Rudolf Elmer – the man who exposed the dark side of global finance

Mr Elmer, can you tell us about yourself?

I am a CPA having worked for Credit Suisse, KPMG, Julius Baer, the Chinese Noble Group and Standard Bank for Africa. Locations where I have worked include Switzerland, New York, Cayman Islands, Jersey, Isle of Man and lastly Mauritius. I consider myself an expert in offshore business due to the fact that I held several positions from Chief Operating Officer, Compliance Officer, Investment Manager and even designer of alternative investments such as capital guaranteed products.

When precisely did you witness unfair, illegitimate and/or illegal behavior within your company, and what was it that you witnessed?

Working in the Caymans from 1994 to 2002 when I became part of the inner circle, I started to realize that there were opaque business practices with respect to the bank's business. At the beginning it looked like tax efficient structures related to Switzerland only and only to the bank. I thought it was not that dubious and was informed that headquarters in Zurich agreed with Swiss tax authorities. Unfortunately, that was not the case, and it became worse due to several deals made in a kind of shadow banking system. When I was fired in 2003 I reviewed in detail the trust and company data. I was a Compliance Officer and some of the critical information was withheld by the local management. I discovered evidence that the bank actively promoted tax evasion and provided secrecy to criminal clients, clients who already had been sentenced to up to 15 years of imprisonment due to drug dealing and murder. Read about the matter is the article from The Guardian newspaper “Isle of Plenty” and “A rare glimpse into the offshore world” both edited by well-known investigative journalist Nick Davies.

What was your reaction to that? Did you discuss it within the company?

I was known in the Cayman organization and even in Zurich as a critical thinker and have addressed issues since 1998 with management. They listened to me but not much changed, a kind of willful blindness. On the other hand, it is extremely dangerous on an island like Cayman to challenge the banking industry. It is state policy, and it means you would become an enemy of the state. Frederic Bisze, a Swiss banker, was murdered brutally in the Cayman Islands in February 2008. There are more stories in the other 80 known tax havens. Exposing yourself in a secrecy jurisdiction like this can become a matter of life and death.

What are the institutions or organizations (other than Wikileaks) you approached to make that information public, and what were their reactions?

I approached the local tax authorities in Zurich, the federal tax authorities in Switzerland and even the federal prosecutor, but I have not been listened to. My complaints were turned down for strange reasons – I mentioned before that it is state policy to protect the financial industry. If an investigation were carried out, for instance, in Switzerland against UBS, Credit Suisse or the largest private bank, Julius Baer, it would send a message such as “Tax evaders are not safe anymore in Switzerland or any other secrecy jurisdiction.” Clients would notice such investigations and possibly withdraw their funds. This would happen not only in Switzerland, but all secrecy jurisdictions. There is a protecting hand over the industry. Finally, I approached Swiss newspapers which preferred to write about the whistleblower (that is me) as mentally ill and/or out for revenge. Articles did not mention any wrongdoing by the bank in the Cayman Islands. The bank's tactic of retaliation was clear: focus on the whistleblower, not the wrongdoing, fabricate a case against the whistleblower, threaten him, isolate him, physically and psychologically attack him and his family, paralyze his career by blacklisting him. Fortunately, The Guardian and Wikileaks disclosed the bank's wrongdoing to the public.

How did you hear about Wikileaks, and how did they react to your request when you approached them?

I searched the internet and came across Wikileaks' page. I contacted them and discussed the matter at length because I wanted to be assured that they would not abuse the information to make money. This was after I experienced defamation, criminal charges, blackmail and psycho-terror. Wikileaks rescued me. Otherwise, the powerful would have won in the sense of “Rudolf Elmer is a psycho, a criminal and only out for revenge." I consider myself a pioneer who made Wikileaks known worldwide in 2008. It was a relief that “free speech and free press” really existed in a country with powerful politicians like the United States.

You have chosen to give Wikileaks data in a nonanonymous way– it was made during a public event announced in advance. What was your motivation for making it broadly known?

I put my name on my first whistleblower letter to Wikileaks. It gives more credibility to the fact that falsified data was published. Because it was an act of civil disobedience, my name was necessary. It was the right thing to do because Wikileaks supported my cause, translated to English my complaint to the European Court of Human Rights and wrote the story, “Is David Helvetic and Goliath a Bear?” After having tried to create awareness of the issue for six years, the public got involved and learned about my fight.

As someone who chose to blow the whistle in a nonanonymous fashion and dealt with the consequences, how important do you think it is to allow whistleblowers to denounce government and corporate malpractice in an anonymous way?

