LDN - Business

Agreement nears in German-Swiss bank secrecy spying case

[November 03, 2017] By Georgina Prodhan

FRANKFURT (Reuters) - A court case that has pitted Swiss bank secrecy against German fiscal propriety looked close to being settled on Thursday with a suspended jail sentence and modest fine for a 54-year-old former Swiss policeman and UBS anti-fraud officer.

The man, named only as Daniel M., has admitted trying to obtain personal contact details of German tax officials on behalf of Swiss intelligence, which wanted to prosecute the officials for obtaining secret bank data.

German states including the one in question, North Rhine-Westphalia (NRW), have over the past years got hold of CDs containing details of bank accounts held secretly in Switzerland by Germans hoping to avoid tax.

Swiss authorities say this amounts to the theft of business secrets, while German officials say they are combating illegal tax evasion.

Daniel M., whose spying activities lasted from 2011 until 2015, was a "patriot" simply caught between two ideologies, his defense lawyers told the higher regional court in Frankfurt, the city where he was detained in May.

"We have to consider how the Swiss authorities view it since we're dealing with a Swiss citizen - even though we may see it differently," said defense lawyer Robert Kain.

"The theft of data and their sale to a foreign authority is a crime in Switzerland and he was helping to investigate it."

The Swiss Banking Act requires employees of Swiss-regulated banks to keep client information confidential, but a number of staff have leaked account details to foreign authorities in the past decade as Western governments crack down on tax evasion.

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Defendant Swiss man Daniel M., accused of spying on a German tax authority to find out how it obtained details of secret Swiss bank accounts set up by Germans to avoid tax, talks to his lawyer Hannes Linke (L) before the start of his trial on espionage charges, in the Higher Regional Court in Frankfurt am Main, Germany October 18, 2017. REUTERS Andreas Arnold/Pool

Whistleblowers and new disclosure standards have proven costly for Swiss banks, which have suffered hundreds of billions of dollars in outflows as a result. Over a third of Swiss private banks have permanently closed.

Chief prosecutor Lienhard Weiss declined to relativise Daniel M.'s actions, saying his actions harmed the interests of all of Germany, not just NRW.

"This was not a trivial offence," he told the court. "This goes to the core sovereignty of the German state."

Weiss conceded, however, that Daniel M. had provided useful information and, crucially, that he had not in fact planted a mole in the NRW tax department, as he had been instructed to do.

The two sides agreed that the defendant should be sentenced to a suspended jail term of one-and-a-half to two years and pay a fine of 40,000 euros ($47,000) to the German state, as well as legal costs.

The agreement will have to be approved and the final sentence decided by the judge next Thursday.

($1 = 0.8590 euros)

(Reporting by Georgina Prodhan, Editing by William Maclean)

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