Former UBS banker turned whistleblower Bradley Birkenfeld has called for changes in the Swiss law to protect whistleblowers, as detailed in a recent interview with Bloomberg BNA. Birkenfeld was awarded $104 million in 2012 by the U.S. government for testifying about Swiss bank UBS’s asset protection programs for U.S. taxpayers. His testimony led to wide-ranging probes by the U.S. government into UBS’s activity and culminated in the collection of more than $5 billion in penalties by the U.S. government. The secretive culture of Swiss banking has been challenged by an increased global (and particularly American) focus on transparency and offshore tax evasion. In recent days, Swiss lawmakers have been considering a new law that would enshrine far more robust protections for corporate whistleblowers within Switzerland.
However, there has been pushback by critics, who claim that such a law would harm the reputation for confidentiality that has made the country attractive to international firms and wealthy individuals with an interest in discretion. Currently, Swiss law carries little protection for whistleblowing employees, who often risk both termination of employment and prosecution in coming forward. The proposed legislation would formalize whistleblowing procedure, requiring employees to internally report complaints at their company and after a period of 60 days, would allow employees to then report the issue to the governmental authorities. However some critics allege that the law would do little to protect whistleblowers from consequences, as an employer could still fire a whistleblowing employee and only be obligated to pay six months’ severance.
The U.S. remains a standard-bearer for whistleblower protection, with a strong regime of protection and incentives for those who come forward, and punishments for those found culpable. While nowhere near as strong as its American counterpart, the proposed Swiss legislation could be an important step toward encouraging financial transparency in Switzerland and the greater international financial community. Going forward, American individuals and businesses holding unreported offshore assets in Switzerland and elsewhere are likely to risk significant consequences as this push for transparency continues.