zondag 22 juni 2008

Kieber Sale of Liechtenstein Data Triggers Backlash

By Alan Katz and Joshua Gallu

June 18 (Bloomberg) -- Heinrich Kieber used a bogus check to buy an apartment in Barcelona, Spain, and tried to blackmail a prince.

He finally got rich by selling stolen bank account data from LGT Group, owned by Liechtenstein's royal family, to German agents, according to the bank. The German government said it paid as much as 5 million euros ($7.8 million) for the data.

Kieber, a 43-year-old computer technician, triggered probes in 14 countries when he handed over computer disks containing about 1,400 names, prompting France to pledge a crackdown on tax havens when it assumes the European Union presidency next month. Germans alone have $485 billion of undeclared assets deposited abroad, according to the country's BBW research institute.

``He's managed to generate the biggest political backlash against tax havens in more than a decade,'' says Pascal Saint- Amans, head of the tax competition division at the Organization for Economic Cooperation and Development in Paris. ``Kieber has really put Liechtenstein in a very difficult situation.''

LGT tried to stop Kieber from releasing the data five years ago when it agreed to help him fight a fraud conviction if he returned the disks, according to his lawyer at the time. That came after he sought help from Liechtenstein officials by telling them he had escaped from kidnappers, then threatened to give the data to foreign authorities unless Prince Hans-Adam II provided legal assistance, the principality's top prosecutor said.

``It's always very dangerous to make a deal with a criminal because you are in most cases the loser,'' says Wolfgang Mueller, the lawyer LGT hired to represent Kieber in 2003 as part of his agreement to turn over the disks.

`The Good Guy'

Jack Blum, a lawyer at Baker & Hostetler in Washington, says Kieber hired him to collect fees he's eligible for after giving the data to U.S. authorities. U.S. law allows whistleblowers to collect 30 percent of any taxes recovered as a result of the information they provide.

Kieber is in a witness protection program because bankers, LGT clients and even drug dealers who had money in Liechtenstein are trying to find him, says Blum, who declined to identify the country that is protecting his client.

``My two interests are keeping him alive and making sure everybody in this chain knows he's the good guy in this case,'' says Blum, a former U.S. Senate investigator and expert in offshore money laundering.

The Senate's Permanent Committee on Investigations has issued subpoenas in conjunction with a probe of possible tax evasion by Americans with accounts at Liechtenstein banks.

A former UBS AG private banker, Bradley Birkenfeld, is cooperating with a separate Justice Department investigation into whether U.S. citizens evaded taxes with the help of Liechtenstein banks. On May 13, prosecutors unsealed an indictment alleging that Birkenfeld and Mario Staggl, a Liechtenstein banker, helped Americans set up shell companies to hide assets.

Family Ties

Kieber was born in Mauren, Liechtenstein, on March 30, 1965. He moved to Barcelona, his mother's hometown, when he was 17 and enrolled in the three-year sales and business administration program at the Escuela Suiza, which teaches courses in Spanish and German. He dropped out after one year, says Arturo Santeugini, head of administration and finances at the school.

``He was a decent student, though he had a lot of problems with his Spanish,'' says Santeugini, who taught a law course to Kieber.

While in Barcelona, Kieber told friends he was a member of the billionaire Hilti family but used an alias because he was afraid of being kidnapped, according to two people with direct knowledge of his claims. The Hilti family, which owns power-tool maker Hilti AG, was worth as much as 5 billion Swiss francs ($4.8 billion) in 2007, according to Bilanz, a Swiss business magazine.

`You Don't Like Me'

Kieber isn't related to the Hiltis, though his father, Alfons, worked for closely held Hilti AG as a machine operator and later a photographer, according to a person close to the Schaan, Liechtenstein-based company.

The Kieber family traces its links in Mauren, a town of 3,600 people, back to 1692, according to a family tree sold by the town hall.

Sandwiched between Switzerland and Austria, Liechtenstein has 35,000 residents and covers an area the size of Washington, D.C. Bank secrecy laws helped the state generate 29 percent of its 5.2 billion Swiss-franc economy from financial services last year, more than double the proportion in Switzerland.

Mueller, 70, says he knew the Kieber family before Heinrich became his client.

``I told him, `If your father, whom I knew very well, knew what his son did, he would roll over in his grave,''' Mueller says. ``And then he cried, and with tears in his eyes said, `You don't like me, either.'''

Unfunded Check

In the 1980s and '90s, Kieber worked as a computer technician at Swiss Air and the Amadeus online travel booking company in Barcelona, then hooked on with a courier firm, driving cars between Spain and Switzerland, according to the German man who sold him the Barcelona apartment.

