“Betrayed” bankers sue after US names transfer

Credit Suisse chief executive Brady Dougan has said bank staff who followed the rules "don't need to worry" Keystone

Dozens of bank workers are queuing up to sue their employers and the Swiss government for handing their names over to the United States authorities in connection with tax evasion.

Two test cases, involving five complainants, have already been launched to find out what personal data was transferred to the US and then to issue criminal proceedings against banks and the Swiss state.

Geneva-based lawyer Douglas Hornung, who represents 40 bank workers (two of whom started legal proceedings last week), said they felt “betrayed” by an April 4 Swiss government order to give data from five major banks to the US.

The decision was taken to avoid full blown criminal indictments against the banks that are suspected by the US of aiding and abetting tax evasion.

Some 10,000 files were relayed to the US Department of Justice containing written correspondence and notes of telephone calls made between bank staff and US clients. Some of this data has been used to identify specific bank staff.

Hornung said that one of his clients, a 24-year-old female office assistant, had been told by her bank not to travel abroad for fear of her being extradited to the US. “She was just collateral damage as the banks gave everything the US asked for in order to mitigate future fines,” Hornung told swissinfo.ch.

“Laws broken”

The lawyer said the action had breached at least five articles of Swiss criminal law and fears it could pave the way for similar information being given to other countries as Switzerland attempts to negotiate global tax evasion accords.

The Swiss Bank Employees Association has been inundated with calls to its helpline that was set up last month. Most callers have been seeking advice about travelling to the US.

Brady Dougan, chief executive of one of the affected banks – Credit Suisse, tried to alleviate employee concerns in an interview with Le Temps newspaper at the weekend. “Any employee who has followed the rules has no need to worry,” he said.

But April’s mass release of communication between Swiss banks and US clients has given many bank workers cause for concern, particularly as some have not been allowed to see exactly what data relating to them has been passed to the US.

The Bank Employees Association last month called on the government to conclude a deal with the US that protects employees from legal action. The body also called on the US to identify bankers who had not violated laws and demanded that the “unacceptable” transfer of data be stopped in future.

“It is not only the trust of customers in the financial system and the rule of law that has been badly damaged, but also the vital trust of employees towards their bosses,” employees association president Peter-René Wyder said in a statement last month.

“Imagine how employees must feel when, after years of practising discretion, they learn that their superiors have, without legal basis, subjected them to American criminal proceedings.”

Clients’ legal action

Swiss Data Protection Commissioner Hanspeter Thür has also been a vocal critic of the personal information of bank employees being handed over to the US by the Swiss government.

“The government cannot ignore laws concerning the right of privacy of employees in relation to their employer,” he told the Tages-Anzeiger newspaper on Wednesday.

Bank employees are not the only group to have issued a legal challenge to the distribution of data to the US authorities. Some 380 UBS clients appealed against the handover of their account details after a 2009 deal was reached between Switzerland and the US.

But last year the Swiss courts upheld, or partially upheld, just 100 of the cases and most of the 4,500 client files have already been transfered.

One UBS customer – also a client of Hornung – has taken his appeal to the European Court of Human Rights in Strasbourg. Banks are also bracing themselves for a potential flood of compensation claims from their clients.

Hornung expects a ruling on the latest round of legal action – by employees – to be reached by the end of this year.

Tax evasion storm

UBS was the first Swiss bank to be investigated by US prosecutors for tax evasion.

It was forced to pay a $780 million fine for helping US citizens avoid paying tax.
 
A year later, the Swiss government agreed to hand over the names of 4,500 American UBS clients, a decision ratified by parliament in 2010. 
 
US tax amnesties saw 30,000 American clients of Swiss financial institutions admit to having undeclared accounts abroad, providing the IRS and the justice department with proof they were aided and abetted by Swiss banks.
 
A number of Swiss bankers and lawyers were arrested or indicted in the US, including three managers at the Wegelin private bank. In January, Wegelin announced most of its activities had been ceded to the Raiffeisen group.
 
A few days later in a first for a foreign bank, the US authorities indicted Wegelin for helping clients defraud the IRS.
 
Eleven Swiss banks are under investigation in the US. Talks are ongoing between the US and Swiss authorities to find a global solution to the crisis.