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Listed tax dodgers safe for now

Gov't resists asking Germany for leaked Liechtenstein list

By Michael Heitmann
Staff Writer, The Prague Post
March 19th, 2008 issue

ISIFA
Klaus Zumwinkel, former CEO of Deutsche Post, is so far the highest-profile German to be charged with tax evasion in the LGT case.
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Investigators worldwide are trawling through a list of more than 1,250 suspected tax evaders who stashed their money in the small European state of Liechtenstein, a notoriously opaque tax haven.
But Czechs are not among those poring over the records, initially obtained by the German government through a whistleblower.
Though it is likely that several Czech citizens or corporations are among those who have stashed their money in the tiny Alpine state, Finance Minister Miroslav Kalousek has so far held off on requesting the records from the Germans. And he is now facing tough questions as to why the government refuses to ask its neighbor for the data, which law enforcement officials are keen to get their hands on.
“We are taking steps to start the investigation,” said Jiří Novák, who is in charge of the anti-corruption police unit. “We are very interested in these documents. If we can access them, we will investigate these claims intensively. No information that gives evidence of a crime is unacceptable.”
The BND, Germany’s foreign intelligence agency, paid a whistleblower 4.2 million euros ($6.5 million/105 million Kč) for stolen information about Germans availing themselves of Liechtenstein’s banks to evade taxes. Much initial attention has been paid to clients of the LGT Bank, though indications are that accounts of at least one other Liechtenstein-based bank may be involved.
Germany’s state prosecution service is now in the midst of a crackdown on tax evaders at home, which has included several high profile busts, such as Klaus Zumwinkel, the now-resigned CEO of Deutsche Post.
While its own investigations continue, Germany has offered other countries access to a list of 800 accounts held by non-German taxpayers at LGT, an offer taken up by the United States, the United Kingdom, Australia, Italy, France, Sweden, Canada, New Zealand and Spain.
Liechtenstein, enraged over the lost confidential information, has issued an international arrest warrant for the former bank employee who allegedly nicked the client data, Heinrich Kieber. Kieber worked for LGT between 1999 and late 2002.
Part of Kalousek’s hesitation in obtaining the list — some newspaper editorials have accused him of trying to give tax evaders time to flee the country — could stem from the data’s dubious legal origins. Czech law experts have voiced concerns over whether bought evidence can be used in a trial.
“It seems inappropriate to me to use sources connected with criminal activity,” said lawyer Roman Hanus. “I don’t know if such evidence would stand its ground in court. And I dislike the international implications of its use.”
The Tax Administration does think it possible that Czech citizens could be implicated in the German lists, its head, Jan Knížek, told reporters earlier this month.
“We can feasibly assume that some Czech companies might have tried this,” he said. “We do not take this lightly.”
Anachronistic havens
The number of Czech companies that have their headquarters in tax havens increased almost 20 percent last year. Čekia, a domestic provider of economic information, estimates that 8,130, or 3 percent, of some 290,000 companies operating in the Czech Republic fall into this category. About a third of them are active in the real estate sector, according to Čekia.
Interest in transferring headquarters to these destinations will continue to grow, said Petra Doležalová, a Čekia board member.
“Setting up a company in a tax haven — depending on the specific destination — costs around $1,000, and about the same amount is paid for the company’s operation a year,” she said.
Although establishing a company in a tax haven is likely to lower taxes, the firm runs the risk of getting into trouble with the local financial authorities, she said.
The Organisation for Economic Development and Co-operation (OECD), the think-tank representing the world’s wealthiest countries, has long been at the forefront of the battle against tax evasion. It currently blacklists three countries as uncooperative tax havens: Andorra, Monaco and Liechtenstein.
Residents of other European countries will continue to evade their tax obligations unless these havens agree to exchange information, said OECD Secretary-General Angel Gurría last month.
“Excessive bank secrecy rules and a failure to exchange information on foreign tax evaders are relics of a different time and have no role to play in the relations between democratic societies,” he said.
The French government plans to use its presidency of the European Union this year to crack down on tax havens, as its own investigation into funds held in Liechtenstein gets rolling.
“We will support the French presidency’s aims of tackling tax havens and states operating privileged tax systems with the aim of achieving harmonized taxation,” German Chancellor Angela Merkel told journalists March 3.

Michael Heitmann can be reached at mheitmann@praguepost.com


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