The embattled former CEO of Volkswagen is reportedly socking away money at Swiss bank Vontobel. The perfectly legal move nevertheless leaves a bitter aftertaste.
The Zurich-based bank maintained an account for Martin Winterkorn, who resigned as head of Volkswagen nearly three years ago amid a massive emissions scandal surrounding the German carmaker, according to German tabloid «Bild am Sonntag» (in German, behind paywall).
Winterkorn was charged in the U.S. two months ago of conspiring to cover up VW's wrong-doing over disclosing its emission levels – an attempt to hold a former top executive accountable that knows no parallel in the finance industry.
Wife's Millions
The German-born ex-CEO, together with his wife, transferred millions in Switzerland to avoid detection by tax officials, the newspaper reported. A spokesman for Vontobel said it complies with all laws and regulations, but that Swiss law prevents it from commenting on any client relationships – or even to deny whether Winterkorn is a client.
Specifically, the paper reports that Winterkorn stowed 3.4 million euros ($4 million) in Switzerland in his wife's name. The sum may have been subject to gift tax in Germany, the paper reports. A lawyer for Winterkorn told the paper that the former CEO's finances weren't «objectionable» according to tax advisors.
Support for Grown Son?
German prosecutors backed Winterkorn: the former CEO is not being investigated for shielding his money from tax, as «Frankfurter Allgemeine Zeitung» (in German) reported later on Monday.
Winterkorn also reportedly devised an unconventional financial aid scheme for his adult son: the ex-CEO sends the 40-year-old son 2,700 euros per month through a German regional bank, but receives nearly as much back – 2,500 euros – via another account at the same bank, «BamS» reported.
The executive's lawyer told the paper that Winterkorn is free to support his family in any way he chooses, and that tax advisors had vetted the scheme as «completely above board.»
Wealth Transfers Noted
Winterkorn's wealth transfers nevertheless belong in his file, the prosecutor in Braunschweig, Germany said. The measures may play a role further down the road in establishing whether the ex-CEO knew of diesel emissions scams, and wanted to protest himself financially against the fallout.
It is implausible that Winterkorn, or any wealthy German, would attempt to evade taxes the simple old-fashioned way, with an offshore account: Germany and Switzerland have been exchanging information on bank clients since January, and any evasion would have been easy for German officials to track under the data-swapping arrangement.
Hoeness Tax Scandal
It is more likely that Winterkorn was attempting to «optimize» his tax bill with several measures like gifting and spreading his money around. BamS speculates that Winterkorn wanted to put a nest egg in Switzerland in case he is convicted in the U.S. and subsequently held financially accountable by class-action lawsuits.
While Vontobel may not have done anything wrong, it reflects badly on the bank because it is the second German scandal to become public: Two years ago, Vontobel paid 4.5 million euros to put a high-profile tax evasion case linked to former Bayern Munich president Uli Hoeness to bed. An unnamed Vontobel banker was also sanctioned. Hoeness himself served less than two years in prison and is back at Bayern Munich.
