From SwissInfo

Tax-cheat data bought by Germany

swissinfo.ch and agencies
Jun 9, 2010 - 12:51


The German government and the state of Lower Saxony have bought a CD said to contain the bank data of 20,000 alleged tax cheats with assets hidden in Switzerland.

The state’s finance minister confirmed on Wednesday that €185,000 (SFr255,000) had been paid for the CD on Tuesday evening – half by the government, the rest by the country’s 16 states.

The data, which had already been analysed, would now be passed onto the relevant states and the due taxes imposed, said Hartmut Möllring.

He added that the data had provided tax income of €360,000 for Lower Saxony alone, estimating the national total “in the double-digit millions at least”.

Möllring said the question had been “do we turn a blind eye and let 20,000 potential tax cheats go, or do we take action?” He and federal Finance Minister Wolfgang Schäuble decided the answer was to take action.

In a similar case in another state in February, North Rhine-Westphalia bought a CD for €2.5 million, of which the federal government paid half.

With word of the CD's existence making headlines in Germany, Baden-Württemberg said 1,302 people had reported their undeclared Swiss holdings.

Two years ago Germany bought information on taxpayers who had money hidden in banks located in Liechtenstein.

From SwissInfo

German tax raid targets Credit Suisse staff

Matthew Allen
swissinfo.ch
Jul 14, 2010 - 12:24


German tax investigators were seeking evidence against Credit Suisse employees as well as clients during a series of raids on bank branches on Wednesday.

If such evidence is found, Credit Suisse could find itself in much the same position as UBS in the United States when key staff and the bank itself were prosecuted for aiding and abetting tax evasion.

Some 13 Credit Suisse bank offices were searched in Düsseldorf, Berlin, Munich and other German cities after the authorities paid for confidential banking data that had been stolen from Switzerland.

Düsseldorf state prosecutor Johannes Mocken said his office suspected an unspecified number of Credit Suisse employees of being accessories to tax evasion. Such suspicions could have come from earlier investigations into the bank’s clients who had been questioned following the acquisition of the data, according to Swiss tax law expert Peter V Kunz.

“I believe the German prosecutors had a double strategy: to find extra evidence against Credit Suisse clients and also to uncover evidence against the bank’s employees,” Kunz told swissinfo.ch.

“This would be more of a problem for the employees than the bank unless proof can be found that Credit Suisse systematically assisted German citizens to avoid tax with the approval of top managers.”


Worst case scenario

In the United States, such evidence was found against UBS after whistleblower Bradley Birkenfeld lifted the lid on the bank’s operations.

Top executives, such as the former head of wealth management Raoul Weil, were hauled before investigators, and the bank was forced to hand over confidential client data.

As yet, there is no suggestion that things could get that bad for Credit Suisse in Germany. But the raid on the bank’s 13 branches in Germany using 140 police officers could worry client relationship advisors as well as their customers.

“Credit Suisse is working in close cooperation with the relevant local authorities. As this concerns an on-going investigation we can provide no further comment,” said Credit Suisse spokesman Marc Dosch.

Kunz does not believe Switzerland’s objections to Germany’s use of stolen bank data would hold much water in a legal battle. A CD of stolen bank data was sold to state authorities in North Rhine-Westphalia for €2.5 million (SFr3.36 million) in February, while Lower Saxony bought another batch last month.

The Swiss authorities are poised to ratify a revised double taxation agreement with Germany, but Switzerland has repeatedly said it would not provide administrative assistance to tax evasion investigations using stolen data.


Reputational damage

But such objections would carry little weight in an investigation being carried out on German soil, according to Kunz.

“When the CDs were stolen, it stoked up a lot of criticism, but right now there does not appear to be any room for those complaints,” he said. “The German authorities are carrying out this investigation in their own country and unless they ask for cross-border assistance, there is very little Switzerland can do.”

But the raids will have done nothing for the reputation of Credit Suisse, which until now has been able to distance itself from the problems experienced by its cross-town neighbour UBS.

Shares dipped by 1.73 per cent by mid-afternoon before closing the day down 0.61 per cent. The news could also put a dent in new assets flowing into the bank, despite its insistence that it has always behaved properly in cross-border private banking.


Global pressure

Swiss banks have come under increasing pressure in the past 18 months from a number of countries that accuse Switzerland’s financial system of aiding and abetting foreign tax cheats.

Last year Switzerland was forced to agree to revise numerous double taxation agreements with other nations.

