Swiss bank scandal (from spiegel online)

**~~The Silent Man~~** · 10-20-2010, 11:58 AM

Germany's biggest ever tax evasion probe has uncovered more than €200 million in untaxed cash stashed in Liechtenstein and 163 offenders have turned themselves in, investigators say. Tax dodgers around Europe take note -- Germany is ready to hand over data to other countries.

Liechtenstein is the focus of a growing tax evasion scandal.

The Liechtenstein tax evasion scandal keeps getting bigger. Public prosecutors in Bochum, Germany, said on Tuesday they had found more than €200 million in funds hidden in Liechtenstein-based foundations, and that over 160 tax dodgers had confessed since the investigation was launched nearly two weeks ago.

"By concealing this capital and the return on that capital, immense amounts of tax were evaded," the prosecutors' office said in a statement.

It said the homes and offices of some 150 suspects have been searched so far following the purchase of DVDs containing the financial details of wealthy individuals with hidden funds in Liechtenstein foundations.

Of the people under investigation, 91 admitted to the allegations and have already paid €27.8 million in back taxes, the office said, adding that the sum is increasing almost daily. In addition, a total of 72 people have turned themselves in to their local financial authority and their tax debt is being checked.

Meanwhile, German authorities are planning to share their data about tax evasion in Liechtenstein with other countries, according to a report in the Tuesday edition of the Financial Times.

“We are going to respond to requests in this regard,” said Thorsten Albig, spokesman for the Finance Ministry. The information will be given free of charge, even though German BND intelligence agents paid a shadowy informant called Heinrich Kieber almost €5 million for the DVDs containing the bank details.

The Financial Times reported that Finland, Sweden and Norway had already expressed interest in the German offer. Authorities in the Netherlands have also contacted Germany to ask if Netherlands tax evaders were included in the list. According to information obtained by SPIEGEL, Kieber tried to sell data to American and British authorities. The London Times reported that Kieber had also provided information to Canada, Australia and France.

A source in the British tax collection agency told the news agency AFP on Monday that British officials had paid an informant for data on British citizens who were using Liechtenstein banks to evade tax. The Financial Times had earlier reported that the UK had paid 100,000 pounds (€133,000) for the information. British authorities believe they can recover 100 million pounds in unpaid taxes.

The scope of the German investigation keeps growing, as German authorities announce they are probing a second bank in Liechtenstein. "We have found connections to a second bank and we will check these," a spokesman for the Bochum public prosecutor's office, which is coordinating the investigation, told Reuters Tuesday, without naming the bank involved.

According to a report in the daily Süddeutsche Zeitung, the bank under investigation is the Vontobel Treuhand AG, a subsidiary of Switzerland's Vontobel Group.

The Liechtenstein subsidiary of Swiss bank Vontobel is reported to be under investigation.

The Süddeutsche Zeitung also reported in its Tuesday edition that the German state-backed bank BayernLB plans to pull out of Liechtenstein. The bank bought a majority stake in the Austrian bank Hypo Alpe Adria Bank International AG in October of last year, which indirectly gave it a presence in Liechtenstein in the shape of the bank's branch in Liechtenstein, Hypo Alpe Adria Liechtenstein AG. The bank told the newspaper Monday that its Austria subsidiary will check the possibilities for divesting the Liechtenstein bank "without delay." The move comes after BayernLB was heavily criticized by politicians from the center-left Social Democratic Party for its presence in the tiny Alpine state.

Until now, the focus of investigations has been on the LGT Group. Investigators believe billions of euros were spirited out of Germany to avoid taxation and deposited in special foundations in Liechtenstein.

Suspects include former Deutsche Post boss Klaus Zumwinkel and his brother Hartwig.

German Finance Minister Peer Steinbrück at the weekend promised to extend the tax evasion crackdown to other countries with banking secrecy rules, such as Switzerland, Luxembourg and Austria.

Swiss officials immediately rejected the idea that there were any links to Switzerland. "I fail to see how problems for Switzerland could arise," Swiss Finance Minister Hans-Rudolf Merz told DRS-1 radio. "This is about Liechtenstein."

Luxembourg also distanced itself from the accusations. "We do not consider ourselves a tax haven," the prime minister's spokesman said Monday.

The scandal is now provoking a backlash against Germans in the Swiss banking industry, with one of Switzerland's top bankers saying Tuesday that Germans will now face increased scrutiny when applying for jobs with Swiss banks because of concerns about spying. Michel Derobert, head of the Swiss private bankers' association, called the methods used by Germany's BND intelligence agency to obtain the Liechtenstein data "reprehensible" and said that Swiss banks would introduce extra precautions to protect the privacy of their clients.