German tax scandal said to spread to politicians

23 February 2008

BERLIN, Germany – German politicians may be implicated in a widening scandal over mass tax-evasion by rich Germans, a Berlin newspaper said Friday as police continued raids of people named on a leaked data disc.

The Berliner Zeitung said in its issue dated Saturday that at least four members of the federal parliament or Bundestag were named on the disc spirited out of Liechtenstein. But it was not clear if they were current or past members.

Three were members of the Free Democrat Party, in opposition since 1998, and one was in Chancellor Angela Merkel’s Christian Democratic Union (CDU), the paper said. Sources in Merkel’s coalition told Deutsche Presse-Agentur this was correct.

Both parties said they were not aware any of their members were under suspicion. There were contradictory claims as to whether two members of the Social Democratic Party (SPD), the other coalition party, were involved.

Until Friday, it had been believed that most suspects were rich but obscure Germans who had created trusts in the tiny Alpine state of Liechtenstein to hide their capital income from the German taxman.

Berlin says Germany’s BND external intelligence service paid an informant "4 to 5 million euros" (about 7 million dollars) for the disc.

Klaus Zumwinkel, chief executive of Deutsche Post, parent of the DHL worldwide parcels service, resigned last week after being raided by tax inspectors. A data privacy official in Bavaria state took leave this week after coming under suspicion.

Prosecutors said they would offer no details on the inquiry till next Tuesday.

The Bundestag administration said Friday it had received no applications to lift the parliamentary immunity of sitting deputies, which would be a requirement to put them formally under investigation.

Germans have often placed money in the principalities of Liechtenstein and Monaco or in Switzerland to take advantage of bank secrecy there.

German Chancellor Angela Merkel is to raise Monaco’s status as "an uncooperative tax haven" when Prince Albert II visits Berlin next week, the German government spokesman said Friday.

Merkel would call for greater financial transparency, the exchange of information and fair tax practices, in line with guidelines set out by the Organization for Economic Cooperation and Development (OECD), Thomas Steg said.

Albert is to hold talks with Merkel on Wednesday next week.

Steg noted that a recent OECD report had characterized Monaco as "an uncooperative tax haven," and said Merkel would raise this with the prince.

Germany would pursue the same line it had taken with Liechtenstein during the visit to Berlin Wednesday by Prime Minister Otmar Hasler, Steg said.

Following discussions with Hasler, Merkel made clear she expected the alpine statelet to change its banking practices to help German tax authorities track down Germans using Liechtenstein’s banking secrecy laws to evade taxes at home.