Luxembourg’s Banque et Caisse d’Epargne de l’Etat, BCEE’s tax evasion imbroglio in Germany

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Luxembourg’s Banque et Caisse d’Epargne de l’Etat, BCEE’s tax evasion imbroglio in Germany

Though information was sparse since earlier news about a wide leak of banking data at the 100% State owned bank, and therefore AAA rated, came out last week, the German ARD Tagesschau served up amazing details today about the ongoing investigation.

German authorities have acquired data of 54,300 German clients at BCEE. This is the biggest amount of client data leaked from any bank. UBS in the US turned over a small percentage of that number. It agreed to be fined USD 780 million by US authorities in order to forego further problems.

In this case, it is supposed that most account holders evaded German taxes. German investigators showed up with search warrants at a first batch of big account holders, those with accounts of Euros 300,000 and more.

BCEE claims to have acted in total legality. An argument that was also used by Luxembourg authorities defending the tax rulings uncovered by Luxleaks. In this case we might see at a minimum a conflict of law, certainly a huge political fallout, and possibly some sort of a fine in the millions, similar to the ones other German banks in similar situations in Luxembourg had to swallow.

One has to consider the peculiar situation of a fine imposed by the German government on actually the Luxembourg government, owner of BCEE. But that wouldn’t be a first: when BNP-Paribas was fined USD 8.9 billion, the Luxembourg government’s share of the onslaught was 1.04% (its holdings in BNP-Paribas), or USD 92 million. Though this is Luxembourg’s theoretical and invisible share of what the company made as a payment.

The conflict with Germany isn’t the only oddity in this case. The most stunning detail is that the person who tried to sell the data to governments for several million Euros each, showed one half to the Germans, the other half to the French as solid proof of the quality of the data. Both German and French investigators realized that both halves represented the total list. Thus the leaker got leaked and didn’t make a buck.