Merkel Disappointed in Hoeness as Opposition Pounces on Tax

Chancellor Angela Merkel expressed her disappointment at Uli Hoeness, the president of Bayern Munich soccer team, as Germany’s opposition seized on a probe into allegations that he evaded taxes.

Hoeness, 61, who made his fortune as founder of the HoWe Wurstwaren KG sausage factory, is being investigated for tax evasion after he reported illicit tax holdings in Switzerland in a bid for amnesty. The sports figure had bet that a Merkel-sponsored treaty with Switzerland, which was blocked by the opposition Social Democratic Party this year, would grant him a form of amnesty, Focus magazine reported at the weekend.

“Many people in Germany are disappointed in Uli Hoeness at the moment and the chancellor counts among them,” Steffen Seibert, the chief government spokesman, told reporters at a regular press conference in Berlin today.

Five months before national elections, the Hoeness affair re-opened a tax debate that ensued in 2011 when the SPD-led opposition blocked an agreement that would have levied a tax on German citizens with Swiss accounts while protecting an element of the country’s bank secrecy. The SPD, trailing Merkel’s Christian Democratic Union in the polls, said the Hoeness case is evidence that Merkel’s coalition treaty with Switzerland would have been a giveaway to tax dodgers.

Tax ‘Obligations’

Tax evasion “undermines the foundations of our society,” SPD parliamentary floor leader Frank-Walter Steinmeier told reporters in Berlin. He said he couldn’t understand why Merkel’s bloc and her Free Democratic Party coalition partner had gone to such lengths “to prevent finally exposing who is avoiding tax obligations.”

Munich prosecutors are examining whether Hoeness’s formal declaration, which is possible under German law to win a pardon for tax violations, “was complete and valid,” Ken Heidenreich, a spokesman for the prosecutors, said today. As a rule, amnesty is only granted if such a declaration is “exhaustive,” he said in an interview.

Bayern Munich leads the German Bundesliga and is competing in the final four of the UEFA Champions League, soccer’s premium club tournament. Bayern Munich ranked fourth in a list of the world’s richest soccer teams by Deloitte, with total revenue of 368.4 million euros for 2011/12.

Bayern Munich’s press office didn’t immediately reply to a fax seeking comment from the club and from Hoeness. Journalists were instructed not to ask about the issue at a club press conference today. Hoeness’s defense attorneys Werner Leitner and Andreas Groetsch didn’t immediately return calls seeking comment.

Government Defense

The German government reiterated its defense of the tax treaty, which was designed to levy a withholding tax on Swiss bank accounts held by German taxpayers, as well as a levy on holdings that were undeclared in the past.

“With the treaty we would have guaranteed that all taxpayers for the past and for the future would have had to pay,” German Finance Ministry spokesman Martin Kotthaus said. Since the opposition blocked the treaty, past holdings that exceed the statute of limitations are now lost, he said.

Hoeness, whose factory makes a version of the famous Nuremberger Rostbratwurst sausage, is the most prominent German to seek clemency after lawmakers last year rejected the treaty.

A member of the German team that won the 1974 World Cup, Hoeness scored 86 goals in 239 Bundesliga appearances and played for Bayern Munich for more than eight years before retiring because of injury at the age of 27.

Bundestag Questions

The opposition SPD plans to ask questions in the lower house this week about what Bavarian state Prime Minister Horst Seehofer knew of the matter and when, as well as whether Hoeness has donated money to Seehofer’s CSU party, Steinmeier said. The CSU is the Bavarian sister party to Merkel’s CDU and the third member of her national coalition.

The CSU is seeking to retain power in regional elections on Sept. 15, one week before the federal vote on Sept. 22 in which Merkel is running for a third term.

Seehofer knows no details of the case beyond that Hoeness is the subject of a tax investigation, Rainer Riedl, a spokesman for the Bavarian state chancellery, said in an e-mailed statement. The relevant authorities will handle all aspects of the case, and it is up to them to address any legal questions, Riedl said.

To contact the reporter on this story: Patrick Donahue in Berlin at pdonahue1@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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