Opinion: Tax Evasion Trial No Mere Slap on the Wrist | Germany| News and in-depth reporting from Berlin and beyond | DW | 22.01.2009
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Opinion: Tax Evasion Trial No Mere Slap on the Wrist

The much-anticipated tax evasion trial is underway of a former top manager who hid money in Lichtenstein. Deutsche Welle's Karl Zawadzky says that the million-euro fine is only the beginning.


The case is fairly cut and dry, meaning the trial will likely be short. As former head of postal giant Deutsche Post, Klaus Zumwinkel was Germany's best-known top manager, a man with an irreproachable reputation. Soon after Zumwinkel's spectacular arrest outside his villa in a posh suburb of Cologne, he made a complete confession and quickly transferred the money he owed to the tax office in Cologne.

The court in Bochum has set aside two days for the case, but the trial could come to end even more quickly. Zumwinkel's defense lawyer and the prosecutor's office in Bochum have reached an agreement for the court to adopt. Not only that, but a legal overhaul for prosecuting tax fraud cases similar to Zumwinkel's, which involves undeclared interest income from private foundations in Lichtenstein, has already been agreed to. The result: if the defendant offers up a guilty plea and shows remorse, he or she can expect a hefty fine and up to a two year suspended sentence. This setup keeps offenders from facing time behind bars.

Karl Zawadzky

Karl Zawadzky

While it bothers many citizens' delicate sense of justice, such outcomes are almost always the norm when it comes to economic crimes. One reason is that the justice system is hopelessly overloaded. For example, there are approximately 700 pending cases against tax cheats in Bochum alone. In all cases, people stashed money and interest earnings in Lichtenstein in order to conceal it from the local tax authorities.

Another reason is that jails would have to be expanded if all tax cheats were given the maximum penalty allowed by law. The state would rather get money for the misdeeds of the past and honesty in the future.

A first Liechtenstein tax evasion case against a multi-millionaire from Bad Homburg resulted in a penalty of 7.5 million euros ($9.8 million) as well as a two year sentence.

Klaus Zumwinkel will not face as harsh a penalty since his tax fraud was less than 1 million euros. As a young man, before heading up the Post, he and his brother inherited 10 department stores and 50 discount stores. They sold this small empire in 1971 and with the 12 million euros in proceedings, Zumwinkel started the private “Devotion Family Foundation” in Liechtenstein, which he used to conceal interest income from tax authorities.

Yet the current court case only covers earnings from the last four years. It appears that during the time in question, the prosecutor's office in Bochum was absorbed in internal office intrigues and power struggles which resulted in the office falling behind schedule in its day-to-day task of handling files. For Zumwinkel, this means that his tax evasion case will remain just under the 1 million euro mark. The Federal Court of Justice recently mandated an obligatory prison sentences for amounts over 1 million euros. You could say that Zumwinkel has fortune in injustice.

In the past, many other tax evaders have profited from the government's practice of handing out high fines and suspended sentences. The government is more interested in money than in filling its jails. The moral of the story: earthly justice is relative. A multi-millionaire like Klaus Zumwinkel can get over a million-euro fine. But much more difficult for him was being forced out of Deutsche Post and his loss of many board of director positions and honorary posts. He has also faced social ostracism and an empty appointment calendar.

In the meantime, part of the tour program for visitors to Cologne includes a stop outside Zumwinkel's villa where he was arrested about one year ago in front of television cameras. Not surprisingly, the erstwhile top manager has retreated with increasing frequency to his castle in South Tyrol.

Karl Zawadzky is DW-RADIO's business editor (th)

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