I think the world “denounce” is the wrong word. It is about spotlighting malpractice. Due to my experience, it is key that malpractice can only be made known to society in an anonymous way. Governments and corporations give whistleblowers and their families a terrible time, using all methods to intimidate a whistleblower. There is no protection for whistleblowers or people who perform civil disobedience. It is a shame, and it is even a crime in my view but it is reality. Telling the truth on the financial industry is a no-no!

After handing over data to Wikileaks in London, you were arrested and put in jail two days later when you set foot in your home country Switzerland. What were you accused of?

I am accused of having violated Swiss bank secrecy.

You remained in jail since and were freed only on July 25. What was the “official” reason for jailing you for so long, and what do you think is the true reason?

The official reason is violation of Swiss bank secrecy. About the true reason – I do not want to make a statement for the moment because it is an ongoing investigation. However, somehow I feel that my family has become a victim of sorts to strengthen Swiss bank secrecy.

As opposed to governments that can be manipulated through more or less official lobbying, it is hard to imagine how prosecutors can be manipulated by corporations and high net-worth individuals. Can you shed some light on this?

I think the word “manipulation” is not the right term. You have to look at the matter in a bigger context. If secrecy laws become part of state policy to protect a certain kind of business, then it is a different ball game. States have interest, and prosecutors are part of the state; therefore, they have to do what is in the best interest of the state. Certainly, some prosecutors and even judges are aware that principles of legality become questionable, but the interests of states are superior to any laws. That is one of the key insights I learned on my odyssey through eight secrecy jurisdictions where I worked.

What was the role of mass media during your struggle?

The mass media was interested in my concerns. They supported my initiative in one or another way. As a CPA I like facts; reporting is based on facts and figures. In my case I do not really mind anymore. I know the game is “If you cannot destroy the evidence, then beat the witness.” That is happening with some media; others report facts. Since it has become a public issue and society talks and thinks about it, that is what I wanted to achieve. I have a positive nature and think the truth will surface; that is my contribution to a better world. As a Swiss citizen, I feel sad that some Swiss newspapers reported negatively about me even though I know many Swiss would not accept abusive business practices in the banking industry. On the other hand, if I were English or American or whatever and raised issues as I did in my home country, the media would not have reported things differently. Most media are controlled by the same powerful entities.

Do you think that journalists are playing their role of investigating and holding power to account?

Some are, and some are not. Good investigative journalism is unfortunately expensive, and so is trying to inform society on the ways that powerful financial institutions, multi-national conglomerates and ultra high net worth individuals operate. Journalists should take social responsibility as others do!

Was there an investigation by the Swiss (or other) authorities about the possible tax-evaders that you tried to expose?

There are some investigations going on which were made public, but you do have tax secrecy, bank secrecy, professional secrecy, etc which prevent others from being made public. This does not permit society to learn about tax evaders and other criminals being investigated regarding my case.  An approach to “name and shame” tax evaders would change the matter considerably.

What was the general position and reaction of Swiss authorities toward you?

Today, I feel I am an enemy of the state, and my civil disobedience is not liked at all. I am outspoken, and that is something that creates tremendous problems in a secrecy jurisdiction. 

Switzerland is generally regarded worldwide as an advanced society.  After what you went through, do you agree with this?

I agree it is an advanced society, and Switzerland has plenty of great people. I am convinced there is respect of working attitude, reliability and tolerance in general, but when it comes to money, human values are disappearing, particularly in the upper class. This is human nature. In respect to what I and my family went through, I assume if this happened in another country I might not be alive anymore.  What I still do not understand is that my family has not been offered a witness protection program in Switzerland due to the fact that the government could have collected millions of taxable funds. I am convinced there remains archaic legislation. However, those are symptomatic in secrecy jurisdictions.

Instead of focusing and trying to know more about the possible tax evaders and the system that protects them that you tried to expose, the mass media focused more on you and your judiciary nightmare. “Shoot the messenger” seems a consensual reaction when citizens try to expose system's malpractices. Do you agree with this?

It is simple and efficient to focus on the person and the judiciary nightmare because the facts about malpractice are a bit more complex, and the will was not there to make any statement about “dirty conduct in business”. It is not only a political issue, it is also an economic issue in which financial institutions, multinational conglomerates and ultra high net individuals make a lot of money profiting from tax, legal, regulatory loopholes in secrecy jurisdictions. Therefore, I agree with your statement.

