Liechtenstein freezes "ETA bank accounts" at judge's request

31st March 2008, Comments 0 comments

Winding route of terrorist group funds traces back to alpine tax haven and Spain

31 March 2008

MADRID - Liechtenstein is cooperating with Spanish authorities in an investigation into ETA's use of banks in the tiny alpine principality to launder money extorted from Basque businesses, reveals documents recently made public by High Court Judge Baltasar Garzón.

Officials in the Liechtenstein capital Vaduz have frozen accounts and embargoed front companies allegedly belonging to members of the Basque terrorist group after Garzón began following the trail of money from the Basque Country to the tax haven in 2006.

It is unclear how much money ETA has hidden in secret accounts in Liechtenstein although court sources indicate that the group's assets there are at least in the "tens of thousands" of euros. Much of that amount is believed to have been extorted from Basque businesses over recent years through ETA's imposition of a so-called "revolutionary tax."

Faced with threats of harm to themselves of their families, businessmen have been forced to hand over thousands or tens of thousands of euros to the Basque terrorist group. Many are too scared to go to the police.

Garzón traced many of the payments to a bar in the Basque border town of Irún, owned by an ETA sympathizer Joseba Elosua, who apparently oversaw the group's fund-raising efforts. The Faisán Bar, which was raided by police acting under Garzón's orders in 2006, apparently formed the hub for ETA's extortion activities, involving both new recruits and several former senior leaders residing over the border in southwestern France.

One of them, 65-year-old Eloy Uriarte, had been known years earlier to exact the revolutionary tax from local businessmen with the help of priests from the towns of Anglet and Hendaye who would hide the money in confession booths. In addition to Elosua and Uriarte, 10 other people were arrested in the operation.

From the Faisán Bar, the money was apparently entrusted to Carlos Bellver, ETA's alleged financial advisor who was in charge of creating front companies and opening bank accounts in Liechtenstein.

ETA used the tax haven to hide and launder the extorted cash, investing it in investment products offering rates of return as high as 10 percent. After its passage through Liechtenstein, some of the money was apparently used to buy real estate in Spain and France.

However, the group's careful financial planning was not free from suspicion even in a tax haven like Liechtenstein. The astute employee of one bank found some transactions to be suspicious and wrote an internal report that Liechtenstein authorities have since passed on to Garzón.

Liechtenstein has a policy of cooperating with third countries only in criminal investigations, particularly involving terrorism, but it refuses to collaborate in tax inquiries because, like Switzerland, Monaco and Andorra, it does not consider tax evasion to be a crime.

That has earned the 160-square kilometre country a place on the Organisation for Economic Cooperation and Development's (OECD) blacklist of tax havens that refuse to cooperate with third countries in money-laundering inquiries.

Its image was further battered last month when leaked information from LGT bank, controlled by Liechtenstein's royal family, led to tax evasion investigations being launched by dozens of countries worldwide.

In the view of many other states, Liechtenstein's tough bank secrecy laws have made it a favourite banking haven for terrorists and criminal gangs as well as businessmen, sportspeople and pop stars looking to conceal their money from the eyes of the taxman. ETA's banking operations in the principality would appear to confirm that.

[Copyright El Pais/ Jose Maria Irujo 2008]

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