Soccer boss tax scandal gives Merkel a headache before election

Tue Apr 23, 2013 1:49pm EDT

* Bayern Munich chief Hoeness admits to secret Swiss account

* Social Democrats, Greens turn scandal into election issue

By Madeline Chambers

BERLIN, April 23 (Reuters) - German opposition parties accused Chancellor Angela Merkel's government on Tuesday of protecting tax dodgers, seizing on the shock revelation that a top soccer manager had turned himself in to tax authorities and making it an election issue.

Uli Hoeness, the Bayern Munich president and an associate of Merkel, revered and reviled in Germany for his footballing success and blunt style, said he was trying to make up for a mistake by telling officials about a secret Swiss bank account.

Five months before an election, the opposition Social Democrats (SPD) and Greens played up Merkel's personal contact with Hoeness, a household name in Germany, and argued that her centre-right coalition had been too soft on tax cheats.

"We need to significantly strengthen tax fraud investigations in Germany. There is a lot of hypocrisy in the current government," said Peer Steinbrueck, who will stand against Merkel as the SPD candidate for chancellor on Sept. 22.

He said Merkel's government had hindered tax investigations by questioning the origins of data used by prosecutors and missing opportunities for international action.

"Calls for a tax FBI from the government's ranks come very late and are hypocritical," said the former finance minister.

The SPD, struggling to make inroads into Merkel's lead in the opinion polls, views tax dodging as a winning issue, partly because Steinbrueck has a track record of trying to tackle it when he served as finance minister.

The well-known face of Hoeness is a gift to them as he draws voter attention to an otherwise potentially dry issue. For days, newspapers have carried pictures of Hoeness and Merkel alongside each other. She has consulted him on business issues.

"The case of Hoeness is of concern because he was a self-styled icon of the honest German middle class," Juergen Trittin, a leader of the Greens in parliament, told reporters.

"He was always welcome with Mrs Merkel, (Finance Minister Wolfgang) Schaeuble... They liked to have their photo taken with him ... But now his image is broken they don't want to be seen with him," he said.

The SPD also homed in on the shortcomings of a Swiss-German tax deal agreed by Merkel's government but which the SPD and Greens vetoed in the upper house of parliament last year, saying it was too weak.

Hoeness, 61, has been reported as saying he turned himself in because that treaty was vetoed. Under the deal, individuals who came forward and paid taxes due on their savings held abroad could have avoided prosecution and remained anonymous.

On Saturday, Munich prosecutors confirmed an investigation against Hoeness but gave no details of the amount involved.

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In a sign of how dangerous the scandal could be to Merkel, her spokesman said on Monday Hoeness had disappointed her.

Hoeness, expected to attend Bayern's Champions League match against Barcelona later on Tuesday, is close to Merkel's conservative Christian Democrats (CDU) and especially their Bavarian sister party, the Christian Social Union (CSU).

A stocky former footballer who does not hesitate to express his views, Hoeness can boast considerable success as president of Germany's top soccer club and had won praise from some ordinary taxpayers for his public criticism of tax evasion.

In an interview published on Tuesday, he said he realised he had made a bad mistake in hiding his savings. "I want to clear the decks. The law offers this possibility," he told Sport Bild.

Merkel's conservatives defended their record on Tuesday, saying Schaeuble had toughened laws on tax evasion and on people who turn themselves in, requiring full and early disclosure.

Gerda Hasselfeldt, a senior member of the CSU, which faces a tough Bavaria state vote in September, described the Hoeness case as a one-off. It could be a major embarrassment to the CSU, however, if it is shown that the Bavarian government knew about Hoeness' secret stash before prosecutors started investigations.

"I see absolutely no problem for us in the party. In party-political terms, we have nothing to do with the misbehaviour of an individual," said Hasselfeldt. (Additional reporting by Hans-Edzard Busemann, Andreas Rinke and Noah Barkin; Editing by Gareth Jones and Mark Heinrich)

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