Wednesday, December 8th, 2021
Crimes exposed
Switzerland is bringing the German lawyer to trial
Germany and Switzerland deal with tax evasion completely differently. A German lawyer feels that. The Swiss public prosecutor wants to put him in jail.
In Germany, the Stuttgart lawyer Eckart Seith is celebrated as an educator in one of the largest tax fraud scandals with so-called cum-ex deals. In Switzerland he is being prosecuted for industrial espionage. Since Seith obtained internal documents from the Swiss bank J. Safra Sarasin, which was involved in cum-ex deals, and passed them on to German investigators, he is accused of being an “economic intelligence service”. As of today, Seith will be tried in an appeal procedure before the higher court in Zurich. He faces a prison sentence of several years.
Since then, he was acquitted of the charge of industrial espionage in 2019, but the court sentenced him to a suspended fine for a fringe issue. Both the public prosecutor and Seith appealed, so the case is now being reopened.
“We are confronted with one of the biggest economic crimes of the European post-war period,” says Seith of the dpa. “And the Swiss judiciary is fighting the Enlightenment with all the harshness of its criminal law. Something is going wrong.” The Zurich public prosecutor’s office has made itself “the patron of organized crime”. Since then, with the Sarasin documents, a client who lost a lot of money with cum-ex deals had successfully used the Sarasin documents to obtain damages.
For a long time, Germany and Switzerland have crossed over the question of which investigative methods are allowed to uncover tax offenses. Around 15 years ago, the purchase of tax CDs with customer data, which were used in black money accounts of Germans in Switzerland, caused serious diplomatic resentment. Among other things, Switzerland sued German tax investigators. A Swiss man was later arrested in Germany for espionage at the tax authorities. For the Federal Republic of Germany the purchase of the CDs was a contribution to the investigation of criminal offenses, for Switzerland it was industrial espionage. To this day, a statement by the then Federal Finance Minister Peer Steinbrück met with outrage. In 2009 he threatened to let “the cavalry ride” because Switzerland did not want a tax treaty.
“Everyone must have known”
What is the cum-ex scandal about? Several banks have been cheating the German and other European tax authorities since the beginning of the millennium with dubious share shifts by billions. They sold financial products with the promise of dream returns. Around the dividend day, the banks pushed shares with (“cum”) and without (“ex”) dividend entitlements back and forth. In the end, the tax authorities didn’t know who they belonged to. The result: capital gains taxes paid only once were reimbursed several times. For economics professor Christoph Spengel from the University of Mannheim, this was not a tax loophole. “Everyone must have known that it couldn’t be,” he told the Swiss broadcaster SRF.
German courts have been busy with business for years. In July, the Federal Court of Justice ruled in a landmark ruling that they should be assessed as tax evasion and are therefore punishable by law. Among other things, two ex-stock exchange traders have already been sentenced to probation for tax evasion or aiding and abetting. Further processes are running.
In Switzerland, however, neither Bank Sarasin nor other banks are investigated. In the trial of the first instance against Seith, the prosecution portrayed the institute as a victim of espionage. The bank does not comment, but is also not involved in the proceedings. “If you serve up whole buildings of lies and get the tax authorities to make reimbursements when you have no claim at all, that is also punishable from a Swiss point of view,” said lawyer and expert on financial market regulation, Alex Geissbühler, of the SRF.
Another cum-ex case concerns German and Swiss courts. It’s about the German lawyer Hanno Berger, who went to Switzerland years ago and is considered a key figure in the scandal. German courts want to bring him to trial. Berger is in extradition custody, but refuses to be transferred to Germany. The Federal Criminal Court has already rejected his argument that the acts he was accused of in Germany were not punishable in Switzerland. The proceedings are still ongoing.