5th Feb 2023

'Immense' German tax fraud scandal widens

An investigation of wealthy and prominent Germans squirreling away money in Liechtenstein to avoid taxes is rapidly expanding around the world, with tax authorities from eight additional countries announcing probes of their own.

Officials from the Netherlands, Norway, France, Italy, Sweden, the US and Canada said yesterday they are investigating hundreds of their citizens for tax evasion in connection with LGT, a bank in the principality and tax haven. Last week, the UK announced a similar probe.

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The German prosecutor in the case, Hans-Ulrich Kruek, told reporters on Monday that the investigation has so far netted 91 confessions from some of the country's wealthiest citizens, who have now already made payments to tax authorities worth €27.8 million. A further 104 individuals have turned themselves in.

"Taxes were evaded on an immense scale," he said, according to AP news agency.

Mr Kruek said that some 150 raids of premises had taken place throughout Germany in connection with 120 cases of tax evasion related to foundations in Liechtenstein. The prosecutor said that these foundations held capital worth "well over €200 million".

Searches of homes and offices across the country burst onto the front pages two weeks ago with the high-profile raid of Deutsche Post CEO Klaus Zumwinkel's house. The executive has since resigned from the German post office.

The investigation was launched after the German government paid €4.2 million for a CD-ROM stolen by an informant containing a list of some 1,400 of names involved in the tax fraud scheme.

The American Internal Revenue Service, the country's tax authority, announced an investigation of more than 100 US citizens who allegedly hid assets in the Liechtenstein bank owned by the family of the country's ruler, Prince Hans-Adam II.

French officials have said there are hundreds of their country's citizens on the CD-ROM, while Sweden and Canada are both investigating around a hundred cases, and Australia is investigating 20 individuals.

German prosecutors have also announced they have received information relating to a second Liechtenstein financial institution and are considering the need to investigate other banks in the tiny country.

Meanwhile, the Financial Times is reporting that prosecutors may expand their probe into a Swiss bank, Vontobel, as well. The UK business daily says that the German investigating team is looking into whether Vontobel helped Germans to create secret accounts through a subsidiary in Liechtenstein.

The scandal has cooled German-Lichtenstein relations, with German Chancellor Angela Merkel demanding the principality work to prevent such tax evasion. The chancellor will also call Monaco to account for being a haven for German tax evaders when visiting Prince Albert today (27 February).

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