Banks, blood and chocolate

Published on Pambazuka, by Khadija Sharife, August 12, 2010.

Rudolf Elmer, whistleblower and former CEO of Swiss bank Julius Baer’s Cayman Island operations, reveals the secrets of the murky world of offshore banking to Khadija Sharife. ‘Mauritius is in many ways the Switzerland of Africa,’ says Elmer, but there is another African nation vying to be the ‘golden’ financial gateway: Ghana.

At one point during our conversation, the phone goes dead. Much later, Rudolf Elmer, one of the world’s most infamous whistleblowers and the former chief executive officer of private Swiss bank Julius Baer’s Cayman Islands operations, would rattle off to me a list of possible intelligence services that might have been involved. 

In Elmer’s native land – Switzerland – blowing the whistle on banking secrecy is a crime. Elmer was imprisoned, his family harassed by private detectives, his daughter stalked at school by men who waited in parking lots, and his wife almost driven off a highway.[1]

‘They offered her chocolate with one hand, and terrorised her with the other,’ he tells me. ‘My wife was followed. My secretary, scared to go to the post office. They put on so much pressure. And, as I discovered, the police, the media – they are all part of the systemic corruption,’ he said. ‘It is just like the mafia, only it’s respectable.’

Through Elmer’s attorney, Swiss bank Julius Baer allegedly offered to pay Elmer over a series of instalments (‘to silence me,’ Elmer says) after he was sacked in 2003 for attempting to change the system from within by demanding that clients cease their tax evasion activities. Julius Baer maintained he was acting out of revenge. Later, to protect his family, and after considering and canning suicide (‘these are the things you think about seriously when your life is falling apart, but it would not be good for my daughter, she needed me,’) Elmer publicly blew the whistle via, among other foreign sources of media. Elmer disclosed the names of accounts of companies, hedge funds, trusts and more than 1,300 individuals with whom he dealt between 1997-2002.

’As a compliance officer,’ he explained, ‘you’re on the frontline, you’re sitting on a barrel of powder and you’re not really sure when it’s going to go off.’ Because he revealed the inner workings of Julius Baer, Elmer has justification to be fearful. He knows, and was told, of some accountants and bankers in Panama, the Cayman Islands and other regions, who have mysteriously disappeared, were threatened or worse, such as Swiss banker Frederick Bise, who was killed and burnt in his car.’

‘The dirty boys, they’re not sitting in the Caymans where people don’t really get a great deal of information. They are “onshore” at the financial institutions, the accounting firms like KPMG, the banks.’ Julius Baer is not the only bank that Elmer has blown the whistle on. Between 2006-2008, Elmer set up the offshore business of one of Africa’s most important financial entities – Standard Bank – transferring 1,400 trusts and hundreds of companies to Mauritius in order to administer and prepare the accounts and services of these entities. ‘I was trained up for Mauritius in Jersey and the Isle of Man before being sent there,’ he stated. ‘There is a lot of British influence: The major banks like Barclays and HSBC have built up major operations and multi-storey buildings in Cyber City south of Port Louis (the capital.) Six years ago there were only five – today, I estimate about 40’ … //

… Ironically, though corporate mispricing accounts for 60 per cent of illicit flight from resource-rich developing nations, specifically those in oil and-mineral rich West Africa, Ghana vies to become the Netherlands of Africa. ‘Under the IFSC, Barclays Bank has been given the license to operate the first Offshore Bank in the sub region.’[10] Cumulatively, US$13 trillion in private wealth is stashed by tax evaders and avoiders in secrecy jurisdictions. If taxed at a moderate 7.5 per cent rate of return, these funds would yield US$865 billion dollars annually.

The Ghanaian government is eager to realise the World Bank’s predictions of Ghana graduating from being a low-income member, such as Chad, through increased GDP. But neither the government nor the Ghana National Petroleum Corporation, headed by Nana Boakye Asafu-Adjaye, former country head for oil corporation Vanco Ghana Limited, appear to have a problem with the current state of arrangements, just six months shy of exploitation.

The paradox? Even as Ghana potentially stands to lose development revenue to ‘onshore’ tax havens like the Netherlands and multinationals, it is aggressively vying to become the Netherlands of Africa.’

Have you seen John Grisham’s The Firm? It’s just like that; except it’s not a few lawyers but the whole political system,’ Elmer warns before our conversation comes to an end. (full text and Notes 1 to 10).

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