Print

Mail

wiki links

Germany frets after tax scandal

German leaders expressed concern on Saturday that a tax evasion scandal which has put hundreds of prominent Germans in the police spotlight risked discrediting the country's post-war economic model.

A raid on the home of Deutsche Post chief executive Klaus Zumwinkel in an investigation into suspected tax dodging has heightened resentment towards top managers, who many Germans feel have profited from economic growth at workers' expense.

Thursday's police swoop on Zumwinkel, who has led Deutsche Post for 18 years, is likely be followed by police visits to hundreds more prominent Germans as part of a probe into offshore accounts, sources close to the investigation have said.

"Tax cheating: Now the rich are trembling", ran a front-page headline on Saturday's edition of mass-selling daily Bild.

Economy Minister Michael Glos told the Bild am Sonntag newspaper that Germany's top managers should be aware of their example to society.

"Otherwise, our social market economy will be implausible," he said.

"Then our country would be a takeover candidate for the Left," he added, referring to the Left party, a group of ex-communists and disaffected former Social Democrats whose growing appeal has pulled the main political parties left.

Germans' faith in executives has been shaken in the last few years by a series of corporate scandals, and by firms putting downward pressure on wages at a time when the economy has seen its strongest burst of activity since reunification in 1990.

Daily Sueddeutsche Zeitung said no other board members of firms listed in Germany's DAX leading share index were being targeted in the tax evasion probe.

But a series of scandals in the last few years has engulfed top firms like Volkswagen and Siemens, whose successes have generated the corporate prowess on which Germany's post-war identity is founded.

Frank Bsirske, head of services trade union Verdi, said people were fed up with executives lining their pockets.

"They preach restraint for others and stuff their pockets full themselves," he said. "It can't go on like this."

Zumwinkel will resign as Deutsche Post chief today, the company said on Friday. He faced pressure to go after prosecutors said they suspected him of dodging about 1 million euros (US$1.47 million) in taxes by transferring money to tax haven Liechtenstein.

Finance Minister Peer Steinbrueck told reporters Zumwinkel had admitted evading taxes. Zumwinkel himself was unavailable for comment.

Meanwhile, the German government said on Saturday that it paid an informer to get Liechtenstein bank details on the tax evasion scandal.

A bank in the principality said that German authorities were working from a list of its clients stolen by an employee in 2002.

Steinbrueck approved the payment to the informant, his department said in a statement, without confirming a Der Spiegel magazine report that 5 million euros was handed over.

Steinbrueck "was kept informed of the budgetary consequences and gave his approval to the payment" to the secret informant, a ministry statement said.

The minister "had no knowledge of the details of the action undertaken nor the accounts and the names," the statement said.
This story has been viewed 1105 times.