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).
