Dresdner protests against 'bullying' inspectors

DRESDNER BANK strongly protested yesterday at what it described as bullying tactics by German investigators who have been searching the bank's main offices for evidence of illegal money transfers to Luxembourg.

Some 40 tax inspectors and finance experts from the state prosecutor's offices in Frankfurt and Dusseldorf have been searching the bank's buildings in the two cities since 11 January.

They are investigating suspicions that the bank helped clients to switch undeclared funds to its Luxembourg subsidiary, so that they could avoid taxes on interest income.

A spokesman for the Dusseldorf state prosecutor's office said that the results of the searches so far had strengthened the suspicions of wrongdoing.

Dresdner Bank said that its transactions were in complete accord with German tax regulations and took place thousands of times every day.

Accusing the investigators of strong-arm tactics, the bank has indicated its intention of taking its complaint to the constitutional court in Karlsruhe. An initial protest to a lower court has already been rejected.

The bank said that employees had been threatened with arrest if they did not co-operate with the investigators and that all the mail from Luxembourg to Dresdner's main Dusseldorf office between 13 and 20 January had been unlawfully seized and searched by the authorities.

Frankfurt banking circles described the tough action against one of the country's top financial houses as a deliberate attempt to frighten German savers into keeping their funds at home.

In particular, the action was thought to be directed at shaking savers' trust in the confidentiality of German banking subsidiaries in Luxembourg.

The introduction by Germany of a 30 per cent withholding tax on interest income in January 1993 prompted a massive outflow of funds, especially to neighbouring Luxembourg, which has no such tax. German banking subsidiaries there saw an explosion in their business.

According to the latest Bundesbank monthly report, in the period between September 1992 and March 1993, some DM53bn ( pounds 20bn) worth of German savings flooded across into Luxembourg mark funds.

This financial exodus sparked off a diplomatic row between Bonn and Luxembourg, as the German government tried to persuade its neighbour to introduce a withholding tax.

Bankers believe that the German government's lack of success through diplomatic channels has now encouraged the authorities to adopt other methods.

Start your day with The Independent, sign up for daily news emails
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Digital Optimisation Executive - Marketing

£30000 - £35000 per annum: Recruitment Genius: The UK's fastest growing, multi...

Recruitment Genius: Financial Reporting Manager

£70000 - £90000 per annum: Recruitment Genius: A Financial Reporting Manager i...

Recruitment Genius: Payments Operations Assistant

£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...

Recruitment Genius: Telephone Debt Negotiator

£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...

Day In a Page

Sepp Blatter resignation: The beginning of Fifa's long road to reform?

Does Blatter's departure mean Fifa will automatically clean up its act?

Don't bet on it, says Tom Peck
Charles Kennedy: The baby of the House who grew into a Lib Dem giant

The baby of the House who grew into a Lib Dem giant

Charles Kennedy was consistently a man of the centre-left, dedicated to social justice, but was also a champion of liberty and an opponent of the nanny-state, says Baroness Williams
Syria civil war: The harrowing testament of a five-year-old victim of this endless conflict

The harrowing testament of a five-year-old victim of Syria's endless civil war

Sahar Qanbar lost her mother and brother as civilians and government soldiers fought side by side after being surrounded by brutal Islamist fighters. Robert Fisk visited her
The future of songwriting: How streaming is changing everything we know about making music

The future of songwriting

How streaming is changing everything we know about making music
William Shemin and Henry Johnson: Jewish and black soldiers receive World War I Medal of Honor amid claims of discrimination

Recognition at long last

Jewish and black soldiers who fought in WWI finally receive medals after claims of discrimination
Beating obesity: The new pacemaker which helps over-eaters

Beating obesity

The new pacemaker which helps over-eaters
9 best women's festival waterproofs

Ready for rain: 9 best women's festival waterproofs

These are the macs to keep your denim dry and your hair frizz-free(ish)
Cycling World Hour Record: Nervous Sir Bradley Wiggins ready for pain as he prepares to go distance

Wiggins worried

Nervous Sir Bradley ready for pain as he prepares to attempt cycling's World Hour Record
Liverpool close in on Milner signing

Liverpool close in on Milner signing

Reds baulk at Christian Benteke £32.5m release clause
On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

On your feet!

Spending half the day standing 'reduces risk of heart attacks and cancer'
With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

The big NHS question

Why are there so few new GPs when so many want to study medicine?
Big knickers are back: Thongs ain't what they used to be

Thongs ain't what they used to be

Big knickers are back
Thurston Moore interview

Thurston Moore interview

On living in London, Sonic Youth and musical memoirs
In full bloom

In full bloom

Floral print womenswear
From leading man to Elephant Man, Bradley Cooper is terrific

From leading man to Elephant Man

Bradley Cooper is terrific