The crackdown on tax evaders who depend on Liechtenstein in order to shield income has escalated.
Nine countries from the Organization for Economic and Co-operation Development (OECD), Britain, France, Italy, Spain, Canada, Sweden, the United States, Australia and New Zealand, have reportedly received and are examining information on Liechtenstein accounts from two banks. The Bundesnachrichtendienst has officially confirmed that Liechtenstein Global Trust (LGT) Group is a focus of the investigation, a charge that LGT has acknowledged. The other bank has not been officially named though the German Sueddeutsche Zeitung has indicated that it is a subsidiary from the Swiss private banking group Vontobel in Liechtenstein; Vontobel has said that this is not true.
The OECD has been prominent amid these investigations. The Organization claims to provide “a setting where governments compare policy experiences, seek answers to common problems, identify good practice and coordinate domestic and international policies.”
It is not surprising to note the OECD’s involvement. In 2002, the OECD published a list of un-cooperative tax havens, which initially included seven countries. Only three remain on the list: Andorra, Monaco and yep, Liechtenstein.
Last week, hundreds of wealthy Germans had their homes and offices searched in Frankfurt, Munich, Stuttgart, Hamburg and Ulm as German officials crack down on what is perceived as massive tax fraud.
The German government believes that as much as €3.4 billion ($5 billion US) have been transferred to Liechtenstein in an attempt to evade taxation in Germany. The most prominent German named in the scandal to date is Klaus Zumwinkel, the now former chief executive of Deutsche Post; he is facing criminal charges of trying to escape paying more than €1million ($1.5 million US) of tax.
Investigators believe that more than 1,000 people are involved what is being referred to as “massive tax evasion.” The crux of the evasion is the diversion of funds to the principality of Liechtenstein where the funds were then routed to banks outside of Germany without being taxed; this is against the law in Germany and can result in criminal charges. It is, apparently, also common. More than 100 additional searches are planned, with the German government promising that more high profile names will be revealed.
Apparently, the break in the scandal came when a source offered the Bundesnachrichtendienst (the German version of the CIA) data from the Liechtenstein Global Trust (LGT) Group, a focus of the investigation.
The source, believed to be former Liechtenstein bank employee was paid €4.2 million ($6.25 million US) for the information. The bank was not unaware of the existence of the informant, claiming that it had been the subject of blackmail attempts involving the data.
Wealthy Europeans may be clutching their pocketbooks a little tighter. The information is reported to contain the names of tax evaders from countries outside of Germany. Finland, Sweden, Norway and the UK have allegedly indicated interest in the list.
US Senator Carl Levin (D-MI), Chair of the Senate investigations committee, has promised an inquiry into whether United States citizens are on the list.
Despite the allegations, Liechtenstein has vowed to uphold its banking privacy and tax-haven status – and no wonder: LGT is owned by Liechtenstein’s royal family (ching, ching).
