The World After Kieber and Falciani
Written by Ian O. Angell
Heinrich Kieber and Hervé Falciani – hardly household names, but after the actions of these two desperados, the world of tax evasion will never be the same again.
Kieber had worked in the IT department of the Liechtenstein Global Trust bank in Vaduz between 2000 and 2002, surreptitiously downloading the financial details of clients onto four DVDs. In 2006 he was paid nearly 5 million Euros by the German tax authorities for a list of German clients of the bank. (I wonder if he paid tax on that sum?) As a bonus he was given a new identity. Kieber was also paid £100,000 by the UK tax authorities for a list of 300 British clients. Kieber also spilled the beans on LGT’s operations on behalf of American clients to the US Senate Permanent Subcommittee on Investigations, where he described in detail the bank’s procedures for obfuscating the provenance of assets.
As for Hervé Falciani, late in 2008 he was arrested for data theft by Geneva police. When he was working as a software engineer at HSBC’s private bank in Switzerland, Falciani illegally downloaded details on 24,000 clients. He skipped the country, and then passed the details on to the French authorities, and consequently they recovered nearly 500 million Euros in unpaid taxes. The French have also forwarded information to their counterparts in the UK and elsewhere.
By no stretch of the imagination could Kieber and Falciani be described as honourable whistleblowers, but were they sordid blackmailers and extortionists? It really depends which side of the line you stand on tax-evasion – Falciani is seen as a hero in France. Despite the data being stolen, the authorities in Germany, England, France, the USA and elsewhere were not above using the details to demand money with menaces from their tax avoiders/evaders caught in the net.
That net dragged UBS into the firing line, and on June 19, 2008, Bradley Birkenfeld, an American employee, pleaded guilty to conspiring with American billionaire Igor Olenicoff to evade $7.2 million in taxes by helping him conceal $200 million of assets in Switzerland and Liechtenstein.
And the moral of this story? Putting your un-taxed money into an offshore account is now like playing Russian Roulette. Are you willing to take the chance that the authorities don’t already know of your subterfuge. Should you volunteer to pay up, do you cross your fingers and hope, or what?
This is a no brainer. There is no such thing as a secure computerized database – eventually they all leak like sieves. Sooner or later somebody will pass on your details – possibly even the bank itself, should they be placed under enough pressure. That’s why people who work in banks are called tellers – eventually they tell the government everything.
There are only two sensible strategies. If you remain a taxpayer (according to THEIR rules) of your high-taxing state then just pay up. For when they find out, and they will, you’ll have to pay anyway; they may also add on a hefty fine, and possibly leave you languishing in jail. Remember the case of Lester Piggott, the British champion jockey, who was sentenced to three years jail over a mere £3.5 million tax fraud. In 1983 he agreed to ’settle’ his tax bill, at which time he stated he had only three bank accounts. He persisted with this story until 1986 when he admitted to having three more large bank accounts. Subsequently he was found to have a further 14 undisclosed accounts. Lester was caught because he settled his tax bill with a cheque drawn on one of the undisclosed accounts!
However, if you want to keep your hard-earned money then you can’t remain a taxpayer. You will have to become a Golden Goose, and legally separate yourself from the state. That means being properly advised on all the rules, to ensure that you don’t accidently stray back into the firing line. Otherwise their tax collectors will take a malicious pleasure in hunting you down.
Apart from devaluing the currency, there’s only one thing governments can do – target the poor benighted taxpayer. The economics of the UK public sector is a case in point. According to the UK Audit Office, in 2008-9 the average British worker paid £516 towards the pensions of retired teachers, civil servants, the health service and the military – a total of nearly £15 billion. That is more than private sector workers pay for their own pensions, always assuming they have one; here is another group that is getting angry.
