10, the Swiss Bundesgericht (Federal Supreme Court), by a 3-2 margin, affirmed the acquittal of a former Julius Baer accountant, Rudolf Elmer, who had been charged with violating the banking-secrecy offense in Article 47 of the Swiss Banking Law. Elmer had been chief operating officer of Julius Baer Bank & Trust Company Ltd, a Cayman Islands-based unit of Julius Baer. In 2002, he reportedly was fired because he allegedly was involved in theft of bank data, and subsequently leaked bank client data on several occasions.
The President of the Court of Penal Law, Christian Denys, stated that Elmer, as an officer of the Cayman Islands unit, “was neither an employee nor representative of a Swiss bank” under Article 47, and therefore that Article 47 was inapplicable to his conduct. The majority of the court reasoned, according to Neue Zürcher Zeitung, that Julius Baer “had outsourced part of its business to the Cayman Islands and thereby had placed it under the law there. The motive for doing so played no role here.”
In 2011, Elmer had publicly handed over two CDs reportedly containing bank-client data to Julian Assange of Wikileaks. That act reportedly led to Zurich prosecutors having Elmer detained for 220 days, and eventually securing his conviction on multiple charges under Article 47 in 2015. Elmer was not imprisoned after his conviction, but was given a suspended fine of just CHF 16,800 (equivalent to nearly $17,000).
On appeal, however, the regional supreme court in Zurich reversed the Article 47 conviction, but meted out “a 14-month suspended sentence for sending threatening letters to former colleagues — one of which began ‘Dirty Pig’ and threatened the colleague’s safety — and for falsifying documents.” The Federal Supreme Court allowed that sentence to stand. Elmer’s attorney indicated that his client would not appeal those parts of the verdict, but would appeal the judge’s decision that Elmer bear legal costs that exceed CHF 200,000.
Note: Although various legal developments have been reducing the ambit of Swiss banking secrecy for quite some time, this decision by the Federal Supreme Court appears to establish a significant jurisdictional limitation on the scope of Article 47 – at least if a Swiss bank chooses to take advantage of a foreign jurisdiction’s laws in establishing a subsidiary in accordance with those laws. If that construction is correct, it could give law enforcement authorities in the United States and other countries – in time, perhaps even Switzerland – greater confidence about seeking bank records from such Swiss bank subsidiaries for use in foreign-corruption, fraud, money-laundering, sanctions, and tax-fraud investigations.