A two year long Criminal proceeding launched against Liechtenstein’s LGT banking group by German state prosecutors has reportedly ended with the bank paying a landmark fine totaling around EUR50m. (The bank had been under investigation since early 2008 on suspicion of having abetted tax evasion).
The Bank in question LGT (which had been under investigation since early 2008 on suspicion of having abetted tax evasion)’s media spokesman has said the settlement – reached without admission of guilt by either the individuals concerned or by the bank itself – was reached in order to avoid lengthy and burdensome litigation.
State prosecutors in Bochum investigating employees of the former LGT subsidiary, LGT Treuhand, agreed to suspend their tax investigations in return for payment of a global fine of EUR46.35m imposed on the banking group and for individual fines of around EUR3.65m.
The tax investigations were launched following Germany’s Federal Intelligence Service purchase (at a cost believed to have been in the region of EUR5m) of data stolen from LGT Treuhand. Hundreds of individuals worldwide with accounts held in the bank were alleged to have evaded taxes, including Klaus Zumwinkel, former head of German mail giant Deutsche Post.
Meanwhile Liechtenstein’s government has just approved tax information exchange agreements in accordance with the OECD standard with Norway, Sweden, Finland, Denmark, Iceland, the Faroe Islands, and Greenland.
The agreements with the seven Nordic partners meet the internationally applicable standards in accordance with the OECD model tax convention. Both sides of the agreement have reportedly emphasized a willingness to expand and to deepen tax cooperation beyond the TIEA. This also includes a willingness to enter into talks concerning the conclusion of a double taxation agreement.
Liechtenstein has now concluded 23 OECD-compliant tax agreements. The new agreements were due to be signed on December 17, 2010.
Whilst TIEAs having become a fact of life for those in the Offshore Incorporation world it’s a shame indeed that LGT didn’t test in court the admissibility of the illegally obtained evidence. I wouldn’t be the only legal expert to cast doubts over whether the Prosecution would have been allowed to lead such heavily tainted evidence (especially in such a huge trial) having regard to public policy considerations.
Tis a sad day indeed for justice when the Government of an economic giant can be allowed to get away with persecuting a smaller neighbor after having acted criminally itself… ( Star Chamber anybody?)