ZURICH – A high profile scandal involving German tax evaders and Swiss banks has produced its fair share of media headlines in both countries. But looking westward, the same controversy has failed to gain momentum in France, even though research conducted by Geneva-based brokerage Helvea shows that in 2010 there was more than $98 billion in undeclared French funds in Swiss accounts.

The reason for France's reticence? Some of the money contributed to political parties stems from these undeclared funds in Swiss banks.

Of course that's not the official line. "The French don't want to discuss this because it goes against the principles of the Republic," said a spokesperson from the Swiss Secretariat for International Financial Matters (SIF). Informed observers attribute France's shying away from the tax issues to the ongoing electoral campaigns in France, with the first round of presidential elections later this month, and the final runoff in early May.

French author and investigative journalist Antoine Peillon's accusations run across the political spectrum: "Almost all the party elites are involved in hidden party financing."

In 2007, L'Oréal billionnaire Liliane Bettencourt allegedly financed Nicolas Sarkozy's campaign – in cash – with undeclared money from a Swiss account, says Peillon. "This doesn't just concern Bettencourt, but a lot of other party sponsors as well," he adds. And Sarkozy isn't the only one alleged to have financed his campaign with murky funds: there source of the money streaming into other campaigns – that of Socialist François Hollande, Communist Jean-Luc Mélenchon and liberal candidate François Bayrou –also remains murky.

Peillon is critical of the fact that many large corporate donors are involved in partially illegal funding of the parties. "Many businesses still refuse to openly divulge details about their payments, and that includes payments with money parked in Switzerland," he said.

Peillon believes that as long as the present power balances prevail, politicians will do very little to make information about funding public. "Especially not if they actually depend, politically and financially, on the people giving them the money," he said. "It could take years to achieve clarity on this. In France, the mills of justice grind slowly."

Shifting capital

Political scientist Guillaume Allègre of Paris-based university Sciences Po told Tages Anzeiger that the whole discussion regarding tax evasion in France "is still in its infancy." He added that right now a debate about a withholding tax would be perceived by the candidates as "harassing."

But Peillon believes the French public might see things differently: "Many people pay their taxes willingly, sometimes even a tad over-correctly, whereas the super rich and big business just keep moving their capital around from one place to another," he said.

The French government often negotiates tax deals that are favorable to big business just to keep them in the country. That means significant differences in tax rates as compared to other European countries.

"Resistance to this is rising; fiscal dumping in the European Union is starting to be broadly discussed," Peillon said. "Harmonizing taxes would mean that tax competition among countries would cease, and with it the competition for big money which is widely perceived as unfair." The investigative journalist believes that tax evasion, to Switzerland for example, would then become just one topic to be dealt with under among a slew of related tax issues including tax avoidance and tax fraud.

Read the original story in German

Photo - mpd