Bloomberg News

Julius Baer Says Employee Stole German Offshore Client Data

August 27, 2012

Julius Baer Group Ltd., the Swiss wealth manager established in 1890, is contacting German customers after an employee stole information on their offshore bank accounts in Switzerland.

“We launched an internal investigation and we discovered a case of data abuse,” Jan Vonder Muehll, a spokesman for the Zurich-based bank, said today by phone. “We are in contact with potentially affected clients.”

The suspected data thief was fired by the company and arrested, according to Vonder Muehll, who declined to give further details of the theft. SonntagsZeitung reported the information theft yesterday, citing an interview with Julius Baer Chief Executive Officer Boris Collardi.

U.S. and European authorities are analyzing information from thieves, whistle-blowers and client disclosures to probe the alleged role of Swiss banks in fostering tax evasion by wealthy customers. North-Rhine Westphalia, a state run by Germany’s Social Democratic Party, has regularly been the subject of reports it bought CDs with stolen Swiss bank account information on rich Germans.

“These presumed data purchases are making Germans with untaxed Swiss accounts more nervous and a voluntary disclosure is usually the cheapest way to resolve the situation,” said Gerd Kostrzewa, a lawyer working in Dusseldorf and Zurich for Heuking Kuehn Lueer Wojtek. “North-Rhine Westphalia will keep buying data and increase its prosecution efforts.”

Jail Threat

Julius Baer said Aug. 22 it had contacted some German clients because of speculation over data theft and the acquisition of CDs by German authorities.

Switzerland’s Office of the Attorney General is investigating the data theft, Jacqueline Buhlmann, a spokeswoman for the office, said in an e-mailed statement. The suspected data thief is still being detained, she said.

Zurich’s police department declined to confirm whether it was involved in the matter. Swiss secrecy laws threaten bank employees with a jail term if they divulge client information.

Julius Baer rose 1.1 percent to 32.04 Swiss francs in Zurich trading, paring this year’s decline to 13 percent and giving the bank a market value of 6.29 billion francs ($6.6 billion).

Tax authorities have increasingly been offered secret bank information since Germany in 2009 prosecuted tax evaders, including former Deutsche Post AG (DPW) Chief Executive Officer Klaus Zumwinkel, using the information bought from a former computer consultant at LGT, owned by Liechtenstein’s princely family.

Customer Data

UBS AG, Switzerland’s biggest bank, and Coutts, a subsidiary of Royal Bank of Scotland Group Plc, have both said in response to German media reports over the summer they haven’t found evidence of staff stealing customer data.

Merrill Lynch Bank Suisse SA has also investigated the possibility of data theft, said Valerie Bastardoz, a Geneva- based spokeswoman, who declined to comment on the outcome of the inquiry. Julius Baer agreed two weeks ago to buy Bank of America Corp.’s Merrill Lynch wealth management units outside the U.S. for about 860 million francs.

Baer has opened offices in Munich, Wurzburg and Kiel in the past three years as it tries to retain offshore clients repatriating money to Germany. While the onshore business, which also has offices in Dusseldorf, Hamburg, Stuttgart and Frankfurt, attracted inflows in the first half of this year, it wasn’t profitable, Baer said last month.

Swiss Haven

“Most Julius Baer clients I’ve seen have kept their offshore accounts after disclosing their affairs to the authorities,” Kostrzewa said. “There’s still a demand for banking in the Swiss haven given the level of uncertainty in the euro region.”

Julius Baer agreed last year with German authorities to pay 50 million euros ($63 million) to end an investigation over undeclared client assets in a separate case of data theft.

Rudolf Elmer, who worked for Baer’s Cayman Islands unit until December 2002, handed over data on about 2,000 cross- border accounts to WikiLeaks’ founder Julian Assange last year. Elmer was later detained by Swiss prosecutors investigating whether he broke banking secrecy laws.

Julius Baer is one of 11 Swiss financial firms under investigation for allegedly helping Americans hide money from the Internal Revenue Service and expects to pay a fine to the U.S. authorities as part of a settlement.

To contact the reporter on this story: Giles Broom in Geneva at gbroom@bloomberg.net

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net


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