Privacy and wealth

By Jeremy Hazlehurst

When Rudolf Elmer, a former employee of a Swiss bank, stood on a stage in London and handed a CD to Wikileaks founder Julian Assange this January, a shiver might have gone down the spine of many high net worth individuals.

Elmer was passing on the private financial details of 2,000 British, American and German clients of the bank Julius Baer, where he worked until 2002, covering the period from 1990 to 2009. Although it was not revealed what information Elmer passed on, he has previously handed information to Wikileaks that shed light on what it alleges is tax evasion.

This is not the only attack on the privacy of wealthy people. The issue of bankers’ bonuses refuses to go away and the UK government says that it is considering forcing banks to reveal the value of the bonuses it pays. The government points out that there is precedent for this – it is standard practice in Hong Kong, for example – but bankers and lawyers argue that the names of the individuals who have received the bonuses would be easily discoverable by journalists.

There seems to be an increasing trend in some quarters to reveal – or want to reveal – the financial affairs of high net worth individuals. But what can legally be published? If you fear that information about your own financial dealings, salary and tax affairs are going to be revealed, what are your rights, and what can legitimately be made public?

It all comes down to the law of privacy. Historically, there was no right to privacy in English law, but in 1998 the European Convention on Human Rights was incorporated into English law by the Human Rights Act which included, in Article 8, the right to respect for private and family life. On the face of it, the case for protecting personal financial details is strong as such information is considered highly sensitive private information.

Things become complicated when an individual’s right to privacy clashes with the media’s right to freedom of expression. As both rights have equal weight there is plenty of scope for legal conflict about when one should override the other.

The outlines of the arguments are easily understood, however. Simply, there are two defences that can be used by those wishing to publish private information about somebody. The first is that the information is already in the public domain. High profile individuals need to monitor carefully the accessibility and accuracy of the private financial information about themselves that is publicly available.

A recent trend towards the personalisation of business has meant that many people, as part of the process of raising their profiles and marketing their businesses, unwittingly volunteer private information into the public domain via interviews, for example, that they might subsequently regret when that same private information is used as justification for unwanted and intrusive media attention.

Then there is the increasing accessibility online of an individual’s private financial data. “It can be quite easy for a journalist to build up a detailed picture of somebody through information that has been put into the public domain legitimately, such as the information that the director of a company has to disclose,” says Magnus Boyd of London solicitors Carter-Ruck, which has a reputation for defending high-profile individuals.

But the real problem comes from a trend to give business reporting a more human face. The London Daily Mail editor Lord Dacre’s editorial formula of telling every story “through the prism of people” has been applied in recent years to the coverage of financial affairs.

“Tabloid techniques for telling a story are increasingly being used in the reporting of business and financial matters,” says Boyd. “So even a story about complex finance can be accompanied by photographs of big houses, expensive cars and other representations of the wealth or lifestyle of the individuals involved and these can frequently mean encroaching into areas of those individuals’ privacy.”

Boyd adds that the problem for many high net worth individuals is that some of them might well have freely put lots of personal information into the public domain that they now regret. “There was a trend in public relations for using corporate figureheads to humanise companies. Chief executives were encouraged to do interviews for that reason and to open up areas of their private lives and those of their families without thinking about the consequences for the future,” says Boyd.

So, for example, the discussion of bonuses, use of tax havens or tax-efficient business practices in one context can be very damaging when reported in another context. Before they volunteer information to the press, people need to think about the possible downsides. Thanks to the internet once such material has been put into the public domain it can be very difficult and expensive if not impossible to retrieve it.

So what of the second defence for invading somebody’s privacy: that the information is in the public interest? The crux of this defence is that the definition of just whose affairs might be in the public interest is fluid and can change with the news agenda.

So, for example, while in the past the members of a bank’s board might have been considered irrelevant to political debate, in a world where banks were bailed out it could be argued that it is in the public interest to know about them.

Secondly, as there is an increasing hostility towards tax havens, it could increasingly become in the public interest to learn about the tax affairs of wealthy people. The definition of a public figure is changing, and so is the kind of information that might be considered in the public interest. This is all up for grabs in a court of law, of course.

So what can you do if you believe that your privacy is being intruded upon? The key legal tool is an injunction to prevent the publication of a story. Of course, this only works if you get wind of a story before it is published, normally because you get a call from the newspaper asking for your side of the story.

