A whistleblower reported a Swiss private bank to U.S. prosecutors for violating an offshore settlement, it has emerged. Among his accusations: a Zurich-based bank shielded a gigantic precious emerald from the prying eyes of tax officials. Has IHAG got a new problem on its hands?

The allegations, reported by «Tax Notes» (behind paywall), were made by Swiss tax consultant Rolf Schnellmann against IHAG Private Bank. Reached by finews.com, Schnellmann identified himself as the whistleblower. 

He is the most recent in a series of Swiss private banking whistleblowers including former UBS banker Bradley Birkenfeld, ex-Julius Baer banker Rudolf Elmer, and Herve Falciani, who stole data from HSBC private bank when he worked at the Geneva-based institute as an information technology specialist. 

Like all of them, Schnellmann has his own run-ins with the law: he was convicted by a court in Zurich of embezzlement and improper management last week. 

IHAG Confident

The verdict, which Schnellmann told finews.com he plans to appeal, is the result of a five-year criminal complaint into him, after his relationship with his employer soured in 2010.

Schnellmann came forward as an informant to U.S. justice officials several months before IHAG reached a settlement in the U.S. for helping wealthy Americans cheat on their taxes. The bank, founded in 1949 by a wealthy weapons manufacturer and art collector, agreed in 2015 to pay a nearly a $7.5 million penalty to to avoid prosecution for its wrong-doings with U.S. clients.

The bank voiced confidence that it is out of the woods.

«We have no indication that Mr. Schnellmann's accusations have any effect on domestic or foreign authorities,» IHAG Chief Executive Heinz Stadler said in an emailed statement to finews.com.

$870 Million Emerald

A cursory read of Schnellmann's accusations, summarized in letters to U.S. officials through a lawyer, appear to at least partly jibe with the bank's own admissions to U.S. prosecutors. 

IHAG admitted to using several steps, including with the help of third parties, to strip assets of any sign they belonged to U.S. taxpayers.

The gist of Schnellmann's accusations is that IHAG's deception went further: for example, he maintains that IHAG also set up a fund structure to hide beneficial ownership – the true account holder.

Schnellmann also accuses a Zurich private bank of safekeeping an emerald valued at $870 million for a client who has since died. This claim appears far-fetched: the world's most expensive emerald gemstone, the Bahia Emerald, is valued at $400 million – a 341-kilogram schist.

U.S. Revisits IHAG?

The Department of Justice, or DoJ, must determine if Schnellmann's accusations are compelling enough to warrant revisiting IHAG's non-prosecution agreement. The DoJ didn't comment to finews.com.

«IHAG Private Bank has, within the limits of Swiss law, always been fully transparent, honest and truthful with the Department of Justice, and IHAG will continue to fully co-operate with the DoJ,» the bank's attorney, Marnin Michaels of Baker & McKenzie, said in a statement.

The authority in 2015 credited the bank with fully cooperating, provided information and documents requested on 182 accounts the bank held with U.S. taxpayers. 

«Furthermore, IHAG has always complied and will continue to fully comply with the provisions of and obligations under the non-prosecution agreement,» Michaels said. 

IHAG's Nose Clean

The agreements generally require the banks to keep their nose clean in the U.S. for four years following the settlement – until 2019, in IHAG's case. IHAG is emphasizing that is has been full and fair with the DoJ because it could face serious repercussions if officials discover it hasn't, according to Douglas Hornung, a Swiss-based lawyer. 

«The non-prosecution agreement could be terminated, and criminal procedures against the bank could be launched,» Hornung told «Tax Notes». 

IHAG's situation is akin to that of Credit Suisse, which pleaded guilty three years ago and paid $2.6 billion to settle criminal charges of a similar nature. The bank later rushed to freeze $200 million held in an account linked to an American evader as U.S. authorities reportedly began probing Credit Suisse again. 

Schnellmann mentions other private banking heavyweights, including UBS and Credit Suisse, in his information, but doesn't levy specific accusations against those banks.

His lawyer said the tax consultant plans to ask for an award based on unpaid taxes recovered from his information, an avenue pursued successfully by Birkenfeld, who garnered the largest ever whistleblower payout from U.S. officials – $104 million.