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Grafs seeking shelter from the storm Tennis star, father at center of Germany's 'biggest tax scandal ever'


BERLIN -- It started as a simple family scandal, albeit a big one: a volatile Svengali of a father allegedly scheming to evade the taxes on his daughter's hard-won millions; a clean-cut tennis idol struggling tearfully to keep her game intact, even as her creator was carted off to jail.

Now, though, the Steffi Graf affair seems to be blossoming into something more: "the biggest tax scandal ever in Germany involving a private individual," said state legislator Dieter Puchta, one of a growing number of politicians calling for a wide-ranging public investigation.

Not only the names of the U.S. Open's recent victor and her father are being splashed across the front pages of the German press these days. So too are the normally invisible denizens of the German tax bureaucracy, a state minister or two, the German Tennis Federation and such leading lights of the international private sector as Adidas, the Italian pasta-maker Barilla and a large Stuttgart dairy, Suedmilch, whose yogurt Steffi Graf promoted.

The Graf affair exploded in May, when 15 investigators from the public prosecutor's office raided the family's southern German estate, seizing documents and keys. Word leaked out that the officials believed Peter Graf had set up illegal tax shelters for his daughter's earnings, enabling him to conceal millions of dollars.

By August, Peter Graf was arrested and placed in a hospital-prison, where he continues to be held in "investigative custody" while prosecutors prepare their case against him.

Through it all so far, Steffi Graf, 26, has kept to her tennis. She won the U.S. Open in New York last month but then broke down in tears in a post-match news conference, explaining that she was unable to visit her father in prison because she is considered a possible accomplice. (Graf, who last week was questioned by authorities in connection with the case, has since returned to Germany and been granted permission to see her father.)

Now, with calls mounting for open hearings and sanctions against the civil servants who may have led the Graf family astray -- and with the grotesque relationship between a dominating father and an approval-starved daughter laid bare -- many fear that the pressure will prove too much and that the woman whom Germans routinely call "our Steffi" will retire.

Yesterday, her attorney, Peter Danckert, told the German sports news agency SID that Graf has dropped out of the Brighton International Championships later this month and is unlikely to play again until Philadelphia in November.

"People don't blame Steffi Graf," says Puchta, chairman of the legislative finance committee for the state of Baden-Wurttemberg. "People say her father did it all for her."

Indeed, in prosperous, proper Germany, the elder Graf, who once sold used cars to GIs, is far too much of a scrambler to fit in. As his daughter's earnings ballooned into the tens of millions -- they are estimated to now total $125 million -- he hauled cash prizes away from tournaments in bulging grocery bags.

As the story has it, Peter Graf gave his daughter her first sawed-off racket when she was 3. She won her first final when she was 6. He controlled her life completely. When she competed at the Olympics in Seoul in 1988 and Barcelona in 1992, he wouldn't let her live in the Olympic villages, where she might have met young people, but was made to stay with him at off-site hotels.

Asked about this bizarre father-daughter relationship, the tennis star appears at a loss.

"What else was I supposed to do when I was 15, 16 or 17 years old, besides trust my father and his advisers?" she asked. "And ** later, why should I do anything differently, when everything appeared to be running well? There was no sign for me that everything wasn't in order."

Germans may be willing to accept her protestations of innocence. But there is growing disgust here that there were, apparently, well-placed people who knew perfectly well what was going on -- and they either looked the other way or abetted Peter Graf's shenanigans.

Records available so far suggest that as early as 1985 Peter Graf was searching for ways to decrease the 48 percent in taxes that the average German wage-earner pays to the state.

Old correspondence shows that a senior Adidas official suggested the following year that Peter Graf solve his tax problems by moving to Switzerland. But Graf apparently decided, instead, to ask his home state officials what they might be willing to do for him.

Just what happened next is murky. Peter Graf boasted to his Adidas friend that the state's prime minister had worked out a "political solution" for him, but the former prime minister categorically denies it.

Meanwhile, Peter Graf seems to have gotten the idea that his daughter no longer had to file any tax returns. None were handed in from 1989 to 1992; instead, the Grafs just paid an annual lump sum with no explanation of how they had arrived at the amount. When federal and local tax officials started to grumble, the family made a lump-sum tax payment of $2.5 million with no documents to show how it was calculated. Large though this amount may be, it is but a fraction of the amount Steffi Graf owed.

None of these goings-on might have come to light had it not been for some sports promoters in the western German city of Essen, who paid Steffi Graf a "starter's fee" to appear in a tennis match. Graf was sick on the appointed day, but her father refused to send back the money. The Essen organizers sued.

The lawsuit itself was small potatoes. But the panel of judges hearing it noticed the irregular ways in which the Graf family was receiving its money and brought the matter to the public prosecutor's office. After years of neglect, someone finally decided to take on the Grafs.

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