LGT CEO Prince Max in tax probe

Investigations concerning citizens escaping taxes are continuing in Germany. The purchase of client information from a former LGT bank employee in 2007 resulted in headlines around the world and a highly publicized embarrassment of the now former CEO of Deutsche Post, Klaus Zumwinkel in 2008 and now with his conviction in 2009. But despite this case result he investigative work continues, and now a member of the ruling Princely Family of Liechtenstein is pinned as one of the accused.

Prince Maximilian, second son of Fürst Hans-Adam II of Liechtenstein and CEO of the family’s bank LGT, is being targeted by the public prosecutor’s office in Bochum, Germany. Financial Times Germany published extensive reports on Thursday and Friday saying that the reason for the criminal suspicions of the Prince stems from the by the German finance minister heavily criticized rules for private foundations and according to both FTD and other media the accusation is that the Prince has not paid taxes for payment from a family foundation. The Prince’s side on the other hand is arguing that he did not take out any payment from it during his period of residence in Germany but that he rather only secured non-taxable credit. The German authorities are supposedly arguing that the Prince should have to pay taxes on the whole foundation capital despite it being a foundation for the whole Princely Family and it being their shared wealth and not solely Max’s.

The newspaper also writes that the investigations towards Prince Max went as far as checking if the Prince enjoys diplomatic immunity and when they found out that he did not but is instead subject to German jurisdiction – they had direct contact with him in December 2008. A statement from the Prince confirms this and says that the meeting between him and representatives of German tax authorities decided that his lawyers will try to bring clarification and more information to the table so that the whole thing can be cleared out.

In a statement released by LGT, published in FTD, Prince Max said:
- I have fulfilled my tax liability to my best knowledge and conscience. If it, contrary to my conviction, should turn out that I owe the German state taxes, I will immediately fulfill my obligations. I have chosen my domicile in Germany consciously and pay significant taxes here. Not to fulfill my tax obligations was never my intention.

Even though the countries are officially cooperating and Liechtenstein’s next Prime Minister has promised to work with Germany to resolve these tax issues, the relations between the countries will probably continue to be somewhat frosty in the coming months. After public money from the German finance ministry was originally used to buy the secret tax details of private citizens from a former LGT employee, the heir of the tiny principality – Prince Alois – was according to the newspaper quoted calling the act a ‘large scale handling of stolen goods’, and the powerful family is continuing to close ranks. In connection with his 64th birthday last week, Fürst Hans-Adam called Germany’s supposed plans for tax laws against imported goods and services from Liechtenstein a violation of EU rights, international law and being against the fundamental principles of the German constitutional state.

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