UPDATE 3-Former Swiss banker linked to WikiLeaks goes on trial

By Emma Thomasson and Martin de Sa'Pinto

ZURICH, Jan 19 (Reuters) - Former Swiss banker Rudolf Elmer admitted on Wednesday he sent private client data to tax authorities as he went on trial for breaching bank secrecy, but denied blackmail and a bomb threat against Julius Baer.

Elmer, 55, among the first to use WikiLeaks to publish private bank documents, said he took his information to the website after Swiss authorities failed to act on it.

'The ethics of business leadership on both sides of the Atlantic have disappointed me,' he said, adding that he wanted to expose illegal offshore activity in the Cayman Islands.

Elmer said Baer waged a campaign of 'psychoterror' against him and his family and offered him 500,000 francs to keep quiet. He said he had never taken payments in return for secret data.

But he admitted writing anonymous emails in 2005 threatening to send client details to tax authorities and the media if Julius Baer did not stop unspecified actions against employees.

'The situation was very threatening. We were very scared and I thought the bank was behind it. That is why I sent the emails,' Elmer told the court.

Wearing a black suit and a red shirt, Elmer also admitted charges that he sent details of tax evasion to Swiss tax authorities, but he denied he made a bomb threat against the Zurich headquarters of his former employer, Julius Baer , threatened a Baer employee and tried to blackmail the bank.



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Prosecutor Alexandra Bergmann said the reason Elmer denied those charges was because they contradicted a defence strategy that he acted out of altruistic and public interest motives.

Elmer's lawyer Ganden Tethong Blattner said her client and his family had paid for standing up to a powerful opponent.

'This is the story of a man who discovered misdeeds and was under constant surveillance for more than a year. This great pressure was aimed at silencing him,' she said.

Tethong Blattner accused Swiss prosecutors of uncritically adopting evidence provided by Julius Baer's private investigators without doing their own investigations.

Julius Baer says Elmer waged a 'campaign of personal intimidation and vendetta' against the bank after it refused his demands for financial compensation following his 2002 dismissal.

Prosecutors are asking for Elmer, who ran Baer's office in the Cayman Islands until he was fired in 2002, to be sentenced to an eight-month jail term and to pay a 2,000 Swiss franc ($2,083) fine. A verdict is expected later on Wednesday.

Wednesday's case does not concern his publication of bank data on WikiLeaks, but earlier alleged breaches of bank and corporate secrecy in Switzerland and threats against Baer.

The trial in Zurich drew broad media attention and about a dozen protesters gathered in front of the court building.

Members of the left-wing Alternative Liste party held up a banner, saying: 'They want to hang Rudi, they let Kaspar off the hook', in a reference to UBS chairman Kaspar Villiger.

Switzerland was forced last year to give details of about 4,450 UBS accounts to U.S. authorities as part of a deal to settle a tax probe into its biggest bank despite strict secrecy laws. None of its bankers were prosecuted in Switzerland.

'We think those who expose the distasteful side of Swiss finance need our support,' said protester Walter Angst.

Elmer, a certified auditor who also worked at Credit Suisse and KPMG, said Swiss bank secrecy should not be relevant, since the documents he leaked referred to accounts in Cayman.

Swiss bank secrecy has come under global attack in recent years, with neighbouring Germany buying secret data from informants in its bid to track down tax evaders.

On Monday, the banker handed over compact discs he said contained information on some 2,000 offshore banking clients to WikiLeaks founder Julian Assange at a media event in London.

Elmer helped put WikiLeaks in the spotlight after he used the site to leak secret data, prompting Julius Baer to launch a lawsuit against the website in 2008. It later dropped its bid to block the site after an outcry from free-speech advocates.

(Editing by Louise Ireland) ($1=.9601 Swiss Franc) Keywords: WIKILEAKS SWISS/ ([e-mail]; [phone]; Reuters Messaging: [e-mail]) COPYRIGHT Copyright Thomson Reuters 2011. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.