Germany says it paid for data leading to tax swoop

Germany paid for information that led to a sweeping probe into tax evasion and expects to reap several hundred million dollars from the investigation, a Finance Ministry spokesman said. German media reported that the BND intelligence service paid an informant around $1.47 million for a compact disk containing Liechtenstein bank data on over 1,000 tax evasion suspects.

The Finance Ministry spokesman did not deny the reports and added: "It's money well invested."

The tax investigation has already led to a raid on the home of Deutsche Post chief executive officer Klaus Zumwinkel and threatens to ensnare hundreds more rich Germans. Mr Zumwinkel is expected to quit as Deutsche Post CEO.

Mr Zumwinkel, a pillar of Germany's corporate establishment, came under pressure to go after prosecutors said they suspected him of dodging about €1 million in taxes by transferring money to tax haven Liechtenstein.

Police are likely to visit hundreds more rich and prominent Germans as part of the probe into offshore accounts, sources close to the investigation have told Reuters.

Liechtenstein Prime Minister Otmar Hasler is due to meet German Chancellor Angela Merkel and her finance minister, Peer Steinbrueck, tomorrow in Berlin for talks on the missing millions.

The tax scandal has undermined trust in company executives, who many Germans already held in low regard after a series of recent corporate scandals, and because bosses have held down workers' wages at a time when the economy has grown strongly.

Der Spiegel magazine reported that the informant contacted the BND early in 2006. Several meetings with tax investigators followed that year during which the whistle-blower provided sample data to demonstrate the quality of the information.

Investigators subsequently paid for the information in full.

German leaders expressed concern at the weekend that the tax scandal risked discrediting the economic model on which the country's post-war identity is founded, and industry chiefs sought to shore up their reputation.