Coalition battle over plan to pay for stolen tax data

BERLIN’S COALITION government is divided over plans to pay €2.5 million for stolen details of Swiss bank accounts allegedly used by German citizens to evade tax.

Chancellor Angela Merkel has backed plans by German tax authorities to acquire the information on a reported 1,500 tax evaders that could net a reported €100 million in withheld taxes and fines.

But the plan has divided her own Christian Democrat (CDU) party, incensed her junior partners, the Free Democrats (FDP), and once again strained relations with neighbouring Switzerland.

“Like any sensible person, I want to clamp down on tax evasion . . . and if this information is relevant to this, we should do everything to take possession of it,” said Dr Merkel.

German finance minister, Wolfgang Schäuble, described the deal yesterday as “perfectly acceptable, legally speaking”.

But the government is divided over whether there can be an illegitimate means to a legitimate end, and whether it is permissible for a state to pay for stolen information with taxpayers’ money in the hope of clawing back more.

Berlin has been here before: in 2008, tax authorities spent €5 million on stolen data from a Liechtenstein bank, a coup that has earned €177 million so far and claimed the scalp of one of Germany’s top executives, Klaus Zumwinkel.

But Guido Westerwelle, leader of the pro-business FDP, made clear yesterday that he thinks little of the plan. “Of course tax evasion is a serious crime and not a misdemeanour. But it’s clear, too, that we don’t want to make ourselves co-perpetrators to thieves.”

The FDP has dismissed claims it is trying to protect its affluent voter base, claiming the deal signals Berlin rewards data thieves.

The Swiss see this as the latest battle in a long-running war with its larger, northern neighbour on financial affairs. “We expect that Germany will not buy information from criminals but instead arrest them and give back the data,” said Thomas Sutter of the Swiss Banking Federation.

The row comes at an inopportune time for Switzerland: after several bruising encounters last year over its banking secrecy laws, Berne is still trying to settle a long-running row over US tax evasion involving its largest bank, UBS.

News of the proposed Berlin deal brought condemnation from nearly all political parties in Switzerland yesterday.

However, the Swiss Social Democrats suggested it was time to end the unique distinction in Swiss law between tax fraud, viewed as a serious crime, and tax evasion, seen as less serious civil offence.

Speculation continued yesterday about the identity of the whistleblower, named in several reports as Hervé Falciani. The 37-year-old former employee of the Geneva branch of Britain’s HSBC bank sold information on alleged tax evaders to the French government last year

Mr Falciani dismissed speculation to AFP yesterday as “just a rumour”.