Heinrich Kieber, 42, stole confidential information on tax evaders from the Liechtenstein bank LGT Trust Ltd. which is owned by the Leichtenstein Royal Family. The credit outlook on the Liechtenstein's LGT Bank was downgraded 2 weks ago to 'negative' from 'stable' by international ratings agency Standard and Poor's.
He then proceeded to sell it.
In 2006 he approached the German foreign intelligence agency, the Bundesnachrichtendienst (BND). On Jan. 24, 2006, the BND received an email through its regular Internet address. The sender offered them a DVD full of information detailing foreign investments and following capital flows from Germany into those investments. he told them he had detailed information on a number of accounts held by German nationals in the LGT Group, a bank managed by the principality of Liechtenstein. The material, he wrote, related to financial investments worth €3.5 billion (US $5.2 billion).
Negotiations followed which eventually involved German Finance Minister Peer Steinbrück.61, SPD and from Rhine Westphalia. He authorised payment of 5 Million Euros for the single data disk and agreed to provide personal protection for Herr Keiber.
It now appears that he also passed on information about acounts with the Liechtensteinische Landesbank (LLB) which may (and almost certainly will) reveal tax evasion. It is now known that data on 1,400 Germans, has been made available ,many of whom had invested their money in foundations in Liechtenstein to deliberately circumvent German taxation. At stake are billions of Euros in tax revenues lost to the German government.
The first to fall was Deutsche Post CEO Klaus Zumwinkel. He resigned on February 16th after raids on his home and office by officials looking for evidence of massive tax invasion. His case was only one of many investigations launched last week and of other investigations to come.
German politicians were not slow to capitalise on these events and led by Chancellor Angela Merkel jumped on their high horses. She reminded German economic leaders that they carry a huge responsibility. "Responsible behavior from companies is an elementary prerequisite for a functioning socially-responsible market economy."
Minister of the Economy Michael Glos, told sensational tabloid Bild am Sonntag that German managers have to "become aware that they are role models for society." Otherwise, he said, "faith in our market economy will be lost."
Interior Minister Wolfgang Schäuble, CDU mused "I have zero understanding for this kind of greed. Uncontrolled capitalism, greed and massive losses on speculative investments -- that is a combination that makes people furious." Steinbrück, the Social Democratic Finance Minister, said when asked about the afair y the leading daily Die Zeit "It is the elites who are threatening to cause the system to collapse."
However Prince Alois, Liechtenstein's head of state, denounced the German investigation as an
"unprovoked attack by a large country.".. and sat back and watched the LLB share price plummet - probably as fast as customers disappeared. Roger Köppel, 43 the editor-in-chief of the Swiss weekly newspaper Die Weltwoche, sensing no doubt that these investigations might range, way beyond the tiny state of Lichtenstein described it as a "fatwa by the German tax authorities against businesses and employees seeking to withdraw from a fundamentalist taxation system."
How did Keiber ( who we now know Kieber was involved and wanted by Spanish Police for a 1996 fraudulent real estate deal in Barcelona, which had earned Kieber 600,000 Swiss francs ($553,000). He apparently fled to Argentina before returning to Liechtenstein, where he began working for LGT Bank in April 2001 - who were unaware of his criminal past) get the information to pass on to the BND ?
Kieber was very competent computer specialist ,his attorney Robert Müller says, a highly intelligent, "inconspicuous and sensitive man who speaks Spanish well." His job at LGT was to digitize all of the paper documents at a subsidiary of the bank, LGT Treuhand.
It is probable that Keiber copied the information as a useful bargaining counter if the Spanish Police caught up with him. Anyway he set to, copying contracts, meeting minutes, handwritten notes -- essentially the bank's entire inventory of information. Kieber had exceptional access to the secret archives of LGT Treuhand.
In January 2003, he resigned from LGT. He tried to blackmail them. Liechtenstein state prosecutor Robert Wallner, says Keiber demanded free passage and two forged passports, an d he agreed not to turn over the stolen client data to "foreign media and authorities."
The Liechtenstein authorities would not play ball. Nevertheless, Kieber gave himself up and on the ageing Spanish fraud charges, his attorney Müller negotiated a penalty of one year in prison, reduced to three years' probation, which would not be entered into his police record in Liechtenstein. He was not convicted of data theft and, on Jan. 7, 2004, Liechtenstein authorities closed the Kieber case.
