I am not in the habit of trying to get out of the mores that some arguments are able to tie up in. These usually involve firstly moral and ethical implications, but also practical matters of state-citizens relations, rights to privacy, solidarity, good public values and the like. Let’s take the case of the alleged informant in the tax evasion scandal, who has been identified by the German press as Heinrich Kieber.
It is alleged that from the information he supplied thousands of tax evaders in Europe and elsewhere are now being investigated for tax evasion by German and other European authorities. It is not clear whether the USA authorities are acting on this information.
German authorities have confirmed that they paid an informant between four and five million Euros – about 6 million and 7.5 million US dollars – for data of account holders in the LGT (Liechtenstein Global Trust) banking group. The banking group is said to be largely or partly owned by the ruling family in Liechtenstein. Forbes says it is controlled by Crown Prince Alois of Liechtenstein and has assets worth nearly 100 billion Swiss francs ($92 billion) under management.
Welcome to Liechtenstein
Is often described as a beautiful alpine country, rich in snow, where the beautiful people go and enjoy. It is a principality, speaks German, uses the Swiss franc as currency and shares borders with other tax havens Austria and Switzerland.
9. Is there banking secrecy in Liechtenstein?
Answer: Yes, there is banking secrecy in Liechtenstein. It is actually called bank client secrecy, since it is based on the protection of individual privacy. This is a basic attitude and a tradition in Liechtenstein. However, bank client secrecy is waived in the case of criminal acts. The Liechtenstein financial sector has zero tolerance for criminal assets. In contrast to tax fraud, tax evasion is an administrative offense in Liechtenstein, not a criminal offence. This approach is based on the conception of citizens as trustworthy and well-informed persons, not as entities to be administered.
It is said that the financial sector accounts for about 30 % of the country’s economy.
So what is the story all about and how did it begin?
Heinrich Kieber – it has been reported – had a dubious past. Suggestions in the media are that he was criminally inclined. (my words).
This past, according to Forbes, relate to 1996 in Spain, when he financed a real estate deal with “uncovered checks”. He was not charged and did not have a criminal record when he joined the bank in Liechtenstein.
In 2001, he was fined 600,000 Swiss francs ($552,000) for fraud by the Liechtenstein judicial system. (Forbes)
From about 2001 and 2002 he worked at LGT Treuhand banking the trusts records, work which included digitalizing the paper archives. Some explained his job as involving checking documents that were being scanned and transferred into electronic databases, but what is clear is that he had access to information.
It is alleged that he stole the documents during 2002 when he was working there.
By the end of 2002 he left the company and the country but that is only the beginning…
It is alleged that before Kieber left LGT he created four DVDs containing the details of the client data he had been scanning. His intention appears to have been blackmail, apparently not against the company but the legal authorities whom he felt treated him unfairly. (Forbes)
In January 2003, apparently Kieber communicated with Prince Hans-Adam of Liechtenstein, outlining his grievances and seeking a way out of his legal difficulties. He apparently demanded also two new passports, and threatened to pass on the stolen client data to foreign media and authorities. (Forbes)
The principality of Liechtenstein refused to accede to his demands and sought his arrest whilst the company LGT – according to Forbes – took a softer approach. It managed to make contact with Kieber and coax him back to the country to face the legal consequences by offering to pay for his legal counsel and his apartment in Liechtenstein. During the subsequent court proceedings, the four DVDs were returned to the bank and destroyed.
Apparently Kieber sent two more letters to Prince Hans-Adam, one seeking a pardon for his conviction of fraud. This was not acceded to and kieber fled the country for the second time in 2003.
In 2006, Kieber allegedly contacted German authorities
The company confirmed this week that they believed the informant was Kieber and that they do not believe that he had destroyed all the DVDs and must have had copies.
Based on the information (believed to contain 1 400 names and about 600 of them believed to be German), it is reported that hundreds of homes and offices across Germany have been raided.
So is Kieber a whistleblower and does it matter what he is called?
If one uses the old dictionary and given our obsession with sports, I think he can qualify as a whistleblower. According to the Oxford English Dictionary, whistleblowing involves bringing an activity to a sharp conclusion as if by the blast of a whistle. Well… this is not the end of the league season but one match, and he played well, even if he was a bit dirty.
As members of the global justice movement (including anti corruption), we must know that these issues are not easy to deal with but in the real world they require some compromises from ideal type moral – ethical positions which many of us hold. Although modest, it is clear that Transparency International is moving towards tackling tax havens and must make greater strides towards doing so …fast. The last press release on the subject was encouraging and included the view that “Global financial centers play a pivotal role in allowing corrupt officials to move, hide and invest their illicitly gained wealth. Offshore financing, for example, played a crucial role in the looting of millions from developing countries such as Nigeria and the Philippines, facilitating the misdeeds of corrupt leaders and impoverishing those they governed.”
The question the Kieber makes many ask is: Did the German authorities do the right thing to pay for this information from an employee with a grievance against his company or its host country?
My answer is Yes. Very little if any harm has been caused to any person although I feel uncomfortable about payments personally. But this is not a perfect world and the fallout (personal anger, etc.) is good news for the justice movement worldwide, and it is widespread. If the authorities say – as they assert – that they believe that most of the citizens that invest with them are upright citizens, who are law abiding, they should have nothing to fear. I understand that Kieber has to take up a new identity as his life is obviously in danger from those law-abiding citizens who were simply banking in Liechtenstein.
Inside Germany the Deutsche Post AG was arrested based on the information for alleging he evaded paying about €1 million in taxes. And outside there is great movement and interest from many countries from far and wide (Australia, USA, Spain, etc.) to deal with tax evaders who use so-called tax havens.
Those who evade taxes deny countries the necessary resources for national and international development, so much needed to fight HIV Aids, hunger, poverty and inequality, and the scourges of violence against women and children and much more.
In addition, the German Finance Minister Peer Steinbruck warned Liechtenstein and other European tax havens, which use the cover of banking secrecy laws, including Switzerland, Luxembourg or Austria (interestingly enough, in this case Austrian tax authorities will apparently not pay for information but have no qualms of using the information available to act upon those evaders).
That’s breathtaking stuff.
For a long time now many in civil society and in particular the Tax Justice Network have inspired the struggle to fundamentally reform this financial architecture of some nations. Although more has to be done, it is appropriate to pause and take a bow for those comrades.