Germany Goes to War on Tax Havens, UK Buys Liechtenstein Data

Christopher Owen

25 February 2008

The UK tax authority said that it has paid an informant for data regarding British citizens who have accounts in Liechtenstein. HM Revenue and Customs confirmed the move in a Sunday Times report, but would not confirm how much it had paid the informant. The Sunday Times claimed the amount paid was £100,000 ($196,000). HMRC said it had made the move in a bid to protect the UK against those trying to "deprive the UK of tax revenues to which it is entitled" and was seeking "to protect the UK exchequer from those who seek to hide behind secrecy laws". The Sunday Times report said the US tax authorities had also acquired the files and has been using them for several months to trace lost tax dollars held in Liechtenstein foundations. Meanwhile, German Finance Minister Peer Steinbrueck has vowed to broaden its tax evasion investigation to include other European countries like Switzerland, Luxembourg and Austria. In an interview with the Bild am Sonntag newspaper, Mr Steinbrueck threatened Liechtenstein with business sanctions if it failed to meet German demands, but said the battle was not limited to the principality. "It is not just about Liechtenstein," he said. "We are also talking about Switzerland, Luxembourg and Austria. We want to launch a battle against all tax havens in Europe." The German government sent shockwaves through the world of private wealth management when it acknowledged last week that its intelligence service had paid an informant around €4.2 million ($6.17 million) for a CD containing client data on over 1,000 tax evasion suspects from LGT, a private bank owned by Liechtenstein's royal family. It was claimed in Liechtenstein that the source of the data was Heinrich Kieber, a computer expert and former employee of the LGT Group, who had threatened to release bank data several years ago unless he was given a new identity to avoid prosecution in a separate case involving a property fraud. The request was denied and Mr Kieber was convicted of fraud in 2004 but was allowed to go free after returning the data. Sources at the bank where he worked believe that he kept some of the information. In a separate development, prosecutors in Bochum leading the tax probe told the Sueddeutsche Zeitung newspaper that they had obtained account data from a second Liechtenstein bank. Liechtenstein is one of three jurisdictions classed as an “uncooperative tax haven” by the OECD for failing to allow tax authorities in other countries access to its clients’ bank details. The other two are Andorra and Monaco. Swiss Finance Minister Hans-Rudolf Merz said there was no reason for Switzerland to be affected by the German tax investigation in Liechtenstein. Although some of the money held by the foundations in Liechtenstein is invested in Swiss banks, that does not mean the Swiss bank is party to tax evasion, he added. Swiss Economics Minister Doris Leuthard is due to meet government officials in Liechtenstein today.