ZURICH, March 21 (Reuters) - A dispute over data privacy between Switzerland and Germany has been rekindled after Zurich prosecutors charged three Germans with industrial espionage and violating bank secrecy for aiding German officials during a court battle with a Swiss bank.
Swiss prosecutors allege the three passed documents to German courts and authorities, several Swiss and German media reported, in the latest twist to a row pitting Switzerland's long-defended bank secrecy laws against a German tax clampdown.
Prosecutors confirmed that their white-collar crime unit had charged the three unnamed suspects with industrial espionage, violating business and banking secrecy, and breaking stock exchange law.
One suspect was also charged with extortion. No one was in custody in the case, a spokeswoman said by email.
The German foreign ministry said it was familiar with the case but would not comment on the legal process. Ministry spokesman Rainer Breul told reporters the case was not weighing on German-Swiss relations, and Berlin had no doubt the three individuals would receive a fair trial in Switzerland.
The case stemmed from a legal dispute between private Swiss bank J. Safra Sarasin and German drug store magnate Erwin Mueller over trades making use of a capital gains tax loophole that has since been closed, the media reports said.
According to the reports, the three individuals -- Stuttgart-based attorney Eckart Seith, who was working for Mueller, and two former bank employees -- denied the charges.
"This is justice-for-hire, intimidation. It is supposed to tell every European that he will go to jail if he uncovers wrongdoing by a Swiss bank," Seith told German broadcaster ZDF, which said he faced 3-1/2 years in jail if convicted.
Seith used internal documents from Safra Sarasin for the trial and then gave them to authorities, the reports said.
ZDF also interviewed one of the two bank employees charged in the case who it said had spent half a year in Swiss investigative custody. It concealed the identify of the suspect, who said confidentiality was supposed to protect clients, not Swiss banks.
The scandal had consequences for top Sarasin management: Eric Sarasin, the former deputy chief executive officer, resigned in 2014 to leave himself free to defend himself in the probe and eventually paid a "low six-figure amount" to have the tax-fraud investigation closed. 1/8http://reut.rs/2IGfOUe 3/8
A German court last year ruled that the bank had to pay $50 million to Mueller for incorrect investment advice.
The Swiss justice ministry cleared Zurich prosecutors to investigate the three people on possible charges of industrial espionage in 2015, the media reports by German weekly newspaper Die Zeit, the Correctiv research group, ZDF and Swiss digital magazine Republik said.
German states have for years obtained details of bank accounts held secretly in Switzerland by Germans they say are trying to evade tax. Swiss authorities say this amounts to the theft of business secrets.
Switzerland, the world's largest center for overseas wealth, will gradually dismantle secrecy this year as it begins sending information about customer accounts to foreign tax agencies. (Reporting by Michael Shields in Zurich and Andrea Shalal in Berlin Editing by Keith Weir)