German Tax-Evasion Scandal Stirs Outrage German authorities begin a major crackdown on tax evasion, armed with an extensive list of clients of a bank in Liechtenstein. The tiny principality is a favored destination for the money of wealthy Germans avoiding the taxman.
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German Tax-Evasion Scandal Stirs Outrage

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German Tax-Evasion Scandal Stirs Outrage

German Tax-Evasion Scandal Stirs Outrage

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RENEE MONTAGNE, host:

And from Germany, a story about an international tax scandal that's got all the makings of a spy thriller - secret bank accounts, a mysterious informant, and high level mud-slinging. Officials are carrying out raids against wealthy Germans who've hidden assets in nearby Liechtenstein.

From Berlin, Kyle James has the story.

(Soundbite of music)

KYLE JAMES: This tune might sound familiar to Americans, but it's also the national anthem of Liechtenstein. When that country's Prime Minister Otmar Hasler came to Berlin last week to meet German Chancellor Angela Merkel, relations weren't as friendly as usual. Liechtenstein, a tiny country squashed between Switzerland and Austria, prides itself on its financial services and the banking privacy it offers its clients.

But it's a little too private for the Germans. Their intelligence agency, the BND, managed to crack the Alpine principality's wall of secrecy looking for tax evaders, and it's netted at least one pretty big fish.

Unidentified Man #1: (Speaking German)

JAMES: Journalists were invited to watch as the head of the German post office, a man named Klaus Zumwinkel, was taken into custody. His name and 1,000 others showed up on a CD that the BND bought for $6 million. They bought it from a disgruntled former employee of Liechtenstein's biggest bank, which is owned by the country's royal family.

Zumwinkel is suspected of evading around $1.5 million in taxes by funneling money to foundations in Liechtenstein. Based on the information on that CD, tax officials are carrying out up to 20 raids a day.

Protestors were soon chanting their displeasure at the meeting between Merkel and Liechtenstein's Hasler. The tax scandal has hit a nerve in Germany and fed an already growing suspicion of the country's elites.

Christian Humborg is with Transparency International.

Mr. CHRISTIAN HUMBORG (Transparency International): It has just been another crack in the fundament of trust in German corporate leaders. Now we see that the CEO of Deutsche Post, one of the leading German companies, has broken the law. And that, obviously, the ordinary citizen on the street cannot understand.

JAMES: Bernd Thiemann is walking with friends at Alexanderplatz, a large square in central Berlin. Before he retired, former Deutsche Post (unintelligible) Zumwinkel was his boss. Now he's furious at what he thinks is greed, pure and simple.

Mr. BERND THIEMANN (Former Deutsche Post Employee): (Through translator) I think it's a disgrace. Zumwinkel gets 89,000 euros a month in retirement, but evidently that's not enough for him. These people should be locked up, I think.

JAMES: Fifty-five-year-old Ursula Wachtel says she's been on and off welfare for a while now. She's on her way to her a second job as a washroom attendant to make ends meet.

Ms. URSULA WACHTEL (Washroom Attendant): (Through translator) The guys at the top do whatever they want and us little guys pay for it. If people actually paid their taxes here, we could work down our national debt or we could help the poor, like the homeless you see here in this square.

Unidentified Man #2: (Speaking German)

JAMES: But opinion is not unanimous. Some of the students in this seminar at a private business school in Berlin think Germany's top tax rate of 45 percent is too high and the tax code too complicated. Sebastian Gaiser says the government's intensive hunt for tax evaders is akin to class warfare.

Mr. SEBASTIAN GAISER (Student): (Through translator) It just shows that in Germany people are envious of high achievement. I think that's a shame, because pillorying these executives who create jobs for the economy isn't going to do a lot for the country.

JAMES: But tracking down those tax dodgers could help replenish government coffers. It's estimated Germans evade about $44 billion in taxes every year.

As for Liechtenstein, it's expressed outrage at the violation of its banking secrecy and that German intelligence bought information that was gained illegally. The principality has said in order to crack down on its tax dodgers Germany's been dealing in stolen goods.

For NPR News, I'm Kyle James in Berlin.

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