Uli Hoeness and the Rhetoric of Tax Evasion

From the outset, it should be understood that the illegality of tax evasion is justified regardless of how high the taxes are.  Another understanding is that in the capitalist systems that dominate global economics the clever, and the deft who succeed and flourish within the system are also those more likely to try and figure out and successfully find ways to keep hold of the wealth they have accumulated.

The diction involved in tax evasion can appear aggressive.  Obviously “tax” isn’t overly aggressive, in fact it’s quite neutral however, “evasion”, directly referring to a circumventing of the rules, does evoke a feeling similar to resistance, almost on a level of malicious intent.  All this, possible from one single word.  But is every case of tax evasion malicious?

Uli Hoeness is a massive German societal figure both inside and outside the context of FC Bayern Munich.  Because of this, and the suspected sums of money involved, Hoeness’ voluntary declaration of tax liabilities which involved a Swiss Bank account upon which no taxes had been paid, has become the national scandal of discussion and it has been made even more so with political figures including German Chancellor Angela Merkel who had previously been in Hoeness’ corner taking some steps back from the Bayern President.

Apparently Hoeness had intended to take advantage of an expected bi-lateral pact between Germany and Switzerland whereby holders of accounts owing back taxes would be kept anonymous and the back taxes on assets could be settled.  Similar agreements exist between other countries known as “Rubik Accords”, according to Swissinfo.ch , “The idea behind it is to separate income from wealth and hand over tax at the source to third countries, while keeping the Swiss bank account holder’s anonymity.”

An agreement between Switzerland and Germany, while passed by the Swiss government, was in the end not passed by German officials which forced Hoeness to declare his accounts to tax authorities and in doing so paid back taxes of more than $3.9 million.  This process allows for anonymity and in fact also allows for amnesty however the account was being used for stock market speculation and due to Hoeness’ illegitimate claims of losses for 2-3 years based on netting out losses vs gains (which is not allowed) the case was passed on the the prosecutors office.

This lead to an investigation of tax fraud, leaked by Focus magazine, which resulted in a search of his home in the Alps, his subsequent arrest, and paying around $6.5 million bail.

This whole series of events comes at a time when global soccer paragon Lionel Messi has had charges brought against him in Spain for tax fraud and 41 Italian clubs (including 29 from the Serie A and Serie B) are being investigated for tax evasion.  While professional athletes and the clubs that employ them in Europe make millions the wealth gap continues to increase across Europe and it is not surprising that people are upset by it and why Germans are upset about Uli Hoeness.

In addition to Hoeness’ already high profile, what catapults him into even more notoriety with this scandal is the fact that he has criticized FIFA very openly about their business practices and the perceived corruption within the sport’s global governing body.  His high profile, which is also built on a solid reputation of social responsibility and activity combined with his criticisms puts him in such a hypocritical standpoint with this situation.

The Bayern President has surely taken a massive hit to his credibility and the investigation is not over.  It is believed that he will have charges pressed against him in the coming months.  What is important to consider though, when condemning him with the worst tax offenders and the morally bankrupt is that while the charges brought against Messi are in regards to his primary source of income via image rights payments and the Italian clubs are being investigated for shady player transfer dealings and questionable agent ethics, The money Hoeness was dealing with was not his primary income.

Hoeness gained a substantial portion of his current wealth from a Bratwurst company that he co-owns in Nuremburg.  The cash that Hoeness was playing the stock market with was actually initially provided by Robert Louis-Dreyfus of Adidas to the amount of around $3.5 million.  This is a significant amount and certainly one that few individual people have the opportunity to see, let alone have as pure investment money.  Beyond this, while his accounting practices of netting losses and gains was not acceptable, it does show that if he is showing net losses for almost 3 full years, this account is not vital to his solvency or his wealth.

It is understood he paid Dreyfus back and the whole scandal around the account does indicate that he had to have made a decent amount of money after that period of net losses.  An important note though, relates to a question brought up at the beginning.  Is every tax evasion malicious?  Some have described Hoeness’ stock market activities as borderline addiction.  This is not to argue that he had some sort of sickness or that his concealment of the account is justified.  It is to say that beyond hiding money he was hiding activity.  The activity though was not illegal.  He was not embezzling funds from Bayern, or laundering money from conspicuous sources.  He was betting on stock prices, and apparently doing it well.

Uli Hoeness hid money and earnings, and sloppily tried to recover from his actions.  The amount of money involved is obscene for many citizens of Germany, as well as around the world but the nature of his actions weren’t nefarious in nature, rather they were grounded in opportunistic and competitive tendencies that have made the wealth of many people the world round.  His misstep was to conceal what he was doing and he should be duly punished for it.  Those that are condemning him though as a morally devoid should possibly consider stratification within this realm of tax evasion.  Many commit this crime, and surely a large portion of money circumventing legal tax application are linked to activities and actions that are inherently malicious and detrimental to society.

Again Uli Hoeness committed a crime and his punishment will comply with German law surely, but his motives weren’t nefarious and it begs the question about what other German nationals hold Swiss Bank accounts outside of German tax application and what were their sources?  Perspective involves more than looking at the angles of one situation, it involves looking at multiple occurrences through those angles and comparing them.

 

 

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Reporting on the business side of the world's game.