Mon, Feb. 08, 2010

Illegal Information on Tax Evasion

AK - Mannheim.   German authorities once again were in the delicate position of weighing to buy illegally obtained information on German tax evaders in one of the world's notorious tax havens, thereby potentially rendering themselves liable to prosecution and risking courts to bar the evidence in later criminal proceedings against evaders.

The first case occurred in 2008 with data obtained in Liechtenstein and ended with a quite publicly staged arrest of then Deutsche Post chief executive Klaus Zumwinckel. Unlike Zumwinckel, other tax evaders chose the court room over striking a deal with prosecutors, and lost, at least for now.

Those defendants had argued against the use of the acquired information since its collection had been illegal and in violation of international conventions on judicial assistance.

The Bochum Circuit Court found no reason to quash the evidence, prompting defendants to seek redress before Germany's Federal Constitutional Court which should decide the issue some time in 2010.

The new case involving data from Switzerland is quite similar, but this time the state government of North-Rhine Westphalia rather than Germany's federal intelligence service purchased the information for 2.5 million Euros. The legal problems surrounding the purchases are largely identical, including aspects of procedural, constitutional and public international law.

In Germany, some aspects of procedural integrity concerning collection of evidence have not yet evolved as it has in the American criminal law system. German courts usually balance the interest of Germany's criminal law system in the prosecution of offenders against the defendant's rights and the procedural integrity. Moreover, the unlawful collection of evidence has to violate the defendant's legal sphere in order to be blocked, meaning it has to have violated a procedural right that exists for the express purpose of safeguarding a defendant's rights.

With respect to public international law, the Bochum court did not follow the defendant's arguments on the violation during the collection phase, and the court doubted even the occurrence of such a violation. It considered the alleged violation insufficient to bar the evidence from use in a trial. Only when the use of the information itself would amount to a breach of international law, it held, would the poisoning of the evidence follow.

With regard to procedural and international law aspects, its decision may not withstand the scrutiny applied by the Federal Constitutional Court. This author discusses vulnerabilities of the ruling in an article appearing in the International Enforcement Law Reporter

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