Deutsche Post ex-head avoids jail for tax evasion

27th January 2009, Comments 1 comment

Klaus Zumwinkel was one of Germany's most respected executives, running Deutsche Post for almost two decades and transforming the former monopoly into a global logistics giant.

Bochum -- German court convicted the ex-head of Deutsche Post of tax evasion on Monday but he avoided jail with a two-year suspended sentence and a one-million-euro (1.3-million-dollar) fine.

Klaus Zumwinkel was one of Germany's most respected executives, running Deutsche Post for almost two decades and transforming the former monopoly into a global logistics giant.

But his world came crashing down last February when his name appeared on a list of suspected tax cheats bought by German secret-service agents from a whistleblower at a bank in Liechtenstein.

In images beamed live on national television, Zumwinkel -- who was also on the boards of Deutsche Telekom and Morgan Stanley -- was shown being led out of his plush villa in a smart Cologne suburb after being raided.

On the first day of his trial on Thursday, Manager Magazine's 2003 "Executive of the Year" admitted to cheating the German taxman out of almost one million euros using a secret trust in the Alpine principality.

"I am not going to beat around the bush: I am guilty of what I am accused of," the 65-year-old told the court. "My career had a bitter end. My job was my life."

It looked possible that the 65-year-old would be jailed but on Monday prosecutors called instead for a suspended sentence and a hefty fine. Defence lawyers had called for a milder sentence.

The list, for which Germany reportedly paid 4.5 million euros (5.9 million dollars), included the names of hundreds of German business executives, sports stars and entertainers allegedly hiding some four billion euros.

This prompted countries including the United States and Britain to launch their own investigations, as well as heavy international criticism of Liechtenstein and other tax havens for their traditions of banking secrecy.

German Finance Minister Peer Steinbrueck vowed last year "to put the screws" on Liechtenstein, while Chancellor Angela Merkel threatened to isolate it from the rest of Europe if it failed to smarten up its act.

Liechtenstein -- dubbed an "un-cooperative tax haven" by the Organisation for Economic Cooperation and Development (OECD) along with Andorra and Monaco -- retaliated angrily.

The principality, measuring just 160 square kilometres (62 square miles) with a population of 35,000 bordering Austria and Switzerland, issued an international arrest warrant for the mole.

Liechtenstein's Crown Prince Alois accused Germany of undermining its sovereignty and breaking the law, and the royal household suspended loans of art works from its collection to a museum in Munich, southern Germany.

The head of the Swiss Bankers' Association, meanwhile, said Germany's investigations "call to mind methods worthy of the Gestapo" -- comments for which he later apologised.

The scandal has added to growing anger within Germany about "fat-cat" executives, as the country hits its worst postwar slump with half a million people expected by the government to lose their jobs this year.

The middle class has been shown to be shrinking and a study last Wednesday by one of the top economic research institutes revealed a widening gap between rich and poor.

High levels of pay and corporate corruption scandals at automaker Volkswagen and engineering giant Siemens have also dented the image of the country's company executives.

Since the Liechtenstein affair erupted, German authorities have managed to claw back 150 million euros after tax cheats voluntarily came forward in the hope of avoiding prosecution.


1 Comment To This Article

  • don bacardi posted:

    on 27th January 2009, 11:53:46 - Reply

    No surprise there.