Whistleblowers (and even alleged whistleblowers) are generally subjected to smear campaigns, like Julian Assange “the cat torturer and rapist," and Bradley Manning “the mentally disturbed homo.” What kind of smear campaign has taken place against you and by whom?

It was and still is an orchestrated smear campaign by Julius Baer, the Swiss bank, audit companies and the media. It started with private investigators operating in a way my family and employees of mine, neighbors etc. could notice. Basically, it was about blackmailing me publicly. Harassment came in different ways and the police as well as prosecution performed willful blindness. In simple terms, I was defamed, criminalized, made to appear pathological and terrorised in many ways. The goal was to drive me mentally ill and provoke a violent action which would have closed my case. However, I believe in non-violence. A judge wrote to me “You are more dangerous for the system that the Red Army Faction or the Red Brigade were because you do not use any violent action, you use figures and facts and that makes you a dangerous person or even an enemy of the state.”

Have you and your family been subjected to intimidation or threats? When, by whom and in what form?

There were plenty and it was no longer bearable. I am still suffering from post traumatic stress disorder, and my daughter has similar problems. More I do not want to say.

Julian Assange said in an interview that Wikileaks has been offered to return the data you gave it against your release, making you some kind of hostage. Can you tell us more on that?

It is an on-going investigation, and therefore I cannot make a statement. However, I know Julian Assange supports me whenever and wherever he can and I am thankful for that.

Julian Assange says that, because simple citizens do not hold any special power, they should be protected with the right to privacy, while the powerful entities of society (governments, corporations) should be closely watched and be subjected to sufficient transparency to avoid abuse. What is your comment on that, and how does it apply to what you have witnessed?

As of today the fact is that privacy laws such as Swiss bank secrecy protect not only the citizen but also and more importantly financial institutions and multinational conglomerates. Therefore, there is no transparency related to the latter two categories. Transparency is a must and not a nicety to have to avoid abuse. It is not only transparency, it is also protection to citizens who bring abusive practice to light. That is missing as well for clear reasons. Julian Assange is right, and if it were to change society would aim for better values than money!

In your opinion, what is the limit that government or corporate secrecy should never cross?

Criminal behavior and violation of human rights.

While you were in prison, and despite the Obama administration’s witchhunt against whistleblowers, the pro-transparency movement reached another level, with the AntiSec movement, through which Anonymous and LulzSec pledged to expose government and corporate wrongdoing with their means (hacking and cracking servers). Also, several Wikileaks-like outfits have appeared (HackerLeaks, LocalLeaks, BrusselsLeaks, Corporate Leaks). What do you think of these developments, which reflect the empowerment of citizens thanks to information technology?

Generally speaking, I think it is a good movement but it also has it risks. There is empowerment of citizens but it also needs to be taken carefully. There is plenty of information out there that citizens not only have the opportunity but also the responsibility to make a judgment about: is it a trustworthy information, is it useful and is it important? My hope is that this will bring the world to another level.

Iceland, which is a country that went through a major economic and political crisis due to the opacity of its financial system combined with the financial crisis, is working on a law, IMMI (the Icelandic Modern Media Initiative), that intends to better protect the media and their sources in order to avoid similar disasters in the future, by making the exposure of malpractice easier and less legally risky. Do you think such a law is important regarding your experience with the financial and the judicial systems?

Yes, such a law is extremely important. However, it does not solve the fact that major media are controlled by the financial industry and multinational conglomerates. It is a step in the right direction but at the end of the day truth tellers have to be protected by society because the powerful have plenty of ways to retaliate. If such laws were in place, some say financial crises can be avoided in the future. That is naïve to believe. Based on my experience the most efficient way is through anonymous whistleblowing to a credible whistleblower site.

What are in your opinion the greatest barriers in the fight for transparency and accountability, and how could they be overcome?

There are plenty of barriers. It is money, power, status of people, interests of states. An approach is that people start to think globally: there should be a global commitment to change the financial industry, there should be a global action, and the human aspect should be a major part of any decision taken.

You have founded a counseling center for whistleblowers. Can you tell us more about this initiative and how potential whistleblowers get in touch with it?

They can get in touch with me via email. However, I do not want to receive any information but I will tell them what they have to consider before blowing the whistle: call it a whistleblower survival guide. There are plenty of issues which a potential whistleblower must think about beforehand and not learn after the fact at his expense.

What advice would you like to give to potential whistleblowers to make their action the most effective while exposing them to the least burden?

It is anonymous whistleblowing that I recommend; however the whistleblower must still be willing to run a campaign against major abusive behavior. However, anonymous whistleblowing might not have the necessary credibility to change things!