Website battle taxes Swiss bank

Bär was forced to show its claws Keystone

Swiss bank Julius Bär is facing a titanic battle after a judge overruled a previous order to shut down a website that published stolen confidential client data.

The case had sparked a row over free speech versus banking secrecy. And it comes hot on the heels of the German tax authorities using stolen data from a Liechtenstein bank to crack down on tax evaders.

Campaigning website Wikileaks published what it claimed was evidence of tax evasion and money laundering schemes by Julius Bär customers in the Cayman Islands. The documents were allegedly stolen by a former bank employee.

Two weeks ago, a United States judge closed down Wikileaks with a permanent injunction that is being challenged by the website’s owners. However, the ruling was overturned on Friday following a welter of criticism from bloggers and pressure groups.

Last week, Julius Bär was forced to issue a statement denying it had sinister intentions.

“It is not and has never been Julius Bär’s intention to stifle anyone’s right to free speech,” the bank said in its statement. “Instead, [our] sole objective has always been limited to the removal of these private and legally protected documents from the website.”

Michel Jaccard, a partner at business law firm BCCC Attorneys, specialising in intellectual property and new technologies, said it is simple to shut down a website that infringes third party rights, such a copyright or trademarks.

But the original ruling appreared to be flawed on two counts, he told swissinfo.

“Shutting down the whole website was overreaching because it not only blocked the content at the centre of the dispute but all the other legitimate information on the website,” Jaccard said.

“It was also inefficient because Wikileaks had mirrored the site which could be accessed in other jurisdictions.”

Blogging power

Julius Bär should now concentrate on finding and restraining the source of the information rather than concentrating on the intermediary, Wikileaks, Jaccard added.

The bank could still face a backlash from could come from disgruntled clients.

“The real threat is that the client can file a lawsuit against the bank for breaching the confidentiality agreement between the bank and the customer,” Jaccard said.

Public relations expert Pascale Lehmann told swissinfo that Julius Bär did the right thing to protect its clients’ confidentiality. However, she believes earlier communication could have helped stave off some of the criticism.

“It is very important that the company sits in the driver’s seat. This means being the first to communicate the issue, for example by making an announcement as soon as the lawsuit has been filed,” she said.

Blogging has become increasingly influential in shaping a company’s image, she added.

“They are very fast, accessible for everyone and have a global reach. In addition, bloggers are very involved, have an affinity to the topics they talk about and are well informed,” she said.

German probe

Jaccard agreed that institutions face new problems if they battle with the online community.

“When you take out a suit against the internet then you cannot keep it secret, and you have to rely on a favourable public reaction,” he said.

The issue of banking secrecy and criminal activity was thrown into the spotlight two weeks ago when stolen customer data from a Liechtenstein bank, bought by a German intelligence agency, was used to open a massive tax evasion investigation.

It is questionable whether stolen data could be used in court, but it could lead investigators to new sources of information, experts agree.

swissinfo, Matthew Allen in Zurich

German investigation

Germany’s tax authorities launched a massive crackdown on evaders on February 14 when it arrested the former boss of Deutsche Post Klaus Zumwinkel.

The net has since widened to include up to 1,000 people and hundreds of millions of euros. Several individuals have come forward voluntarily to cooperate with the tax office rather than be arrested themselves.

A Munich branch of Swiss banking giant UBS was raided, but the suspect was a client rather than the bank itself.

However, recent rumours have linked Swiss investment bank Vontobel to the German inquiries. Vontobel said this week it has not been approached while the German investigators have refused to comment.

German Chancellor Angela Merkel has repeated calls for tax haven countries to become more transparent and has visited some of these states to put forward Germany’s case.

Julius Bär

The roots of Julius Bär can be traced back to the creation in 1890 of the bank’s forerunner, Hirschhorn & Grob.

The banker Julius Bär joined the enterprise in 1896 and took complete control five years later, the bank taking on his name.

It opened offices on Wall Street in 1940, in London in 1982 and in Hong Kong three years later.

The bank posted net profits of SFr1.14 billion in 2007, a 31% rise from the previous year. The number of employees rose from 3,684 to 4,099.

It is on the verge of spinning off its asset management business in the US via a $1 billion (SFr1.05 billion) initial public offering, subject to market conditions and regulatory approval.