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Bank data Swiss-German ‘spy’ drama raises hackles – and questions

The sale of stolen Swiss banking data has centered on the German state of North Rhine Westphalia

(Keystone)

The arrest of a suspected Swiss spy in Germany has raised questions about what roles the Swiss secret service, the state public prosecutor and UBS bank played in the affair. The 54-year-old man, known as Daniel M, is accused of spying on the German tax authorities to find out who sold stolen Swiss banking data.

His arrest at the end of April prompted a diplomatic spat between the two countries, a deluge of condemnation from the German side and red faces in Switzerland. A Swiss parliamentary commission is investigating the affair – and the media has also been trying hard to put together the scraps of evidence that have so far come to light.

The alleged spying scandal ironically comes at a time when a long-running tax evasion dispute between the two countries (see box below) was quietening down. In the last few years, several CDs of stolen Swiss banking data have been bought by German states and used to prosecute tax evaders.

The German authorities allege that the accused man - a former security specialist at UBS bank who later became a private investigator - was hired by the Swiss federal intelligence service (FIS) to disrupt the illegal distribution of bank data. His alleged brief was to find out the identities of people selling and buying the data by planting a mole in the German tax office. FIS has so far refused to either confirm or deny the allegations.

Putting the pieces together

In a twist to the story, Daniel M is also under investigation by the Swiss for allegedly aiding and abetting the sale of stolen data to Germany. Picking up on the man’s apparent status as a double agent, the NZZ am Sonntag newspaper asked last week why FIS possibly chose to contract such a dubious character. “How can they have been so dumb?” the newspaper quoted an unnamed Swiss parliamentarian.

The SonntagsZeitung followed up the revelation that the Germans were given Daniel M’s name by the Swiss attorney general. The newspaper said it had seen the documents handed over to the German authorities, which also gives evidence of a link between the suspect and FIS.

The SonntagsZeitung also looked into the role of UBS in the affair. In 2014, the bank discovered that its former employee had been handling stolen data to Germany, according to the newspaper. This apparently formed the basis of the ongoing investigation by the Swiss prosecutor into his activities.

On Sunday, May 7, Defence Minister Guy Parmelin indirectly confirmed that Daniel M. had actually worked for Swiss intelligence. He told Swiss public broadcaster RTS that since 2014, there had been no contacts between the Swiss intelligence service and the suspected spy in Germany.

The following Sunday, the alleged spy's lawyer, Valentin Landmann, told the German-language paper Schweiz am Wochenende that his client was ready to testify against Switzerland. He noted that because much information has already been obtained by the German authorities, via un-redacted documents transmitted by the Swiss Attorney General's Office, his client cannot be reproached for betraying state secrets.

Private investigation explosion

The case highlights an explosion of private investigation offices that have cropped up in Switzerland in recent years, according to the Blick newspaper, which said the industry has become “uncontrollable”. According to documents seen by the newspaper, at the end of 2016 these companies were conducting 306 overseas investigations – 115 of which involved intelligence agencies.

Swiss-German tax evasion row

The tax evasion spat between Switzerland and Germany has been running since the financial crises of 2008 and the subsequent listing of Switzerland as a harmful tax haven by the OECD.

In 2010, the German authorities paid €2.5 million for a list of 1,500 names stolen from a Swiss bank.

Over the past decade, the government of North-Rhine Westphalia has bought at least 11 CDs with data about Germans with bank accounts in Switzerland. They have paid millions of euros to try to recover money hidden by suspected German tax dodgers. 

In addition to providing evidence against individual tax evaders (more than 100,000 hiding in excess of €100 billion), this data also led to Swiss bank offices being raided in Germany and the eventual financial settlement by Swiss banks for tax evasion infringements in Germany.

In May 2015, Switzerland signed an agreement to automatically share tax information with all European Union states, including Germany. Swiss banks started compiling information about EU clients at the start of this year. The Swiss authorities will start to pass on this information from the start of 2018.

On 28 April, 2017, the German authorities arrested Daniel M on suspicion of spying on the German tax authorities.

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