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Swiss Bank's attempt to hide money laundering backfires
Swiss Bank Julius Baer convinced Federal court Judge Jeffery White to disable the website wikileaks.org to prevent access to leaked documents that implicated them of money laundering. The ensuing controversy has cast suspicion on the IPO bid of their US operation.
As all financial institutions these days, Swiss Bank Julius Baer has been struggling with the poor economy. They attempted to sell of their US asset division but could not find a buyer. Meanwhile, rumors spread that the bank was desperate to sell off their operations due to massive withdrawls and slower growth than their competitors.
On February 12, the Bank filed an initial public offering for its US operation under the name Artio Global Investors, Inc. There remained one problem with their bid. A former Vice President, Rudolf Elmer, released documents which allegedly implicated the Bank's Cayman branch in money laundering and tax evasion schemes. The documents were posted on the internet website wikileaks.org.
The next week, Julius Baer quietly filed papers in U.S. District Court (San Francisco) asking the site to be shut down, preventing public access to the documents. They claimed that the documents were obtained illegally. Federal court Judge Jeffery White agreed and ordered the website hosting service, Dynadot, not only to disable access to the offending documents, but to disable the entire website permanently. Unfortunately, his order required emailing the order to the owners of the website after it had already been disabled. Wikileaks was not given advance notice to be present in the court and therefore, the website owners were never notified of the ruling.
Taking advantage of this loophole, the site owners moved the site offshore, out of US jurisdiction. Even though the domain name remains locked, the contents are still available through a variety of "mirrors" which host copies. The New York Times reported that the websites wikileaks.be, wikileaks.org.uk are still active, along with direct access through their IP address of http://220.127.116.11.
The internet community was outraged at this apparent violation of free speech. Never before in the United States had an entire media system been disabled due to individual contents. The unintended consequence has been a sudden worldwide interest in the Julius Baer IPO and their operations in the Cayman Islands.
The Bank's intent was to silence the issue but instead, it has become one of the most hotly debated subjects on the internet this week, featured online not only in the New York Times, but also in Newsweek, Christian Science Monitor, CIO Today, San Jose Mercury News, Techworld, ZDNet, along with hundreds of other media outlets, First Amendment discussion forums and "weblogs." Most constitutional scholars agree that the ruling appears to violate the First Amendment, which guarantees free speech in the United States.
Since the controversy has begun, Judge White has reduced his ruling to a temporary injunction and has given Wikileaks a chance to respond to the allegations. The order will be reviewed at a hearing scheduled for February 29.
Wikileaks and Juilus Baer declined the opportunity to contribute to this article.