In September 1996, while on vacation in Barcelona, Kieber bought the apartment in a white, 1970s-era building in the hilly, El Putxet neighborhood, saying he wanted to spend more time in the city, said the seller, who asked that his name not be used for fear of reprisals from Kieber's associates.

On Oct. 4 of that year the seller filed a criminal complaint alleging that Kieber wrote an unfunded check for 29.2 million pesetas ($280,000 today), says Olga Vasquez, an attorney at the Barcelona law firm Cuatrecasas who represented the plaintiffs. Kieber resold the apartment for 29.5 million pesetas a month after he bought it.

`You Must Help Me'

The civil guard, acting on that complaint, arrested Kieber in front of the Barcelo Sants Hotel, near the central train station, on Oct. 31, 1996, Vasquez says. He was questioned by police and the next day appeared before an investigating judge. Two days later, he was released pending further investigation and promptly fled Spain, Vasquez says.

By 1999, Kieber was back in Liechtenstein working for a consulting firm that was putting LGT's records into a computer system, the bank said. In 2000, LGT hired him to finish the process.

That was the year Robert Wallner became Liechtenstein's chief prosecutor. Kieber, still the target of an international arrest warrant, hit Wallner's radar screen in August.

Wallner had just given his first radio interview at a country fair. As he stepped off the platform, Kieber ran up and grabbed his hand.

``You must help me,'' Wallner, 49, recalls Kieber saying. ``A terrible injustice has been done to me.''

Argentine Kidnap

Kieber then recounted his time in the dank cellar of an Argentine ranch in 1997. He told Wallner that his captors demanded money as compensation for the apartment fraud, chained his legs to the wall, burned him with cigarettes and slashed him with a knife. Kieber said he agreed to cough up almost 700,000 Swiss francs ($670,600) to secure his freedom, then reneged when he returned to Liechtenstein, according to the prosecutor.

``He had pictures drawn that showed him lying face down on a stretcher, with his hands tied behind his back with a shackle being welded on his leg,'' Wallner says. ``And he had one that showed him wearing that and kneeling in front of his captors pleading for mercy.''

Wallner had his team investigate Kieber's claims, and a forensic medical specialist examined the marks on his legs, wrists and neck.

``I can't say with absolute certainty that it didn't happen, but we found no evidence that it did,'' Wallner says.

Instead of intervening on Kieber's behalf, Wallner charged him with fraud in the Spanish case.

Attempted Coercion

In October 2001, a civil court in Liechtenstein ordered Kieber to pay the German couple the equivalent of 615,000 Swiss francs in damages for the Barcelona apartment deal.

Kieber was indicted on charges of aggravated fraud in November 2002, Wallner says. He later sent a letter to Prince Hans-Adam and his son, Alois, warning that he had stolen the names of LGT clients and would reveal them if he wasn't freed.

The prince referred the details to police and a charge of attempted coercion was added to Kieber's case, Wallner says.

After receiving the letter, the prince asked LGT to set up a task force to stop Kieber from releasing the data, Mueller says.

The group decided to seek Kieber's cooperation, and LGT agreed to pay for his legal defense, Mueller says. Kieber was convicted and given a suspended jail sentence after he told a judge he had returned the computer disks and paid compensation for the apartment.

``The main intention in Liechtenstein was to get rid of him,'' Mueller says. ``For him to go to the Australian outback and never come back.''

Where's Kieber?

Now Liechtenstein's authorities want Kieber back.

Police in Vaduz issued an arrest warrant for Kieber on March 11 and demanded his immediate extradition if apprehended abroad. The next day, Germany said it needed time to consider whether it could aid in the search.

Wallner says he hasn't received a reply from the German authorities. The German Justice Ministry didn't respond to five telephone calls requesting an update on the country's position.

Blum, Kieber's U.S. attorney, says he has no way to reach his client because he is in such ``deep witness protection.''

``I have no way to talk to him,'' Blum says. ``That's the problem.''

Kieber's mother, Maria, now lives in Bellach, Switzerland. On June 5, she said by telephone that she didn't know where her son was living and hadn't heard from him since he disappeared.

The German magazine Der Spiegel in March reported that Kieber had called her from San Francisco in December, and that he was now living in Australia. Telephone directory searches in Liechtenstein, Germany, Switzerland, Austria, Australia and California failed to locate Kieber.

``It's hard to defend stealing, and hard to defend people not complying with their country's tax laws,'' says James Hines, director of tax policy research at the University of Michigan. ``There are settings where there are no good guys, and this is one of them.''

To contact the reporters on this story: Alan Katz in Paris at akatz5@bloomberg.netJoshua Gallu in Zurich at jgallu@bloomberg.net

Last Updated: June 18, 2008 02:27 EDT

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