Small and defenceless it may be, but Liechtenstein has never willingly given up a banking secret. Now the unthinkable has happened: a DVD has found its way into the hands of British tax inspectors detailing Britons’ dealings in the Alpine tax haven.

How HM Revenue & Customs got hold of this fiscal holy grail is a tale of intrigue worthy of a thriller: it involves German spies, a mysterious whistleblower and a dogged quest by the British taxman to claim a share of hundreds of millions of pounds hidden in secret bank accounts.

Germany sent shockwaves through the world of private wealth management when it acknowledged last week that its foreign intelligence service had paid £3.2m for details of accounts held by several hundred tax-dodging Germans at a bank owned by the royal family in Liechtenstein.

The landlocked principality, which regards the secrecy of bank accounts as sacred, reacted in fury: Prince Alois appealed for sympathy by suggesting that his country, which had stayed neutral through the last war, was coming under the German boot.

“We are under bombardment from a great power,” said the impeccably groomed Sandhurst-educated prince, adding that Germany’s loss of revenue to offshore havens was its own fault for imposing high taxes.

This did not deter Chancellor Angela Merkel from her campaign against tax cheats: dozens of Germans, including the head of the post office, one of the country’s top executives, and four politicians were rounded up for questioning about their once secret Liechtenstein accounts.

This weekend it has emerged that British tax authorities have acquired similar information for £100,000 – and are studying details of about 100 accounts held at the Liechtenstein bank by Britain’s richest families.

The Americans are also reported to have acquired the files and have been using them for several months to try to get back millions of lost tax dollars from Liechtenstein’s infamous stiftungs, or trusts.

It is the first time that any tax authority has been able to lay its hands on such detailed information about so many accounts in Liechtenstein.

British taxmen were thrilled: thousands of Britons are believed to keep accounts in Liechtenstein, which has more registered companies than its 35,000 citizens.

“This is a coup for HM Revenue & Customs,” said Andrew Watt, an accountant who worked for six years as one of its special investigators. “They will be very excited. Until now Liechtenstein has been beyond the reach of the taxman. Not any more. Make no mistake, a lot of people here will be very worried.”

It was claimed in Liechtenstein that the source of the infamous DVD was 50-year-old Heinrich Kieber, a computer expert. He is a former employee of the LGT Group, a bank owned by Alois’s family, who had threatened to release sensitive bank data several years ago unless he was given a new identity to avoid prosecution in a separate case involving a property fraud.

The request was denied. Kieber was convicted of fraud in 2004 but was allowed to go free after returning the data. Sources at the bank where he worked believe that he kept some of the information. They claim that the DVD acquired by the Germans had been on sale for 18 months and was woefully out of date.

German intelligence was reluctant to admit to having any dealings with a convicted fraudster. Officials spoke instead of a “classic whistleblower” who had approached them by e-mail, posing as a woman.

The informant, claiming to have acted out of moral outrage, had offered information about money laundering in Liechtenstein as well as details of German tax evasion. A meeting was set up in the French city of Stras-bourg in May 2006. The source had demanded money and also police protection from organised crime gangs.

A formal contract was signed. Things were so above board that the informant even had to pay tax of £300,000 on his fee of £3m. He was denied access to the witness protection programme but got two passports with false names, intelligence sources said.

Such unusual candour – for the spy world, at least – could only encourage other bank employees to cash in. No wonder some Liechtenstein banks have removed USB ports from office computers to prevent removal of data. It emerged that another bank had paid blackmailers millions of pounds to keep client information secret.

The struggle to protect confi-dentiality is hardly surprising.

Banking secrecy has helped to put the pint-sized country – and its royal family – among the world’s richest.

Its banks may, on occasion, divulge information if confronted with proof of a criminal activity such as fraud, money laundering or terrorism. Tax evasion, by contrast, is not considered a criminal offence in Liechtenstein, whose previous clients have included Robert Maxwell, the British media baron, and various African despots.

Having survived centuries of European upheaval, the Liechtenstein royals were putting a brave face on their predicament: instead of bowing to German demands for more transparency, they vowed only to strengthen customer privacy.

“We don’t like to be bullied,” Prince Nikolaus, the uncle of Alois, explained.

Hideaway blacklist

Liechtenstein is one of three places classed as an “uncooperative tax haven” by the Organisation for Economic Cooperation and Development (OECD) for failing to allow tax authorities in other countries access to its clients’ bank details.

The other two on the OECD’s blacklist are Andorra, the tiny principality in the Pyrenees, and Monaco, the Mediterranean port that has become a playground for hedge fund managers, private equity barons and entrepreneurs.

The days when foreigners could arrive clutching a suitcase full of banknotes are long gone. Foreigners can now set up bank accounts from their homeland and transfer funds electronically. Until recently they were allowed to do so anonymously.

The key attraction is secrecy, alongside specialist wealth management advice.

Angela Merkel, the German chancellor, is spearheading the campaign to force Liechtenstein, Andorra and Monaco to end secret banking practices.

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