Swiss Banker Guilty of Corporate Espionage for Leaking Data on Tax Dodge

(Bloomberg) -- A Zurich court convicted a former employee of Bank J. Safra Sarasin AG of one count of corporate espionage for leaking internal documents about a controversial tax deal.

The man, who can only be identified as Volker S., was found guilty Thursday of giving a journalist the information, which was used by German authorities in a probe of the tax-avoidance programs. He was acquitted of four other charges against him.

Judge Sebastian Aeppli ruled that the man’s former colleague, Bernhard V., and Eckart Seith, the German lawyer at the heart of the case, were both guilty of lesser violations of the Swiss Banking Act in the case but acquitted both men of four other charges against them.

Volker S. was given a 13-month suspended prison sentence and a fine of 20,400 Swiss francs ($20,380). Seith was fined 165,600 Swiss francs, while Bernhard V. received a fine of 129,600 francs. Neither Seith nor Bernhard V. were given a prison term.

The fines don’t have to be paid if the men don’t break the law during a two-year probation period. All three men had faced a prison sentence of up to three years if found guilty on the most severe espionage charges.

Judge Aeppli ruled that charges of spying and breaking business secrecy couldn’t be proven because the documents ended up being used by the plaintiff in the German lawsuit, not a third party, and that Sarasin no longer offered the investment products described in the documents, “which is why they were not relevant for maintaining the bank’s competitiveness.”

Seith’s acquittal on espionage charges represents a modest victory for his supporters in Germany, who argued that his actions helped bring down tax evaders who exploited the cum-ex investment vehicles for their own illicit gain. The deals, which involved multiple tax credits on dividend payouts, have sparked a scandal in Germany, with lawmakers estimating it may have cost the government 10 billion euros ($11.3 billion) in tax revenues.

Seith represented a German billionaire, Erwin Mueller, who won 45 million euros in a lawsuit against Sarasin over investments that took advantage of cum-ex investments. Zurich prosecutors had invoked Swiss bank secrecy statutes to argue the three men colluded to steal confidential bank data they could use to win a German lawsuit against the bank.

Corporate espionage and banking secrecy are frequently invoked in white-collar prosecutions in the Alpine nation. Swiss prosecutors have repeatedly gone after local bank employees such as Herve Falciani and Rudolf Elmer for breaking secrecy laws despite revelations leading to major tax investigations in France and Germany.

Seith looked displeased as he walked out the courtroom but couldn’t immediately be reached for comment. Lawyers for the two bankers couldn’t immediately be reached for comment.

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