Banking files from the Caymans have been handed to the US authorities by a whistleblower claiming they reveal international tax avoidance, according to reports.
Concerns UK banks have been using the Cayman Islands for tax avoidance purposes have recently been raised in the Commons, while Barack Obama and Senator Carl Levin attacked the islands' 'tax haven' reputation and plan to investigate.
Documents listing names and transactions of hundreds of funds, companies, trusts and individuals, protected by Swiss secrecy laws have been given to the US authorities, The Guardian reports.
Legal tax avoidance structures are also alleged to be contained in the documents from Rudolf Elmer, former chief operating officer for the Cayman arm of Julius Baer Swiss bank.
Since he was sacked in December 2002, Elmer and the bank have been embroiled in a bitter dispute.
Elmer says his documents contain back-up data held on the firm's computer server in the Grand Cayman office at the time he was sacked.
They comprise accounts, memos, resolutions and correspondence of 60 funds, 80 companies, 114 trusts and over 1,000 individuals.
Julius Baer insists its activities complied with laws and regulations, calling Elmer's whistle blowing, a 'misguided campaign'.
The Swiss authorities have indicated they intend to charge Elmer for breaking Swiss bank secrecy laws after he posted some documents on Wikileaks website which Julius Baer got closed down.
Legal action sparked interest from the US Internal Revenue Service (IRS) with which Elmer is cooperating as well as with a subcommittee probing offshore tax havens led by Levin.
The Guardian says documents include references to a memo by a Cayman financier who did not leave a message on a UK client's answer phone 'in case tapes are seized by the authorities' plus a memo about a UK stockbroker whose trust contained 'undeclared money'.
"Offshore havens support and facilitate tax evasion and therefore it gives a lot of space for corporations and individuals to use and unfortunately abuse offshore centres," Elmer tells the newspaper.
As everything is protected by bank secrecy and tax secrecy he believes he has only seen the tip of the iceberg and the problem must be made public.
"There's a system behind it. In UK and American banks it's really big and this is the frightening part of it."
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