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Tax Fraud Probe Rising to International Incident? With Reuters Wires

Liechtenstein's Crown Prince Alois on Tuesday accused Germany of launching an attack on the principality's sovereignty by paying an informer for bank details in a massive tax fraud investigation.

"Germany has clearly failed to understand how one behaves towards a friendly state. We are a small country and we want good relations with our neighbors but we are also a sovereign state," the prince told a press conference aired on German television channel AFP.

Alois' pronouncement comes as German public prosecutors revealed they were widening their searches in their investigation of large-scale tax evasion linked to Liechtenstein.

Investigators searched the Munich branch office of Dresdner Bank, part of top European insurer Allianz, on Monday, the bank said. It declined to give details.

"We are continuing our work throughout the whole of Germany," Bernd Bieniossek, public prosecutor in the city of Bochum, which is leading the probes by tax investigators and police, said Tuesday.

Bieniossek said it was too early to summarize results of the probes so far but said he would report early next week.

He declined to comment on the focus of the searches on Tuesday.

Investigators searched a number of banks and residences in large German cities on Monday.

Recent tax-fraud raids by German finance authorities to secure funds transferred by German citizens to Liechtenstein bank accounts are worrisome, a Swiss member of parliament, Hans Kaufmann, told daily newspaper Tages-Anzeiger.

Deutsche Post CEO Resigns as Probe Widens

The tax-evasion scandal, which threatens to ensnare hundreds of rich Germans, came to light last week, when police raided the home of Deutsche Post Chief Executive Klaus Zumwinkel, leading to his resignation.

Zumwinkel came under intense pressure to step down after German prosecutors said last Thursday that he was suspected of dodging about 1 million euros ($1.46 million) in taxes by transferring money to tax haven Liechtenstein.

Hundreds more rich and prominent Germans faced a visit from the police after prosecutors investigating the tax evasion got extensive data on offshore bank accounts in Liechtenstein, a paper said.

It was unclear how prosecutors obtained the documents about accounts at LGT, business daily Handelsblatt said. But it quoted one unnamed investigator saying: "We cracked the entire bank."

More than 150 tax-dodging suspects were raided on Monday, adding that around 1,000 people were under suspicion.

LGT spokesman Bernd Junkers in Liechtenstein said the bank controlled by the tiny principality's princely family had taken note of the report but could not comment further.

-- Reuters contributed to this report