When to "Do the RIght Thing"

The public likes to laud those who "do the right thing" but the public rarely thinks about what this means to the life of a whistleblower, his family, his future, even his own self esteem. In short, it is easy to picture yourself as "a hero" but it is much harder in the real world to make the decision to destroy your life to "do the right thing".

Here's a bit from the UK Guardian newspaper's article on Rudolf Elmer, the latest high profile person to "leak" secrets to Wikileaks (official site: www.wikileaks.ch). I have bolded the key bit:

The offshore bank account details of 2,000 "high net worth individuals" and corporations – detailing massive potential tax evasion – will be handed over to the WikiLeaks organisation in London tomorrow by the most important and boldest whistleblower in Swiss banking history, Rudolf Elmer, two days before he goes on trial in his native Switzerland.

British and American individuals and companies are among the offshore clients whose details will be contained on CDs presented to WikiLeaks at the Frontline Club in London. Those involved include, Elmer tells the Observer, "approximately 40 politicians".

Elmer, who after his press conference will return to Switzerland from exile in Mauritius to face trial, is a former chief operating officer in the Cayman Islands and employee of the powerful Julius Baer bank, which accuses him of stealing the information.

He is also – at a time when the activities of banks are a matter of public concern – one of a small band of employees and executives seeking to blow the whistle on what they see as unprofessional, immoral and even potentially criminal activity by powerful international financial institutions.

Along with the City of London and Wall Street, Switzerland is a fortress of banking and financial services, but famously secretive and expert in the concealment of wealth from all over the world for tax evasion and other extra-legal purposes.

...

"What I am objecting to is not one particular bank, but a system of structures," he told the Observer. "I have worked for major banks other than Julius Baer, and the one thing on which I am absolutely clear is that the banks know, and the big boys know, that money is being secreted away for tax-evasion purposes, and other things such as money-laundering – although these cases involve tax evasion."

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Elmer has been hounded by the Swiss authorities and media since electing to become a whistleblower, and his health and career have suffered.

"My understanding is that my client's attempts to get the banks to act over various complaints he made came to nothing internally," says Elmer's lawyer, Jack Blum, one of America's leading experts in tracking offshore money. "Neither would the Swiss courts act on his complaints. That's why he went to WikiLeaks."

That first crop of documents was scrutinised by the Guardian newspaper in 2009, which found "details of numerous trusts in which wealthy people have placed capital. This allows them lawfully to avoid paying tax on profits, because legally it belongs to the trust … The trust itself pays no tax, as a Cayman resident", although "the trustees can distribute money to the trust's beneficiaries".

Now, Blum says, "Elmer is being tried for violating Swiss banking secrecy law even though the data is from the Cayman Islands. This is bold extraterritorial nonsense. Swiss secrecy law should apply to Swiss banks in Switzerland, not a Swiss subsidiary in the Cayman Islands."

Read the whole article.

Rudolf Elmer has set up his own web site where he has posted documents. The most significant is an article to be published by the CFA Institute, the official organization of the CFA (Chartered Financial Accountants) Institute which has 100,000 members belonging to 136 societies in 57 countries. The CFA Magazine is published by the CFA Institute and the Jan/Feb 2011 issue has an article on Julius Elmer entitled "Blowing It". Here are some key bits from this article:

In the real world whistleblowers aren’t always celebrated as champions of truth and justice for blowing the cover off illegal or unethical conduct and corporate malfeasance. Instead, they can be ostracized and defamed, and their efforts to do the right thing may cost them their careers.

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In light of the corporate scandals of the late 1990s and the early 2000s (as well as passage of the Sarbanes–Oxley Act of 2002, which imposed tougher corporate requirements), TIME magazine celebrated two corporate whistleblowers for their courageous actions: Sherron Watkins, formerly vice president and managing director of corporate development at Houston-based energy company Enron, and Cynthia Cooper, former vice president of WorldCom. (The magazine also honored a government whistleblower: Coleen Rowley, the U.S. Federal Bureau of Investigation agent who accused her superiors of ignoring terrorist warning signs.) But few whistleblowers are ever rewarded with high praise or even a pat on the back, and many find the aftermath to be very different from what they expected.

Even the much-lauded Enron whistleblower has regrets.

“With the benefit of hindsight, I do not regret that I went to Ken Lay [Enron’s chairman] to alert him to accounting irregularities at Enron, but I do regret that I went alone,” says Watkins. “I should have realized that when speaking truth to power, one has to try to change the balance of power. If five of us vice presidents/managing directors had met with Lay, then he could not have dismissed my concerns as just that of one voice, one opinion.”

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Rudolph Elmer is the whistleblower at the center of a recent and still controversial case. He spent 15 years working for the Swiss investment giant Bank Julius Baer, most recently in the Cayman Islands. Elmer alleges that he became aware of his employer assisting several American clients and others with tax evasion, including his own firm’s attempts to avoid paying taxes to the Swiss government, among other illegal activities. “After having tried, in-house, to solve the issue, I was fired,” Elmer tells CFA Magazine.

Julius Baer has a different version of events. The bank claims that Elmer expressed concerns only after being denied a promotion and further alleges that he subsequently stole internal bank documents, an action for which he was dismissed. In a public statement, a representative of the bank depicted Elmer as a disgruntled former employee who didn’t receive the financial settlement he was seeking.

It took two years for Elmer to get the attention of the proper Swiss authorities. He filed a suspicious-transaction report, but a question of jurisdiction (Cayman Islands versus Switzerland) complicated the matter. He also talked to tax authorities in the United States. Although they were interested in the data, they offered no personal protections, according to Elmer. In 2005, Elmer says he was arrested in Switzerland and jailed for 30 days on suspicion of violating bank confidentiality laws. Three years later, he turned to WikiLeaks.org to get his story out. “Public attention is a kind of security,” Elmer says. To protect his interests, he also hired a lawyer based in Washington, DC, who specializes in legal cases involving money laundering and offshore tax evasion. Elmer will get his day in court in January 2011 when his case, the first whistleblower case to be heard in a court in Switzerland, will begin.

The idea of "whistleblower" brings to mind the case of Erin Brokovich to most people. This was dramatized by Julia Roberts in the epoynymous film Erin Brokovich. That film made clear the difficulties of going up against a powerful corporate interest.

Another classic case of a whistleblower is Jeffrey Wigand, the research scientist, who broke the multi-decade wall of silence and exposed the illegal activities of the tobacco industry. Here on is his own web site where you can read and view material he has posted that documents the struggle to get the truth out and the kind of vindictive punishments the industry threatened and carried out to suppress the truth. Wigand's revelations cost him his marriage and a destroyed career.

The classic case of a whistleblower who pays the ultimate price was Karen Silkwood who died trying to expose illegal activities by her employer. As Wikipedia notes:

She died under mysterious circumstances after investigating claims of irregularities and wrongdoing at the Kerr-McGee plant.

I certainly hope that Rudolf Elmer does not become another person who pays a heavy, heavy price in helping the public by whistleblowing.

And... here is MSNBC's Dylan Ratigan's take on this story: