German Chancellor Angela Merkel urged Liechtenstein on Wednesday to take rapid action to combat fraud amid a probe into hundreds of Germans suspected of evading taxes by parking money in the alpine country’s secretive banks.
Liechtenstein has come under fire in Germany after prosecutors launched a series of raids across the country last week to catch tax dodgers. The investigation has already led to the resignation of Deutsche Post Chief Executive Klaus Zumwinkel and threatens to claim other high-profile victims. Merkel, speaking at a joint news conference with Liechtenstein Prime Minister Otmar Hasler in Berlin, said she wanted good relations with the principality but pressed it to show progress in three areas. She listed talks between Liechtenstein and the European Union on fraud, the implementation by Liechtenstein of a third EU money laundering directive and better cooperation from the country with the OECD on unfair tax practices. “Time is of the essence,” Merkel said. “The faster action is taken the better the basis for good relations.”
Liechtenstein, a tiny country of 35,000 sandwiched between Switzerland and Austria, depends heavily on its secretive banking sector. It is one of three countries on the Organization for Economic Cooperation and Development’s black list of uncooperative tax havens, alongside Andorra and Monaco.
Hasler said he was willing to sign an agreement to fight fraud and vowed better cooperation with European partners. “Liechtenstein is on a path of reform,” he said. The probe has led politicians in Germany to call for radical action against Liechtenstein, the smallest German speaking country in the world.
Earlier, the head of Germany’s Social Democrats (SPD) Kurt Beck accused Liechtenstein of “robber baron” policies and said sanctions might be needed to force the tiny alpine state to crack down on tax evaders. In an interview with weekly magazine Stern, Beck urged Europe to act against secretive Liechtenstein banking policies he said were facilitating criminal behavior. “If that doesn’t work, then we need to talk about sanctions,” he added, raising the possibility of a ban on financial transfers to the principality. (Reuters)