Vaduz cancels German art show over tax

Liechtenstein’s tax row with Germany moved into the cultural arena on Tuesday when the royal family of the tiny Alpine state cancelled an exhibition of its paintings in Munich.

Liechtenstein said it would not loan any more works of art to Germany so long as the “implementation of the basic principles of the rule of law” appear questionable, a royal family statement said.

The move marks a worsening of sentiment between the two countries, which started after Germany paid €4.2m ($6.45m, £3.2m) to an informant who provided hundreds of confidential account details from LGT, a Liechtenstein bank owned by the monarchy.

Germany is leading a charge from several other European Union member states to crack down harder on tax havens such as Liechtenstein and to ease bank secrecy rules. Crown Prince Alois, the head of Liechtenstein’s royal family, has heavily criticised Germany for interfering in his country’s affairs.

The cancellation of the exhibition, showing 60 paintings and 100 graphics of Viennese art from 1815-1848 at Munich’s Neuen Pinakothek museum, represents a new attempt to use cultural weapons in diplomacy. Russia threatened late last year to cancel an exhibition in London, which was seen by some critics as part of a wider diplomatic row. It also highlighted Russia’s concerns that the art could be impounded as a result of legal claims for debt against the government.

Herbert Rott, the designated curator of the Munich exhibition that was due to run from May to September, said: “We were caught ­completely cold by the announcement as the row has nothing to do with art. I find it very saddening.” He said he hoped the exhibition could run later this year or in 2009. Liechtenstein said that if the circumstances changed it would be prepared to resume its contacts with German museums.

The cancellation came as German investigators edged closer to obtaining new details of bank accounts in Liechtenstein used by alleged tax evaders, after prosecutors said a second informant appeared ready to hand over the data.

Lawyers representing Michael Freitag, arrested last year in Rostock, northern Germany, for allegedly blackmailing Liechtenstein's LLB bank with stolen data, are due to meet German prosecutors next Monday to prepare the data transfer, the prosecutors’ spokesman in Rostock said.

According to prosecutors, Mr Freitag holds details of 725 bank accounts at LLB, having between 2005-07 blackmailed LLB into paying €9m for the return of data on 1,600 accounts. If he hands over the said data, Mr Freitag could expect a lighter sentence if found guilty in his court case, but would still face a long prison term, the spokesman said.

Mr Freitag’s lawyers last month offered the data to the German finance ministry but were referred to the prosecutors. The lawyers refused to comment on next week’s meeting.

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