Data Dilemma Berlin Risks Spat with Switzerland over Tax Evaders
The German government has signalled it intends to purchase a CD containing information about tax evaders with Swiss bank accounts, even though members of the ruling coalition have warned against dealing with "thieves." In its quest to crack down on tax cheats, Berlin is even prepared to risk a falling-out with Switzerland.
When German Chancellor Angela Merkel appeared at a joint press conference with Palestinian President Mahmoud Abbas at the Chancellery in Berlin on Monday, she expected the Middle East to be the main item on the agenda. But instead she found herself answering questions about a data CD that presents the German government with a tricky moral dilemma and could lead to a spat with Switzerland.
But Merkel was adamant that the CD was worth the risk. "Everything should be done to get this data," she said. "If this data is relevant, it must be our objective to acquire it," she said.
The CD in question is believed to contain sensitive data relating to the bank accounts of about 1,500 German citizens who have allegedly stashed their money in Switzerland in a bid to avoid paying tax in Germany. An informant offered the CD to the German tax authorities some time ago for an asking price of 2.5 million ($3.5 million). Although the chancellor has so far been unwilling to commit herself to the deal, she sounded determined at the press conference. She wants the CD, even if the price is high -- and not just financially.
The chancellor has effectively given her blessing to German authorities accepting the indecent proposal. She called Finance Minister Wolfgang Schäuble and informed him that he has her support "in bringing about a solution," according to an official government statement issued on Monday.
Schäuble, for his part, points out that the current case is similar to another case that involved the purchase of stolen data relating to accounts in Liechtenstein which made headlines two years ago. "We will adhere to the same policy," he says. "The government does not make new decisions in such difficult matters once every year and a half." Schäuble insists that there are legal issues to be clarified before a purchase can take place, and that the decision will be reached by the relevant German states, in consultation with the federal government.
In other words, the government is ready to pony up.
In 2007, the Bundesnachrichtendienst (BND), Germany's foreign intelligence agency, paid a thief about 5 million for stolen data that included evidence of tax evasion by German citizens in the tiny Alpine principality of Liechtenstein. It turned out to be a good investment for the German tax authorities. According to the public prosecutor's office in the western city of Bochum, the information resulted in tax evaders paying close to 180 million in back taxes by the end of 2009. The most prominent case was that of Klaus Zumwinkel, the then-chairman of Deutsche Post, who received a two-year suspended sentence for tax evasion.
Even if the government has not yet committed itself to purchasing the new CD, it is clear that Berlin is hoping that the deal will prove to be just as lucrative as the one involving the Liechtenstein data. Random samples from the data apparently indicate that the material could yield valuable information. Although the Finance Ministry is unwilling to comment officially on the case, officials there apparently expect the data on the CD to result in the payment of more than 100 million in back taxes to the German authorities.
On Monday morning, Schäuble spoke directly with his Swiss counterpart, Hans-Rudolf Merz, to advise him of the German government's intentions. Schäuble's spokesman characterized the conversation as "constructive" -- a term that, when used to describe exchanges between politicians, usually denotes significant differences of opinion.
In fact, there appears to be little in the way of constructive behavior coming from the Swiss. Merz apparently informed Schäuble that the Swiss authorities would not cooperate with Germany on cases that were based on stolen customer data. According to a ministry spokesman, the Swiss government even intends to enact legislation to codify its position that a data purchase of this nature is not only illegal, but is also a breach of good faith.
- Part 1: Berlin Risks Spat with Switzerland over Tax Evaders
- Part 2: 'Modern Form of Bank Robbery'