At the moment there is no requirement for a newspaper to contact the subject of a story prior to publication, although Max Mosley, the Formula 1 supremo whose predilections were splashed across the front page of the London-based News of the World without his being informed that the story was about to run, is currently lobbying the European Court of Human Rights to change the law so that any newspaper has to give “prior notification” to the subject of a story.

While every law-abiding media outlet understands that privacy should not be invaded without good reason, it would be absurd if prior notification became law; every on-the-make politician and criminal mastermind would have to be consulted before a story revealing their misdeeds was published, and a blizzard of injunctions and legal prevarication would block the publication of all kinds of stories that are in the public interest.

Any discussion of injunctions soon comes round to so-called “super injunctions”, where the very existence of an injunction cannot be reported. Although they have been excoriated by the press, Davina Hay of Schillings, another law firm famed for defending well-known people, says that they have been largely misinterpreted: “The prefix ‘super’ simply denotes the reality that whilst the substance of the injunction – the private information that the injunction protects – cannot be discussed by the media, the very fact that an injunction has been obtained to protect ventilation of the private information, also cannot be discussed by the media.”

This is perfectly reasonable, she says, because of the risk of “jigsaw identification”, where the press can piece together the allegation from information that is in the public domain. Despite hostility in some parts of the press to injunctions – super or otherwise – the good news for those whose privacy is being invaded is that English law, says Hay, reflects a culture that “is steeped in maintaining the dignity of the individual and protecting unnecessary infringements of their privacy as well as preventing irreparable damage that can be caused to personal reputations”.

This is evident in the UK’s strong libel laws, and while the laws around privacy are still embryonic, Hay reckons that they will also come to embody this tradition.

The case in other European Union countries is a little different. Historically, countries such as France, Italy and Germany have had very strong privacy laws. In France it has traditionally been unconditional – the law did not have to balance privacy against freedom of expression at all. But things are changing, largely because of the European Convention on Human Rights.

The internet has a role too, and it is harder to uphold privacy when information is disseminated more freely. Injunctions have less force over bloggers, or websites hosted in far away jurisdictions with laws weighted towards free expression, such as the US.

That said, the right to privacy is upheld in law in every country that is a signatory to the European Convention on Human Rights, and anybody who feels that right to privacy has been violated can take it to the European Court of Human rights, as Max Mosley has. So, the right to privacy is strongly protected.

There was a recent case in which the court looked at the case of the London Daily Mirror’s reporting of Naomi Campbell attending Narcotics Anonymous meetings. The court agreed with the Mirror that no-win no-fee cases encouraged lawyers to run up large fees and discouraged newspapers from publishing stories that push the law, but what was less widely reported was that the court agreed that the Mirror had violated the model’s right to privacy and that the story “had not contributed to any debate of general interest to society.”

The law in all signatory countries is bound to change in the coming years as courts digest the right to privacy, but it is certain that privacy will always be defended strongly.

The situation is slightly different in the US, says Leita Walker, a media lawyer at American firm Faegre & Benson. In American law the First Amendment guarantees free speech, which means plaintiffs suing media defendants generally have a high burden of proof.

If private information about you was published you would have a better case against somebody who stole information and “dropped it on the steps of the New York Times”, she says, than the New York Times for publishing it. You would have little power to prevent somebody from publishing information that invaded your privacy because of the convention that there can be no “prior restraint” – in other words, the court can’t prevent publication of a story except in very extreme circumstances such as those threatening national security.

In US law you would be restricted to suing for libel or slander if the information was false or for invasion of privacy if the information were true but private. However, although US law recognises claims for “public disclosure of private facts”, there is a US equivalent to the public interest defence, so that publication is not actionable if the private information is newsworthy.

Only “highly embarrassing” information reaches the threshold, and if we are talking about financial information – as opposed to, say, an embarrassing medical diagnosis – it “would not be a slam-dunk invasion of privacy that would be actionable.”

Your better option is to go after somebody who acted illegally to obtain information about you, or the bank whose lax security allowed the information to be stolen.
If all else fails and there is no way that an individual can legally prevent the publication of private information there is always another route: PR.

Public relations companies often work with high-profile individuals to manage the “orderly” release of news, which in practice means negotiating. A newspaper wants a good story. If it has one that invades your privacy, you might be able to give it another that does not. Good public relation executives have long-standing relationships with journalists and can often leverage that.

For individuals who find private information is suddenly interesting to the public, the good news is that privacy is protected in European law. For journalists, the good news is that free expression is too. For lawyers, the good news is that clashes between freedom of expression and privacy are here to stay.

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