German authorities have raided the homes and offices of hundreds of wealthy people suspected of involvement in the country's biggest tax evasion scandal.

Investigators, prosecutors and police undertook searches yesterday in the financial centres of Frankfurt, Munich, Stuttgart, Hamburg and Ulm.

Their moves came after revelations that Germany had lost €3.4 billion (£2.5 billion) in taxes after millionaires and executives transferred vast sums to a bank and foundations in Liechtenstein, the tax haven between Switzerland and Austria. The only suspect to have been named so far is Klaus Zumwinkel, the former chief executive of Deutsche Post, who is facing criminal charges. He is said to have confessed to having used the Liechtenstein scheme to avoid more than €1million of tax. Deutsche Post named Frank Appel, head of its logistics, as its new chairman yesterday.

According to investigators, who expect to conduct more than 125 searches by the end of this week, more than 1,000 people are suspected of tax evasion and it was only “a question of time” before more prominent names would be revealed. Planning for the police operation, a joint effort between the Chancellor's Office and the Finance Ministry, has been under way since 2006.

The first evidence came from an unnamed source, who offered the Bundesnachrichtendienst, the German equivalent of MI6, a DVD containing confidential files on capital moved from Germany to Liechtenstein. It included details of accounts held by Liechtenstein Global Trust (LGT) Group, a bank managed by the Principality of Liechtenstein, which has become a focus of the investigation.

The source, who was paid €4.2 million and given protection after the authorities verified the authenticity of the data, is believed to be a former employee of a bank in Liechtenstein.

Liechtensteinische Landesbank said last week that for years an individual had tried to blackmail it by threatening to sell client data.

LGT Group, headed by Prince Max of Liechtenstein, manages the assets of the House of Liechtenstein and of other European gentry. It reported a profit of €100million in the first half of last year. Shares of other Liechtenstein banks fell sharply on the Swiss stock market yesterday. LLB, the principality's biggest bank, was down more than 11 per cent at SwFr85.95. LGT Group is not listed.

Angela Merkel, the German Chancellor, is to meet Otmar Hasler, Liechtenstein's Prime Minister, in Berlin this week. Although the meeting was arranged before the scandal, the two are expected to discuss the issue of financial transparency.

Wolfgang Schäuble, the German Interior Minister, said: “I have zero understanding for this kind of greed. Uncontrolled capitalism, greed and massive losses on speculative investments - that is a combination that makes people furious.”

The scandal has prompted criticism of Liechtenstein's normally discreet financial institutions, with calls for more clarity and co-operation with international control mechanisms. It has also drawn attention to the tax-paying habits of Germans, with authorities estimating that annual evasion amounts to €30billion.

Crown Prince Alois of Liechtenstein said: “There are two kinds of transparency regarding the taxation system: transparency towards the citizens and transparency towards other countries. We are good at the first kind, but as far as the second is concerned we believe that too large a transparency is not in the interest of the citizens.”

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