News from the Robber's Den

A princely court system is helping Liechtenstein trustees. This puts beneficiaries at risk of losing their foundations.

“This is customary in the area,” two well-known Liechtenstein trustees say through their lawyer.

The local standard hourly wage for secretarial work is 300 francs, and the two foundation board members treat themselves to 600 francs.

A shared dinner costs 1,800 francs.

This means the two have earned up to 75,000 francs each, per man per month, for about two years.

Paid for by the foundation, which owns extensive real estate holdings in Germany.

However, it is becoming increasingly run-down. Vacant properties, reminders, and debt collection proceedings are piling up, and renovation work is being halted due to unpaid bills.

"They're ripping the foundation off like a Christmas goose," commented Thomas Kindler bitterly. He was appointed by the founder, Hermann Hartlaub, a Liechtenstein resident, as a board member, managing director, and beneficiary.

Kindler pursued this task flawlessly for 28 years. Until two years ago, one of the two trustees, who, as is customary in the region, had a mandatory seat on the foundation's board, seized power in the wake of a fraternal dispute.

Kindler was accused of the “mere appearance of a possible conflict of interest.”

This bold claim, which makes every lawyer's hair stand on end because it is as stretchy as chewing gum, was enough for the district court to summarily remove Kindler from office.

Kindler considered this to be a bad joke until the Princely High Court, in the name of the Prince and the people, ruled that this construction, which was not provided for by law, was sufficient to deprive him of control over assets worth hundreds of millions.

For two years now, Kindler has been fighting to regain control of the foundation's assets that were taken from him.

The proceedings are being held in a bunker-like courtroom. The only decoration in the room is a black-and-white portrait of the prince, photographed in profile.

He looks intently to the left; perhaps he doesn't want to see Kafka reigning here.

In response to Kindler's question to the court as to why he had been dismissed on the basis of the "mere appearance of a possible conflict of interest," which was not applied to the current Liechtenstein foundation boards, the court replied:

“You don’t have to understand everything.”

It is, after all, undisputed that Kindler's access to the foundation was taken away. It is also undisputed that for a year now, he has had no opportunity to gain insight into its administration and, above all, the costs involved.

This right to information was also revoked – with the blessing of the Prince's justice system. This allows the two newly appointed officials to act as they please.

With a serious expression, people in this courtroom act as if everything is above board.

It took the court two years to assess whether Kindler's counter-motion to deprive the two current members of the foundation's board of directors of the right to dispose of millions of dollars at will was legal.

The two trustees and their lawyer earn thousands of francs per court day simply by their physical presence.

They don't have to do too much; the never-ending story will continue in January. The ending is unclear. And this is just the first instance.

Since the number of Liechtenstein foundations has drastically shrunk from over 50,000 to under 8,000 following participation in the Automatic Exchange of Information, the country's approximately 140 trustees have had to look for new sources of income.

Decanting is one of them; that is, the transfer of the financial contents of a foundation into a new vessel to which only the trustee has access.

Direct access to the coffers is another matter. The princely Justice Councilor X is in prison for embezzling 12 million euros, and a former top bank regulator received eight years in prison for stealing 36 million euros from a foundation.

Regarding further specific questions, the lawyer for the two trustees writes: “They do not seriously expect an answer.”

However, the latest model poses a threat to all beneficiaries of a foundation who also sit on the foundation board, for example to prevent decanting.

This makes them easily suspected of having “the mere appearance of a possible conflict of interest.”

They're quickly gone – and for Liechtenstein trustees, it's a clear path. How long will the Princely Court continue to watch this activity?