Shortly after Kieber started to collect on his valuable data first he negotiated with the Americans , then with the British. Since then American tax investigators have been successful in 50 cases since the summer of 2007.
But Tony Blair's Govenrment was a harder nut to crack . Yes they would take the data but they wanted to pay only when they had collected the tax - either a sign of weakness or an opportunity to finesse the data and allow some high flying frineds a chance to extricate themselves from some embarassing arrangements. Some say the Germans would have never been approached if he could have collected earlier. He told the Brits to Go Fuck themsleves ( and there were a few cleaner sets of trousers in the Square Mile) and turned to the BND.
The first meeting was in mid 2006 in Offenburg for 2 days on August 16/17th . The Wuppertal tax investigators talked with Kieber, they moved to Strasbourg in France. They wanted names / details , 10 days later, a list was delivered, through a BND courier, of 150 names from North Rhine-Westphalia (home patch of German Finance Minister Peer Steinbrück) -- it was dynamite.
Keiber wanted €6 million ($8.9 million). The Germans offered to place him in the witness protection program of Germany's Federal Office of Criminal Investigation (BKA). Kieber wanted a new identity -- and he got one. They needed Keibers software expertise to crack the data - they weren't dealing with a fool.
On Dec. 14, 2006, the BND brought the Chancellery into the game.
There were concerns about - and continue to be , about the legality of obtaing the data in this way.
Regardless €5 million ($7.4 million) was rustled up for the DVDs. Keiber paid a flat tax of 10% - the rate for inromants - leaving keiber with €4.2 million ($6.2 million) after taxes. In addition notary fees and of establishing the informant's new identity wer paid . The BND used up almost the entire budget of €5 million ($7.4 million) approved by the Finance Ministry.
The BND cut Kieber's fee 3 ways , drawn on 3 banks. Two whisted through , there was ahitch with the last - they suspected money laundering.
What did the BND Buy ?
The DVDs contain information on 4,527 Liechtenstein foundations and institutions, of which 1,400 were owned by German investors. The DVDs contain data covering a period from the 1970s to approximately 2003, as well as some data through the end of 2005. About 65 of the foundations listed were still in existence at the beginning of 2008. Members of the Bundestag are rumoured to be on the list but this is denied.
Over half the 3,100 foundations and establishments are not German based . Some are part of organized crime in the Balkans and in Russia, the reason that German authorities believe that the informant's life is in danger.
Last week Liechtenstein Prime Minister Otmar Hasler's met Chancellor Merkel in Berlin , a 54-year-old high school teacher, he embodies harmless honesty. He spent three quarters of an hour repeating the same mantra over and over again, no matter what he was asked: Liechtenstein is reforming itself and is on the right track.
Merkel had an ace up her sleeve to force a detente - Germany has yet to ratify a resolution that would allow Liechtenstein to join the Schengen zone of passport-free travel.germany would find it difficult ...of course ...if ... Liechtenstein signed an agreement to provide legal assistance on matters of tax evasion ...then .... "Liechtenstein is reforming itself and is on the right track", the prime minister told the chancellor.
Of course Germans don't get to put (or pass ) their money in Leichtenstein without a little local help.
Two Frankfurt-based private banks, Metzler and Hauck & Aufhäuser, and also the Hamburg-based Berenberg Bank are feeling hot under the collar as the tax inspectors feel it.
The trick was / and probably still is (after Germany introduced a Capital Gains Tax in 1993) to move money
out of one account through a Leichtenstein Credit Anstalt and back into another account - where it stays.
Free from those nasty taxes.
All this is of course legal and above board .....
Managing foreign asets for clients is "a completely normal process," says a spokesman of Metzler. A deciding factor in determining whether criminal activity was involved, according to the Metzler spokesman, was whether the bank was aware of its client's goal of using the Liechtenstein entity for tax evasion. "As far as our clients were concerned, we assume that this was not the case," says the Metzler spokesman. Naturally.
On Thursday the shareholders of UBS gathered to here a litany of woe from their Directors - not least that the world’s biggest wealth manager was bowing (they claim) to Governments pressures to release the names of an unspecified number of American customers who may have committed tax fraud in having their affairs handled by the financial wizards of the bank’s Geneva, Zurich and Lugano offices
