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Stonewalled

ČSSD MP crusades for transparency on tax-dodgers list

By Claire Compton
Staff Writer, The Prague Post
June 4th, 2008 issue

ČTK
Jeroným Tejc is calling for more information on the Liechtenstein list.
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The manner in which the government is investigating likely tax evasion by its most wealthy citizens could amount to unfair protection of the country’s business elite by the ruling coalition, according to Jeroným Tejc, an MP with the opposition Social Democrats (ČSSD).
While one of the largest banking scandals to ever hit Germany has spilled over into other European countries, the reaction from the Czech government has been too slow and opaque, Tejc said.
The prosecutions following a February raid in Germany have been dramatic in scope and circumstance. After an informant stole data on more than 4,500 bank accounts from the Liechtenstein Global Trust (LGT) bank and sold the information to German authorities, prosecutors there wasted little time mounting tax evasion cases against hundreds of German citizens.
Two-thirds of the list comprised non-German citizens, and several countries have initiated their own investigations since the Germans offered to share the information in February. The Czech Republic is still not one of those countries, however.
The Finance Ministry requested the list of accounts March 11, but the list has not been handed over to the Czech Republic, according to the ministry. Tejc said that raises some troubling questions about the intentions of the business-friendly government, which waited far too long in requesting the list.
“The fact that the Cabinet hesitated in the beginning with their request definitely raised some speculations,” Tejc said. Germany announced it would share the information Feb. 26.
In the face of such suspicions, Tejc said the government can only redeem itself through aggressive investigation and prosecution of tax evaders. Failure to do so would be a blow to the government’s credibility, he said.
“If the Cabinet does not take any measures right after they receive the list, it would mean they stand on the side of the financial elite,” he said.
Whether the state even has the list, or when they are expecting it, is something that needs to be clarified further. “We demand to know where the negotiations with the German side are,” Tejc said.
Initially, Finance Minister Miroslav Kalousek said he would wait for the Germans to offer the list. Following the March request, the ministry is still awaiting the information, according to spokesman Radek Ležatka. Without the list, the ČSSD’s claims that the government is loath to prosecute the wealthy are “nonsensical,” he said.
“As we don’t know what the list will contain, we can’t say what we will do with it,” he said. The ministry is similarly unsure of when to expect the list, having “no information about when it could be,” Ležatka added.
After several high-profile leaks to the media, German authorities are reluctant to talk about the LGT list, with prosecutors working on the case declining to comment and the German Finance Ministry unresponsive to inquiries.  
Tejc contends that more needs to be done to expedite the process. A passive approach could mean any wrongdoing that is uncovered will be more difficult to prosecute.
“I think the government should really do everything in order to get the information from the list as soon as possible. The sooner they get the information, the greater chance they have to prosecute possible tax evaders,” he said.
In the fallout from Germany’s actions, investigations have been opened in several countries, including Ireland, the United Kingdom, Finland, Australia, the United States, France and Canada.
Lost haven
The LGT scandal has directly affected the principality of Liechtenstein, not just its banking system. LGT is owned by the prince of Liechtenstein, Hans-Adam II. The tiny principality, bordered by Switzerland and Austria, is perhaps best known as a tax haven where trusts can be set up anonymously and revoked at any time, with assets returned to the owner.
German citizens funneled millions of euros into these trusts to avoid paying taxes, according to authorities. Liechtenstein, along with Andorra and Monaco, remains on the list of “uncooperative tax havens,” as identified by the Organization for Economic Co-operation and Development (OECD).
In a press release, OECD Secretary-General Angel Gurria called Liechtenstein’s bank secrecy rules “relics of a different time” that will only continue to enable tax evasion.
The Czech government does its part to discourage tax evasion by lowering tax rates, attempting to simplify the tax system and granting tax immunity on dividends, according to Ležatka.
“The situation in Liechtenstein is being discussed in the [European Union] and we hope that these negotiations will lead to better cooperation among all European states concerning the banking sector,” Ležatka said.
Despite pressure from Europe on the state to reform its laws, Prince Hans-Adam has characterized Germany’s actions as an attack on his homeland.
Should Liechtenstein remain a tax haven despite the outside pressure for reform, Tejc said that there should be a concerted effort on preventive measures between the Finance Ministry and the police, with a clear delineation of the consequences of such evasion.
“A transparent tax system helps to prevent [tax evasion], together with the fact that people are aware of the punishments,” he said.

Claire Compton can be reached at ccompton@praguepost.com


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