'Stolen' bank data threatens Swiss-German relations

Negotiations between Switzerland and Germany over a new double taxation agreement are under threat from a potential new frontal attack on Swiss banking secrecy.

The German government is mulling whether to pay an informant who is offering to divulge details of 1,500 wealthy individuals who are hiding assets in Swiss bank accounts to escape taxation by Berlin.

The informant’s offer was reported over the weekend by the Frankfurter Allgemeine Zeitung, raising tensions between Switzerland and its biggest trading partner.

The informant is seeking 2.5 million euros and has reportedly already provided information to Berlin about five clients to prove that he has the bank data.

It is not at all clear whether the centre-right government of Chancellor Angela Merkel will   buy the information, but it is under heavy pressure to do so from the opposition Social Democrats.

The information could reveal “numerous criminal acts” related to tax evasion, said Nicelette Kressl, finance spokeswoman for the Social Democrats.

The Frankfurt newspaper that broke the story said the Swiss bank data could allow the German government to recover at least 100 million euros in unpaid taxes.

But Swiss federal cabinet ministers commenting on the affair at the World Economic Forum in Davos expressed concerns that Germany would use “stolen goods” in a bid to boost its revenues.

Defence Minister Ueli Maurer said that such a move would shake Switzerland’s trust in Germany.

Swiss President Doris Leuthard, who doubles as economic affairs minister, was more circumspect,  noting that the matter was “speculative” and had not been officially confirmed.

“We must first make an analysis and have official information and not to make formulations on speculation,” she told the ATS news service.

“In general we judge it difficult that a lawful state would use illegal data,” Leuthard added.  That would involve “dealing with criminals, which is against the law.”

However, the German government has in the past already paid an informant to catch tax cheats.

During the period from 2005 to 2009 when the Social Democrats were part of the coalition government, Berlin purchased information about German taxpayers with accounts in Liechtenstein and Luxembourg.

In one notorious case, the chairman of Deutsche Post, Klaud Zumwinkel, was forced to resign in 2008 after the government obtained data showing that he had evaded paying one million euros by stashing assets in a Liechtenstein trust.

Members of the current German government are less eager to pursue such actions.

“Personally, the fact of paying to obtain something legally contestable poses a problem for me,” German Defence Minister Karl-Theodor zu Guttenberg, a member of the Christian Social party, told the Swiss newspaper NZZ am Sonntag in Davos.

The case is just the latest threat to Swiss banking secrecy, which has come under attack from several other countries concerned about tax havens.

The French government received allegedly stolen information from 3,000 citizens with accounts at an HSBC branch in Geneva last year.

The Canadian government is threatening court action against UBS in a bid to obtain information about wealthy Canadians who have allegedly used accounts at Switzerland's largest bank to escape paying taxes on several billion dollars worth of assets and income.

The United States government has sought the account details of thousands of Americans suspected of evading taxes through Swiss bank accounts.

An agreement between Washington and Bern to furnish the names of 4,450 clients with UBS  accounts was threatened last month by an Administrative Tribunal ruling.

The court decision ruled that such a transfer would be contrary to Swiss banking secrecy laws.

UPDATE:

Germany slammed over stolen bank data