Germany reels over fat cat tax probe

 
  

Germany braced on Sunday for more fallout from the worst tax evasion scandal in its history, exposed by a mysterious informant who reportedly took a five-million-euro award and now says he fears for his life.

 

The German government said it paid the unnamed whistle-blower to hand over Liechtenstein bank details on a multi-billion-euro tax affair, pointing to widespread financial wrongdoing among Germany's monied class.

 

One company chief resigned on Friday while hundreds of wealthy Germans are reportedly under investigation, prompting union leaders and political officials to demand more accountability in the business community.

 

The LGT bank group of Liechtenstein, which has built its reputation on banking secrecy, said German authorities were working from a list of its clients stolen by an employee in 2002.

 

Finance Minister Peer Steinbrueck approved the payment to the informant, his office said in a statement, without confirming media reports that five million euros ($7.3 million; Dh26.65 million) was handed over.

 

The ministry has also urged tax evaders to come forward, saying it could result in a lighter sentence.

 

Media reports said the informant fears he could be silenced by one of the powerful bosses now in the crosshairs of the justice system. He has demanded state protection and refused to testify in court.

 

Der Spiegel magazine, in an issue to hit newsstands on Monday, said the scandal came to light after the informer contacted the BND foreign intelligence agency in early 2006.

 

It said a five-million-euro payment was made for information on those involved in the tax fraud and secret instructions from the government of Liechtenstein on how to hide the flow of money.

 

Meanwhile the head of the Federation of German Industry, Juergen Thumann, said German business could pay a heavy price for the affair.

 

"The news is catastrophic," he told business daily Handelsblatt in an interview to run in its Monday issue.

 

"Germany is the world champion in exports because we deliver good quality products and are reliable. We cherish ethics and responsibility. That is the only way we can attract foreign investors."

 

Deutsche Post chairman Klaus Zumwinkel resigned on Friday after it was revealed that he was under investigation.

 

Press reports said 900 search warrants had been executed this weekend and that several billion euros could be involved.

 

A finance ministry spokesman said on Friday that the suspects were "especially people whose revenues are at the high end of the scale."

 

The affair has been widely condemned by German leaders and will likely be raised in talks when Liechtenstein Prime Minister Otmar Hasler meets Chancellor Angela Merkel in Berlin this week, her spokesman said.

 

Liechtenstein, along with Andorra and Monaco, is viewed as an uncooperative tax haven by the Organisation for Economic Cooperation and Development because of its banking secrecy.

 

A Liechtenstein government spokeswoman said the affair was "unpleasant" for the principality but that she expected it to remain an attractive tax oasis for wealthy Germans.

 

"But we do not expect any long-term damage for Liechtenstein as a place to do business," Gerlinde Manz-Christ told Sunday's Bild am Sonntag newspaper. (AFP)

 
 
 
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