UBS has so far borne the brunt of the global crusade against tax evasion after it admitted last year helping clients illegally hide assets from the US tax authorities.

However, it was widely assumed that other Swiss banks would be caught up in separate investigations, particularly after a spate of thefts of confidential data that were sold to the tax authorities of various countries.

Besides the CDs bought by German states, stolen data from the Geneva-based wealth management branch of HSBC bank was sold to the French authorities last year. It has reportedly been handed on to Italy, Spain and Britain.

Two years ago, Germany successfully forced Liechtenstein into closer cooperation in cases of tax evasion after buying stolen data that had been lifted from banks in the Principality.

I suspect that this razzia has more political and psychological than economical objectives. It is supposed to demonstrate to the German public that the German government is pursuing German tax evaders relentlessly.

I doubt that the fishing expedition will produce much results. If a German wants to hide money from the German tax authorities, he or she will probably do so by opening an account in Switzerland itself, and not in a German office of a Swiss bank.

The reason for Crédit Suisse to operate offices in Germany is the same as for UBS operating offices in the U.S. These large banks need to find places to reinvest money that has been deposited with them, and that they need to do in the countries where these investment opportunities can be found.

For this reason, this razzia will probably do more economic damage to Germany than produce useful data, as it may convince Crédit Suisse that Germany is not the best place to invest their money.

From SwissInfo

Another tax CD causes controversy in Germany

Lena Langbein in Berlin
swissinfo.ch
Aug 24, 2010 - 13:22


Authorities in the German state of Baden-Württemberg are facing the dilemma of how to react to the offer of another CD said to contain bank details of tax offenders.

A CD containing information about Swiss accounts was offered to the state earlier this year and later acquired by the German government.

The new CD is said to include the names of 250 companies which allegedly deposited hundreds of millions of euros in Swiss bank accounts to avoid paying taxes to the German taxman.

For the most part it is telecommunications and property companies that are allegedly involved. The total amount of tax unpaid is said to be between €600 million (SFr809 million) and €800 million a year.

A spokesman for Baden-Württemberg’s finance minister Willi Stächele (Christian Democratic Union) confirmed to swissinfo.ch the accuracy of a report about the existence of the CD in the Bild am Sonntag newspaper.

However, he did not wish to comment on the extent of the tax evasion.


Anonymous informant

He confirmed that there was contact with an anonymous informant, adding the ministry had to leave the matter on hold for the time being because no specific details had been handed over for examination.

Even if the data proved to be genuine, the state government would not alter its policy on the issue

“As long as the origins are not clear beyond any doubt, we will not buy the CD,” the spokesman said.

The state government of Baden-Württemberg, made up of politicians from the CDU and Free Democratic Party, wants to look into the CD offer but will not buy the information if obtained illegally.

“We are not going to buy data which has been unlawfully acquired,” said the spokesman for Stefan Mappus (CDU), head of the state government.


“Popular sport”

The head of the CDU group in the state parliament, Peter Hauk, is calling for an in-depth investigation into whether data has been supplied and what it includes. He has warned: “The offer of tax CDs must not develop into some kind of popular sport.”

The deputy head of the Social Democratic Party’s state parliamentary group, Nils Schmid, says the ruling coalition will be guilty of supporting tax evasion if it once again turns down an offer to buy the data.

A CD with Swiss account data was offered to Baden-Württemberg at the beginning of this year but the government did not buy it after pressure from the FDP.

The reasoning then was that the competent people dealing with the data could possibly make themselves liable to prosecution. The data was subsequently acquired by the German government and the state of Lower Saxony.


Criminal proceedings

The authorities in Baden-Württemberg also used it for criminal proceedings against tax evaders.

Should the latest CD turn out upon investigation to be genuine, the state government of Baden-Württemberg may speculate again that another state government will buy the CD,” said Schmid.

“The state government just wants to obscure the fact that the FDP wishes to protect its clients.”

“If there is a legal risk for officials in buying the CD the state government must logically wave its right to any income that may result if another state steps in.”

He says it boils down to the CDU and FDP wanting to pass the buck to other states. “The state government is behaving badly and dishonourably.”

The FDP group in Baden-Württemberg is sticking to its guns. Its leader Hans-Ulrich Rülke emphasises that tax evasion is a criminal offence that has to be pursued closely.

“But as long as there is no definitive judicial ruling on tax-dodger CDs, I see no reason to buy the data.”