Tax evasion has become something of a national pastime in major Western countries, thanks to symbiotic cooperation between legislators and lobbyists. Governments are realizing that there are trillions of dollars percolating around Lichtenstein, Luxembourg, the Cayman Islands, the Bahamas, the Virgin Islands, Jersey, Mauritius, Switzerland, Cyprus, etc.
However, the “war on tax evasion” is as stupid as the “war on drugs.” Tax havens have a supply and demand function just like any other product. Intelligent people with capital will always create new havens to the extent that they need them.
Getting to the main point: Lichtenstein has found itself dead in the middle of the scope of the German BND intelligence agency, which blatantly violated its extraterritorial mandate to hound the assets of wealthy Germans, by literally infiltrating a Lichtenstein bank and bribing an employee to leak data. Apparently a bunch of Americans’ and other non-Germans’ information was also leaked.
Mammoth tax evasion probe widens
By Hugh Wiliamson in Berlin
Published: February 21 2008 21:48 | Last updated: February 21 2008 21:48
Germany’s mammoth tax evasion investigation widened on Thursday as German bankers came under suspicion of assisting wealthy clients to hide millions of euros in Liechtenstein.
Metzler, the private Frankfurt-based bank, said that three of its staff were under investigation by prosecutors for assisting with tax evasion on funds totalling “less than €6m [$8.9m, £4.5m]”.
Prosecutors have raided several banks this week, including branches of Dresdner Bank and UBS, the Swiss finance institution, although they stressed the banks themselves were not under investigation. German bank staff were involved in administering about 50 specialist foundations in Liechtenstein, according to German media reports. Prosecutors declined to comment on how many bankers were under investigation.
The Financial Times on Wednesday quoted a spokesman for the Bochum prosecutor’s office, which is leading the inquiry, as saying it was following leads that “individual [bank] employees may have abetted tax fraud”. Since the affair came to light a week ago “several thousand people” have contacted authorities to own up to tax evasion or plan to make contact, the head of the association of tax inspectors said on Thursday.
The investigation was widened as legislators from Germany’s ruling coalition told the FT Liechtenstein’s membership of the European Union’s border-free Schengen zone should, if necessary, be delayed until the tax haven had taken steps to reduce bank secrecy.
The German government has accused Liechtenstein of aiding tax evasion by refusing to disclose details of clients investing in foundations. Angela Merkel, the chancellor, said on Wednesday that Vaduz must “move quickly” to ease secrecy, and hinted that the German parliament might link this issue to Liechtenstein’s Schengen membership, which it is due to ratify this later this year.
Joachim Poss, deputy parliamentary leader of the Social Democrats, the junior coalition partner said: “We should use all the political levers available to put pressure on Liechtenstein, and its entry into the Schengen zone is one important element.”
The chairman of the Swiss banking association was right, when he called the German intelligence “Nazis.“
Swiss apology for ‘Nazi’ tax insult
By Bertrand Benoit in Berlin
Published: February 21 2008 20:37 | Last updated: February 21 2008 20:37
The Swiss banking association was forced to apologise on Thursday night for remarks by its chairman that the activities of Germany’s BND intelligence agency in a nationwide crackdown on tax evaders were reminiscent of the Gestapo.
In a statement issued last night, the Swiss banking association said Pierre Mirabaud, its president, “regretted the impression that could have been conveyed when he talked about Gestapo methods in relation to the German intelligence service”.
Mr Mirabaud drew the inflammatory comparison with the Nazi secret police in an interview with French-speaking Swiss television on Wednesday night. “He only meant to express his uneasiness about such methods being used by intelligence services against friendly states,” the banking association said.
Mr Mirabaud’s remarks and subsequent apology highlight the furore in Switzerland and neighbouring Liechtenstein over a tax investigation that has unfolded over the past week. They reflect the concerns felt by German-speaking neighbours over Germany’s economic dominance in central Europe.
Allusions to the Nazi-era are taboo in Germany’s political debate. Off-the-cuff comparisons have led to ministerial resignation in the past and Nazi symbols are banned from public display.
