Swiss banks accused over tax evasion

The head of Germany’s biggest opposition party has accused Swiss banks of “organised criminality” for helping rich Germans evade taxes, and suggested that Germany should threaten the banks with criminal proceedings.

The salvo follows calls from other members of the Social Democratic party (SPD) to scrap the tax deal struck between Germany and Switzerland last August, and marks a significant escalation of the political battle over its future.

“It’s a serious crime. We are talking here about organised criminality in Swiss banks in Germany,” said Sigmar Gabriel, the Social Democrats’ national chairman, in a radio interview, adding that Germany should task a special prosecutor with combating tax evasion.

A year ago it looked as if Switzerland had pulled off the unlikely coup of stilling German discontent over its tax haven status, while preserving its hallowed bank secrecy laws.

Under the terms of the agreement, Germans with previously undeclared wealth in Swiss private banks would be subject to a one-off penalty charge, and would in future pay taxes on their holdings at the same rate as in Germany. In exchange, their anonymity would be preserved and their wealth legitimised.

However, that grand bargain is now threatening to unravel. The treaty has been ratified in Bern, but not in Berlin, and Germany’s centre-right government cannot approve it without the backing of the SPD. The government insists the deal is the best available compromise, but the SPD claims it legimitises tax evasion.

As Berlin’s political class squabbles, some of Germany’s federal states have kept the pressure on Switzerland’s banks by buying CDs containing information about the Swiss accounts of German tax evaders.

Last week it emerged that North Rhine-Westphalia had obtained a new tranche of data, prompting prosecutors in Bochum to say that they had opened a new investigation into possible tax offences.

Norbert Walter-Borjans, the Social Democrat finance minister of North Rhine-Westphalia who has been at the forefront of the CD purchases, argues that they are an important tool for encouraging tax evaders to declare their assets, especially as the treaty has not yet come into effect.

That view, however, is firmly rejected by Angela Merkel’s government.

“People who rely on data-theft are acting in a political and legal grey area . . . The only way to enforce tax claims in Switzerland in an equitable and lasting manner is the tax deal. Without it, each year billions [of euros-worth] of tax claims will lapse,” said Steffen Kampeter, deputy finance minister.

In Switzerland, the CD-buying has provoked outrage. Earlier this year, the country issued arrest warrants against three German officials linked to data purchases, and Silvia Bär, a spokeswoman for the rightwing Swiss People’s party (SVP), on Friday accused Germany of “state-sponsored handling of stolen goods”.

“People who create a market for stolen CDs are just as guilty as those who steal them,” she said.

Indeed, Germany’s CD purchases have sown the seeds of an unlikely Swiss alliance against the deal, placing conservatives who reject it as an infringement of sovereignty alongside leftwingers who oppose it for not doing enough to make states share data on tax evaders.

AUNS, a pressure group close to the SVP, has started collecting signatures to force a referendum on scrapping the treaty, which it says was negotiated “under foreign pressure and in a climate of blackmail”.

The influential Swiss Bankers’ Association still backs the deal, however, and for the country’s private banks, whose revenues have already been hit by the economic uncertainty spread by the eurozone crisis, the prospect of additional legal uncertainty is bad news.

In private, Swiss bankers say they are more concerned about a German failure to ratify the agreement than a Swiss referendum. The German government still believes that the deal will still go through, although a vote is unlikely before November.

“We still think there is a good chance that a majority can be achieved in the Bundesrat,” said the finance ministry, referring to the upper house of Germany’s parliament in which the SPD has the votes to block the treaty.

One factor that could yet encourage SPD-run states to vote with the government is the impact that ratification of the accord would have on their finances.

The finance ministry says that the treaty could bring a windfall of as much as €7bn for Germany’s states and municipalities. With austerity weighing on devolved budgets, that is a not insignificant consideration.