A number of European leaders have been going through a difficult patch: President Sarkozy, Taoiseach Bertie, Prime Minister Brown and caretaker Prime Minister Prodi. But spare a thought for His Serene Highness Johannes Adam Ferdinand Alois Josef Maria Marko d’Aviano Pius von und zu Liechtenstein, Sovereign Prince of Liechtenstein, Count of Reitberg and Duke of Troppau and Jagerndorf (or Prince Hans to his friends). His country, tiny Liechtenstein, has been subject to a vicious assault by its larger neighbour and linguistic cousin, Germany – an assault which if successful could bring the small country to its knees. Are we witnessing the rule of law being supplanted by a ‘might makes right’ policy in Europe? Where does the Irish government stand on this major international crisis?
And why should we care?
It all started when an informant approached the Bundesnachrichtendienst (BND), the German Intelligence Agency, with a DVD containing data on billions secreted away by super wealthy Germans into ‘wealth management’ funds in the tax haven of Liechtenstein. The BND paid him approximately €5 million for the information. Then all hell broke loose.
German tax investigators have been raiding the homes and offices of the super-wealthy in pursuit of over €30 billion in tax evasion schemes. In the process, they are unraveling an elaborate web of illegal pay-offs and corruption that reaches deep into German corporate society.
Germany is putting the squeeze on its tiny neighbour (which has more registered companies than citizens), threatening them with isolation if they don’t clean up their financial act. But Prince Hans is fighting back – and with good reason: one of the banks holding this hot money is partially owned by him. So he has threatened Germany with legal action:
"With its attack on Liechtenstein’s sovereignty (it is) questionable whether such a course of action is compatible with the basic principles of the democratic state. In our country, fiscal interests don't outweigh the rule of law.’
He went on to say that any tax evasion wasn’t Liechtenstein’s fault but stemmed from the ‘criminal energy of Germans’ and that he would fight to protect the rights of privacy. Good for him.
Never mind that the OECD has named the Prince’s state an ‘uncooperative tax haven’. The Head of the Swiss Bankers’ Association, Pierre Mirabaud, claimed the methods used by the Germans investigators
‘ . . call to mind methods worthy of the Gestapo’.
But the nervousness of Swiss authorities is understandable, for the German media is full of speculation that the ‘attacks’ on Liechtenstein are just a dry run for an even bigger go against Swiss banking and their secretive ways.
The struggle to force the super-wealthy to pay their fair share of taxes comes up against a number of obstacles: banking secrecy, sophisticated evasion techniques, inadequate financial regulation. But the real obstacle is the audacious and egotistical insistence that somehow the wealthy are different – moving in a different stratum of society, subject to different expectations than you or me. Even more incredulous is the insistence of the super-rich that their interests are the national interests and so vice-versa you can't separate the two.
The UK’s Government recently proposed that the non-domiciled super rich cough up a minimum of €45,000. There was open revolt with multi-millionaire Dermot Smurfit putting the case this way:
‘If these changes come in I would probably leave the UK. I have five children in England all at private school — I don’t place any burden on the state. I have contributed huge amounts to the country. If they bring these changes in, it’s goodbye.’
He said he would relocate to Monaco, another of the OECD's rogue tax states. At least there he could join his tax exile brother, Dr Michael Smurfit (the Irish Government thought so much of his ‘emigration’ that they made Dr. Smurfit Honorary Counsel in tax-dodging Monaco). No, these people have ‘contributed huge amounts’. They shouldn’t be burdened like the rest of us.
What does Sean Dunne have to do with all this? Does he have hot money lying in a tax haven? I don’t know. But the Sunday Tribune claims to have seen a document commissioned by the property developer which will be part of a last ditch attempt to obtain planning permission for his €1.7 billion, 37-storey tower on the former Jury’s site in Ballsbridge, It argues that
‘ . . foreign investment into Ireland will dry up if he does not receive planning permission. . . the city (is) facing an office accommodation crisis and if “firms cannot find space in the city centre, competing cities in Europe and the rest of the world will be looked to” . . . the decision on planning permission “has implications for the national economy as a whole”.
Wow, if Mr. Dunne doesn’t get his way, the IDA somehow won’t be able to get chemical, pharmaceutical and bio-technological firms to locate their operations here. Public agencies must bend to his will lest the very economy itself is ruined.
Of course, planning permission is not Mr. Dunne’s only worry. Dublin office rents are stagnating with some experts claiming that we may already be facing an over-supply of office space. But these facts won’t get in the way of Mr. Dunne’s presentation. Whether we need more office space or not, he is demanding that the national interest be identified with his own personal interest.
When General Motors coined the slogan ‘What’s good for GM is good for America’, it at least made and sold things, employing thousands in long-term, sustainable jobs. Mr. Dunne’s ‘What’s good for property developers is good for the nation’ doesn’t quite have the same ring. From Liechtenstein to Mr. Smurfit’s private education fees to Ballsbridge, the mindset is the same.
Most of us will never have a tax haven account or a commercial site in Dublin. But there’s sympathetic magic to go around. According to Richard O’Sullivan of Christie Estates, Poznan is hot:
‘The Polish property market is the most dynamic of all property markets in the world.’
Everyone can get that property mojo happening with some Liechtenstein thrown in as well. Estate agents are going to court to prevent the Revenue Commissioners from opening up their sales accounts on overseas property, and with good reason: they know that Revenue knows, like we all know, that overseas property is a good way to hide money: rent money, sales money, capital gains. That’s a major incentive estate agents exploit. If their court action is successful a little more magic is conjured.
And if Poznan is not to your liking, there’s always Dubai, Ibiza, Toulouse, Geneva, London (take that falling market ride), Borovetz (old reliable Bulgaria), Orlando, the Portuguese Silver Coast and, of course, Hurghada (in Egypt). These are the current hot overseas markets.
In imitation of our betters, we have the chance, on a small stage, to ‘participate’: with our own property portfolio – and a foreign one to boot, with exotic names and faraway landscapes. And there’s that good buzz, misdirecting tax collectors.
That’s why it is so important that His Serene Highness Johannes Adam (etc., etc.) succeeds - for the sake of the rule of international law, to protect individual privacy against statist encroachment. If he were to lose it could open the door to the dreaded prospect of politics – the out-of-fashion notion that people can come together to establish their own democratically determined rules to serve their wider social interest.
And enforce them.
Anywhere and everywhere in the world – from Liechtenstein to Ballsbridge and beyond.