Law360 reports on a former HSBC employee wanted by Switzerland for allegedly leaking information about important clients to tax authorities who was released from custody in Spain. Herve Falciani was arrested last week by Spanish police on an international arrest warrant. Falciani had been sentenced to five years in prison by a Swiss court who tried him in absentia for industrial espionage related to violations of Swiss bank secrecy laws. Spanish authorities are considering an extradition request from Switzerland and have revoked Falciani’s passport to prevent him from leaving the country. These developments come as the European Commission considers approving a new directive to provide whistleblowers with greater legal protection.
The new directive was approved by the European Parliament on October 14th, 2017 and is up for approval at the European Commission on April 17 of this year. German MEP Sven Giegold, who is expected to endorse the new directive, said “We have asked for this directive for years, the Falciani case shows just how needed it is.” Giegold further supported his position by saying that authorities in France, Germany, and Spain have benefitted from the information brought to light by Falciani with Spain alone recovering 260 million euros in lost taxes.
The new directive would create a special unit within the European Parliament with facilities to handle information from workers who leak information relating to financial matters within the EU. This would occur instead of allowing the whistleblowers to be persecuted. The unit would also be available to advise whistleblowers on any retaliation protections until a fully independent EU body could be established.
For its part, Swiss authorities say Falciani stole documents from HSBC and tried to sell the documents to banks in Lebanon. The documents allegedly showed HSBC bankers trying to help European clients to get around a tax on bank deposits by transferring ownership of accounts from individuals to corporations.
Many whistleblower attorneys abroad support MEP Giegold’s view that more whistleblower protections are necessary. Whistleblowers are providing vital information to tax authorities that are helping them recover money but face the specter of prosecution in their home countries due to a lack of protections from strong secrecy laws. The special unit to handle whistleblower claims would simultaneously protect whistleblowers and give them a forum to bring claims of fraud or fraudulent schemes to light. It remains to be seen whether the European Commission sides with whistleblowers or banks on April 17th.
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