Friday, 10 August 2012

German tax probe prosecutors act on new Swiss data leak

By Matthias Inverardi
DUESSELDORF, Germany | Thu Aug 9, 2012 7:09pm IST

Aug 9 (Reuters) - The German state of North Rhine-Westphalia is pursuing tax evaders who secretly stashed cash in Switzerland, prosecutors said on Thursday, after they obtained new bank data from a presumed whistleblower.

The move is likely to strain ties between Germany and Switzerland, which has sharply criticised previous purchases of leaked bank data by officials in the state.

In part to prevent such purchases, Berne struck a deal with Berlin in April to levy taxes on German assets in Swiss accounts, but the agreement could easily unravel.

The largest German opposition party has promised to veto the deal in its current form, while a spokesman for the Swiss government said on Thursday it would not be renegotiated.

A spokesman for the NRW prosecutor declined to say which bank or banks the latest information came from but the Financial Times Deutschland reported that the towns of Wuppertal and Aachen had purchased two CDs from a whistleblower, including data from UBS.

"Data from a CD has been made available to us. We are investigating .. in relation to tracking down tax evasion," said prosecutor Bernd Bieniossek.

The paper said the first disc carried data from Switzerland's biggest bank, including "big names", and that the second disc contained information on a smaller bank .

Despite ongoing talks on the Swiss-German tax deal, NRW is reported to have repeatedly bought such CDs over the past year.

Chancellor Angela Merkel's government says the deal will enable Berlin to net huge sums if and when it takes effect. Germans hold an estimated 150 billion euros in Swiss accounts.

But she will probably have to offer the opposition Social Democrats (SPD), who say the agreement in its current form lets the tax dodgers off too easily, more concessions to secure their support.

Merkel needs SPD backing to get the deal through the Bundesrat upper house of parliament, where a vote is tentatively planned this autumn.

Senior SPD member Joachim Poss said that buying the tax data was the best weapon to use to combat tax evasion.

"The purchase (of CDs) is far more effective than a lousily agreed tax deal with Switzerland which is full of loopholes," Poss told Reuters.

Asked if there was a chance the tax deal could succeed, he said: "I hope not. This agreement is not in the interests of the honest German taxpayer. There will be an amnesty on tax crime," he said.

In 2010 NRW, which is struggling to reduce high debt levels, and several other German states said they had bought data from whistleblowers. This prompted Germany and Switzerland to start their tortuous talks on the tax pact.

Banking secrecy is crucial to Switzerland's $2 trillion offshore wealth management industry, and the country has refused to agree to an automatic exchange of information.

Last month, German tax authorities raided Credit Suisse clients and French officials searched the homes of UBS employees, deepening the crackdown on foreigners hiding money in Swiss offshore accounts to dodge taxes.

The Swiss have reacted angrily to the CD purchases and even issued arrest warrants earlier this year for three German tax investigators they accused of buying secret tax data.

Urs Schwaller, a member of the centre-right Christian Democrats who sits in the Swiss upper house of parliament, said on Thursday that the German data purchases should stop.

"When we discussed the tax deal in parliament, we were clearly told that this would not be actively pursued anymore," he said.

Silvia Baer, spokeswoman for the right-wing People's Party (SVP), said: "If a market develops for stolen data and is even practically promoted by the government, then you will always have people who steal data."

(Additional reporting by Gernot Heller in Berlin, Katharina Bart, Albert Schmieder and Andrew Thompson in Zurich,; Writing by Madeline Chambers; Editing by John Stonestreet)

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