58 
the financial services 
industry.10 
The legal hot water in which LGT (and later LLB) 
found itself affected banks with very close ties to the political establishm ent: the 
government provides LLB with a guarantee for the assets it holds, and this pro- 
vided the government with a strong inc entive to protect the bank from legal prob- 
lems. Similarly, LGT is owned by the Prince of Liechtenstein Foundation, which 
is controlled by the Princely House, so the interest of Liechtenstein’s political elite 
in the economic we lfare of the two banks went beyond tax revenue; the financial 
fate of the state and of the two banks were aligned. Hence, no relevant group chal- 
lenge d the political consensus.   
Diverse responses to common challenges 
The follow ing section examines how Liechtenstein and Switzerland have re- 
sponded to four common challenges: (i) the immediate response to US pressure 
following the Senate hearing; (ii) the OECD blacklist; (iii) US criminal investiga- 
tion; and (iv) attempts to instigate AEI on tax matters.   
US pressure after the Senate hearing   
In early 2008, both LGT and UBS were confronted with major tax evasion scandals 
that resulted in a public hearing in front of the US Sen ate Permanent Subcommittee 
on Investigations in July 2008, for which the subcommittee had prepared a detailed 
repo rt based on eight case studies; seven of these concerned Liechtenstein in gen- 
eral and six LGT in partic ular (Levin and Coleman 2008 ). While UBS testified, 
LGT chose not to discuss or defend its practices in public, instead issuing a state- 
                                                    
10 
The Hereditary Prince must expressly agree to every law passed in Liechtenstein. In addition, 
there is widespread agreement that no policy can be made against the will of the Princel y House 
of Liechtenstein, which is therefore usually involved in any discu ssion of political initiatives. initiatives.