Liechtenstein is angry at Germany for having paid €5 million to an informant for a DVD containing financial details of up to 1,000 wealthy Germans with accounts in the tax haven in a deal that has sparked the biggest tax evasion probe in German history.
The DVD included details on Klaus Zumwinkel, who resigned as chief executive of Deutsche Post AG last week after the data prompted a tax probe into him.
"With its attack on Liechtenstein, Germany isn't solving its problems with its taxpayers," Prince Alois of Liechtenstein, the principality's head of state, said in the Liechtenstein capital of Vaduz. He added that it was questionable "whether such a course of action is compatible with the basic principles of the democratic state."
He criticized the BND for paying "a convicted lawbreaker" for the data. The prince said such behavior would be "totally inconceivable from a legal point of view" in Liechtenstein and countless other European states. "In our country, fiscal interests don't outweigh the rule of law," the prince added.
The prince also said that his country placed a lot of importance on the privacy of its citizens, which included respect for banking secrecy. Any tax evasion wasn't Liechtenstein's fault but stemmed from the "criminal energy of Germans," he added.
Liechtenstein now appears to be considering legal action against Germany. "We are currently discussing various legal measures with relation to the banking data illegally obtained in Liechtenstein," Klaus Tschütscher, Liechtenstein's justice minister and deputy head of government, told Germany's Börsen-Zeitung newspaper.
The tax dispute is expected to top the agenda of a pre-arranged meeting between German Chancellor Angela Merkel and Liechtenstein's head of government Otmar Hasler on Wednesday in Berlin. In an attempt at damage limitation ahead of the visit, Hasler told Bild newspaper: "We're taking the situation seriously. But we don't think the good bilateral relations between Germany and Liechtenstein will be endangered by the criminal activities of individuals."
Police, tax authority investigators and prosecutors on Monday searched offices and private apartments across the country including the offices of the venerable private banks Metzler and Hauck & Aufhäuser, where they sifted through the financial records of clients with assets in Liechtenstein. The Munich office of Dresdner Bank was also searched.
A total of 125 searches are planned for this week in the nationwide tax probe which came to light last Thursday with a search of the Cologne villa of Zumwinkel, accused of having hidden assets in a Liechtenstein-based foundation.
Meanwhile political pressure is building in Germany for action against tax havens such as Liechtenstein. Thomas Oppermann, a senior member of the Social Democrat Party, called on Merkel to make clear in her talks with Hasler that "tax havens like that in Liechtenstein don't really have a place in modern Europe."
Anti-corruption organization Transparency International accused Liechtenstein of abetting tax evasion. "Tax evasion must be made a crime in Liechtenstein and Switzerland," Transparency board member Caspar von Hauenschild said. "Liechtensteiner must give up its bank client secrecy for European citizens, as must the Swiss."
But Liechtenstein's ambassador to Berlin, Prince Stefan of Liechtenstein, said: "One can't always assume that every customer who comes through the door is a criminal. We're not going to change our whole legal system, a system which includes the protection of the privacy of our citizens."