Zumwinkel tax scam to drag down other German executives

17th February 2008, Comments 0 comments

The Deutsche Post chief resigned a day after prosecutors announced that he was suspected of tax fraud.

Berlin -- The tax evasion scandal that has led to the fall of one of Germany's most prominent business people, Deutsche Post chief executive Klaus Zumwinkel, could drag down hundreds of prominent Germans, government spokesmen said.

Zumwinkel, 64, bowed to political pressure and resigned his position a day after prosecutors linked him to a tax scam to the value of 1 million euros (1.5 million dollars) using foundations in the tax haven of Liechtenstein.

Chancellor Angela Merkel and Finance Minister Peer Steinbrueck, speaking through their official spokesmen, welcomed Zumwinkel's decision.

A statement from Deutsche Post said Zumwinkel would "in the interests of the company" formally tender his resignation at a supervisory board meeting on Monday. No successor was named.

With the German state owning around 30 per cent of the former monopoly through the KfW development bank, the resignation was certain to be accepted.

Prosecutors in the city of Bochum, who are heading the investigation, called in assistance from Dusseldorf and Cologne.

They referred to "several hundred" German residents making use of foundations in the principality, "which have apparently been set up for the sole purpose of tax evasion."

Steinbrueck's spokesman, Torsten Albig, said the probe took in "numerous" prominent Germans. He refused to be drawn on the details.

Albig urged those involved to file corrected returns detailing their tax evasion - a device known as "self-reporting" under German law and aimed at allowing offenders to reduce possible penalties.

Merkel's spokesman, Ulrich Wilhelm, said the chancellor regretted the fact that Zumwinkel had not made a public statement after police mounted dawn raids on Thursday.

Thursday's statement from Deutsche Post that the chief executive would remain in position provoked incredulity among politicians and opinion makers alike.

Leader writers referred to "greed" and a "moral vacuum" at the top of German business.

Wilhelm said the scandal would be discussed when Merkel met Liechtenstein Prime Minister Otmar Halser on Wednesday.

The police raids, on Zumwinkel's Cologne home and his office at Deutsche Post headquarters in Bonn, were broadcast on national television.

He was taken away under police escort to the Bochum prosecutors office but released after posting a large bond as security.

Zumwinkel, who had headed Deutsche Post since 1990, is credited with turning the loss-making state monopoly into a profitable private concern with a global reach and a staff of 520,000.

He sits on the supervisory boards of Deutsche Post subsidiary Postbank and the telecommunications provider Deutsche Telekom that was split from Deutsche Post in 1995.

Government spokesmen indicated he would resign these positions as well.

Zumwinkel was the longest-serving chief executive among the DAX 30 companies making up the leading companies listed in Frankfurt.

At the end of last year, he drew negative publicity when he sold Deutsche Post shares for 4.7 million euros after the German parliament had passed imposed a minimum wage in the postal sector, undercutting the strategy of competitor companies entering the market.

DPA with Expatica

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