Faithful hands, dirty hands

After the banks, foundation administrators are now also being investigated for aiding and abetting tax evasion. However, German investigators are less concerned with high fines than with justice.

There are many pleasant stories about Liechtenstein trustees who establish secret foundations and help hide other people's assets. For example, that such foundation administrators would rather swallow a document that was incriminating for their clients than hand it over to unauthorized persons. This was a common story in the capital Vaduz and the surrounding area, and people firmly believed it. Foreign investigators, especially tax investigators, were completely unauthorized from the perspective of the tiny state. Administrative assistance was generally not granted. "Trustees were to our country what the Foreign Legion is to France," said Liechtenstein author Stefan Sprenger: "They handled a business that the majority of the population preferred not to know about." The small country between Austria and Switzerland thrived on it.

Liechtenstein trustees are now in serious trouble; initial proceedings are already underway. The tax investigation department in Wuppertal, feared in the tiny state, has recently taken a keen interest in the foundations and their administrators. Initially, investigators uncovered German tax evaders who had hidden their assets in the supposedly safe haven for treasury funds. The proceedings against the then LGT Treuhand bank in Liechtenstein made headlines at the end of the last decade. Well-known names from the supposedly elite of society were linked to the tax scandal. Then the Liechtenstein banks were accused of aiding and abetting. Now the trustees are to be targeted for allegedly aiding and abetting the large-scale tax fraud. The Bochum public prosecutor's office has filed a case number based on material from Wuppertal.

The Wuppertal researchers came up with the idea of ​​investigating trustees based on a fascinatingly simple idea. They analyzed voluntary disclosures by German tax evaders. The individual cases were compiled on a computer; then the investigators inquired about the money's whereabouts. Tax evaders who disclose themselves to the tax authorities are very willing to discuss things, and legal aid also works in such cases.

The investigations against trustees are still relatively new: Initially, only four Liechtenstein foundation administrators were affected, but now there are several more, and no one knows how many there will ultimately be. There are approximately 250 trust companies in Liechtenstein.

Unlike with the banks, the German investigative authorities are not concerned with high fines. They are primarily concerned with justice. All those who helped evade taxation should be caught. This includes the Liechtenstein trustees. According to investigators' findings, they did not earn as much from the foundations as the banks did from illicit accounts. UBS and Credit Suisse from Switzerland paid fines of 300 million euros and 150 million euros, respectively, in North Rhine-Westphalia; many other institutions still had to transfer amounts in the double-digit millions. The trustees' profit from their foundation fees is likely to amount to a few hundred thousand or a few million euros at most. These profits will now be skimmed off, plus interest and penalties. No one in Liechtenstein should go unpunished.

This miniature state used to be the most secretive tax hideout in Europe. No German investigator was allowed access to any documents unless it involved major crimes. The country's trustees were adept at concealing their clients' assets from pesky tax officials. Absolute banking secrecy was state doctrine, and administrative assistance was generally not granted. Most of Germany's political party donation scandals are also linked to Liechtenstein. Dirty money was laundered there and ended up in the coffers of bourgeois parties. The aides, accomplices, and profiteers of Liechtenstein's circumstances held high positions here. This may also have been one of the reasons why no real pressure was exerted on Liechtenstein in the past.

Then came a new era. In the 1990s, disloyal employees obtained floppy disks containing data from the then law firm of the famous tax advisor Professor Dr. Dr. Herbert Batliner; the material also reached tax investigators in North Rhine-Westphalia. This led to the first large-scale investigation into German tax evaders who had hidden their money in Liechtenstein. This was long before the LGT Treuhand case. At the time, the Bochum public prosecutor's office also conducted proceedings against the lawyer and economist Batliner, an acquaintance of Helmut Kohl and adept at exploiting the special opportunities offered by Liechtenstein's financial center for many decades. The case was dropped about ten years ago upon payment of a fine of two million euros.

The stolen Batliner data provided a digital insight into the world of banking secrecy. Then came the numerous tax CDs that bank employees and other insiders sold, primarily to the tax authorities in North Rhine-Westphalia. Tens of thousands of illicit bank accounts were discovered. Often, the secret assets were also invested in foundations. The word "foundation" sounds sophisticated. But foundations under Liechtenstein law were often unsophisticated because they served as a means of tax evasion. The trustees turned out to be the arrangers and beneficiaries of these transactions. The founders, whose names were not to appear anywhere, used such trustees. Some of them created 25 new foundations a day. A lucrative mass business.

After the CDs appeared, thousands of foundations were relocated to Panama

The analysis of the tax CDs and pressure from US investigators have radically changed the business. At its peak, the Liechtenstein financial center boasted almost 90,000 companies. Today, there are still approximately 36,000 companies. Tens of thousands of foundations and institutions have been closed in succession in recent years. Now, there's a lot of talk in Vaduz about transparency and honesty. But investigators can never be sure whether this is truly a change for the better. It's quite striking that after the CDs surfaced, thousands of foundations were relocated from Liechtenstein to Panama. The trail to the Caribbean is far from over. If you look at the Panama Papers data, for example, the word "Liechtenstein" alone yields 297,946 hits. For Vaduz, the number is 31,087. And the famous Aeulestraße, where trust offices are lined up one after the other, still yields around 3,000 hits.

Several Liechtenstein trustees have increasingly expanded their activities to Panama, which has an identical or very similar foundation system. It is said that Panama has copied Liechtenstein. But the elusive money is safe almost nowhere anymore. The Federal Criminal Police Office in Wiesbaden has made a large Panama find, which will be evaluated in the coming months. Then we will see how many Liechtenstein trustees have been laundered in Panama.