Money Shekels bills 521.
(photo credit: Courtesy)
A few days ago the Julius Baer saga came to an end, as the private Swiss bank agreed to pay about 50 million euros to the German government to settle charges that the bank aided German depositors in evading taxes in Germany.
According to the settlement, the bank does not admit any wrongdoing and Germany will not pursue charges against the bank or its employees.
The most interesting ethical wrinkle in this story is the extent to which the case against Baer was built on evidence that was illegally obtained.
The first evidence came to light in 2008 in documents leaked to
WikiLeaks by Baer employee Rudolf Elmer. Much of the data disclosed by
Elmer was confidential, and Elmer was convicted in Switzerland for some
of his disclosures. (The bank claims that some of the document are also
forged.) Subsequently in 2010, the German government made a
controversial step in purchasing documents that had been stolen from
What are the limits on using illegal means to obtain evidence, or on
using evidence obtained by illegal means? It is useful in this regard to
distinguish three levels of complicity: The most severe level is
evidence obtained by illegal acts of the authorities: When the
authorities themselves breach the law, for example by searching without a
valid warrant, the evidence is typically not admissible in court. The
“exclusionary rule” applies in this case. The concern is that without
this rule, the police will have an excessive incentive to violate
citizens’ rights in obtaining evidence, and that it is difficult to hold
law enforcements agents accountable for their actions.
The least severe level is where the disclosure was illegal but without
any government complicity. If a private citizen like Rudolf Elmer
decides, for his own reasons, to disclose evidence of wrongdoing the
government has no obligation to close its eyes. Private citizens don’t
have a built-in incentive to ferret out wrongdoing at any price, and
furthermore there is little worry that they will escape accountability,
as Elmer indeed learned. So there was no reason for the German tax
authorities to refrain from combing the Wikileaks documents to examine
what corroboration could be found for them.
The most perplexing dilemma is where the information was obtained
privately, but there was some government complicity, as when Germany
bought the stolen documents pertaining to Baer. Technically, the
exclusionary rule would not apply here.
The German government did not steal the information, and they broke no
German law in purchasing it. But someone who buys stolen merchandise
obviously has some complicity in the crime, and indeed many German
lawmakers were opposed to the very public deal by which Germany obtained
the stolen disks.
There are a number of considerations we could use to weigh this ethical
dilemma. One is proportionality. If vital national security interests
were at stake, the justification for buying stolen data would be
compelling; for the case of a single individual, much less so. In this
case hundreds of individuals were involved, but given that the final
settlement was a relatively paltry fifty million euros, it seems that
this consideration alone would not justify complicity in having Swiss
citizens break Swiss law.
Another consideration is the equity of the original law. No state feels
bound to give support to the laws of another country when they consider
those laws improper or detrimental to their own interests. This
consideration is much more germane. Germany doesn’t have any problem
with the Swiss laws governing purloining confidential information, but
they have a big problem with what the Swiss law allows to be
confidential in the first place. Switzerland has very strict banking
secrecy laws which Germany feels are abetting Germans to break German
law. There is a certain audacity for Switzerland to complain that German
actions are encouraging Swiss citizens to break Swiss laws, when those
Swiss laws themselves encourage Germany citizens to break the law of
their own country.
The best way for countries to deal with objectionable foreign laws is
through diplomacy, not through rewarding their breach. This is
particularly true when the benefit from the breach is relatively small.
But the German case does have some redeeming features. One is that the
case involved a large number of individuals, and German might have
anticipated that it involved much more money than they ultimately found.
But the main redeeming feature is the close reciprocity between the
ethical problem with encouraging breaking the law and the ethical
objection to the law itself, which Germany viewed as encouraging breaking their own law.