Whistleblowing debate heats up

Whistleblowers are heroes to some, villains to others AFP

The investigation of a prominent Swiss politician and the indictments of German tax officials have again highlighted the dangers of whistleblowing in Switzerland.

This content was published on April 9, 2012

Despite impending changes to Swiss employment laws to toughen sanctions against unfair dismissal, Switzerland continues to beat about the bush concerning the thorny issue of workers going public with suspicions of corruption.

Several cases of whistleblowers getting their knuckles rapped in the past two years appear to demonstrate that Switzerland is no place to take such risks – unlike the United States, where the law actively encourages and rewards such activity.

In January, Swiss National Bank chairman Philipp Hildebrand was forced to step down because his wife had made contentious currency trades. His fate was sealed when his personal banking details were leaked to the press.

In connection with the case, a former Bank Sarasin employee was sacked and faces legal prosecution along with an unnamed third party. Prosecutors are also investigating the role of Swiss People’s Party figurehead Christoph Blocher – ironically a staunch supporter of banking secrecy – in the affair.

“Fear” of whistleblowing

In December 2011, the Federal Court upheld the conviction of two former Zurich social security department employees for industrial espionage. The workers had leaked concerns of misappropriation of funds to the press following an unsuccessful attempt to force action from bosses.

Zora Ledergerber, a whistleblowing expert at the Basel Institute on Governance, complained that the women’s fine sent out the wrong signals and reinforced prejudices in Switzerland.

“There is no conscious culture of whistleblowing in Switzerland. People are afraid that this will lead to a negative culture of malicious snitching to hurt others,” she told

“But if companies set up proper systems, they would find that employees would come forward in a responsible manner. Only one in 100 cases would be reported in bad faith.”

The Swiss Employers Association took a different view at its annual press conference earlier this week, with director Thomas Daum condemning public sympathy for whistleblowers.

“It destroys the bond of trust between employers and employees, without which a profitable working relationship is not possible,” he said on Monday.

Bank data theft

Daum also blasted a growing groundswell of political support for new legal measures to encourage more whistleblowing. He argued that proposals to give the green light for employees to go public with concerns could be dangerous for Swiss firms.

“The whistleblower is to decide if an abuse has damaged the public interest. Could they do that?” Daum asked.

“The whistleblower is to decide whether the employer has reacted with sufficient purpose and in a timely manner. Are they in a position to dictate the speed at which an employer acts?”

Such grey areas only emphasise the need for more concrete laws surrounding whistleblowing, according to Ledergerber.

But the cause of the pro-whistleblowing camp has not been helped by the theft and lucrative sale of Swiss bank data to foreign countries in recent years. Germany has paid millions of euros to get its hands on the information as it tries to weed out tax evaders.

One former Credit Suisse employee, an Austrian national, is behind bars after being caught selling data.

German indictments

But a more significant move was the recent issuance of arrest warrants by the Swiss authorities against three German tax officials who purchased the information. The news has poured oil on an already volatile social and political row between the two countries just as they were negotiating a withholding tax treaty – signed on April 5 – to deal with tax evasion offences.

The issue raises the question of when is a whistleblower acting in the public interest and when is an individual motivated by spite or personal gain. Considering the strictness of Swiss banking secrecy laws, the judgement usually falls into the latter category.

Former Julius Bär banker Rudolf Elmer was pilloried in Switzerland after giving data to the WikiLeaks website alleging that the bank turned a blind eye to tax evasion.

A Swiss court in January last year judged that Elmer had been acting out of malice after being sacked by the bank. Despite being freed with a suspended fine, Elmer is appealing the decision.

Bradley Birkenfeld is languishing behind bars in the United States after blowing the whistle on UBS helping clients evade taxes. His offence in the US was not revealing everything he knew, but the Swiss authorities are more concerned about what he did reveal rather than what he held back.

Birkenfeld’s evidence led to UBS being forced to hand over the names of thousands of clients to the US authorities.

Slow changes

But such changes are taking places, albeit at a snail’s pace. In 2007, parliament approved a revision of the employment law that increases the fine for wrongful dismissal from six months of a worker’s salary to 12 months. The law has yet to be implemented.

“Employees would still not have the right to be reinstated into their old job,” complained Ledergerber. “Switzerland is a small country, and once someone gets a bad reputation it might take years for them to find work again.”

Politicians are also in the early stages of debating changes to the criminal law code to give whistleblowers more protection. The Department of Justice told that an announcement would be made in the near future, but declined to give details.

Famous Swiss whistleblowers

In 1973, Stanley Adams blew the whistle on his employer – pharmaceutical firm Roche – for illegally fixing the prices of vitamins. Adams was arrested and held in prison, only to be released when his wife committed suicide. Adams was compensated by the European Commission, which inadvertently leaked his name to the Swiss, but also served five years in Britain for the attempted murder of his second wife.

Before Bradley Birkenfeld, Switzerland’s most notorious whistleblower was Christoph Meili. In 1997, the Union Bank of Switzerland night watchman informed Jewish societies in the US that the bank was shredding documents about dormant Nazi era bank accounts.

The leak led to an international scandal and a hefty financial settlement from Switzerland to the injured parties. Meili fled to the US to avoid prosecution in Switzerland but returned in 2009.

Rudolf Elmer worked for Julius Bär bank in the Cayman Islands but was dismissed in 2002. He then went public with documents claiming the bank helped tax evaders.

After being arrested and later released in Switzerland in 2005, Elmer gave documents to the WikiLeaks website. He publically repeated this act in January 2011 before being found guilty by a Swiss court of acting with malicious intent – a conviction he is appealing.

Elmer was re-arrested after the court case – in connection with his public Wikileaks appearance in January 2011 – but was released months later.

Bradley Birkenfeld worked for UBS until resigning in 2005 and going to the US authorities with evidence that the bank had aided and abetted tax cheats.

His evidence was instrumental in prosecuting the bank and forcing it to hand over thousands of client names. But Birkenfeld was sent to jail in the US in 2010 for failing to give a full account of his part in the tax evasion activities.

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