BERLIN • German politicians have reacted angrily to reports that Switzerland planted a spy in a regional finance ministry to find out how it obtained details of secret Swiss bank accounts, days after police arrested another man also suspected of spying.

The Sueddeutsche Zeitung newspaper and broadcasters NDR and WDR reported that the Swiss Federal Intelligence Service (FSI) had a mole in the North Rhine-Westphalia (NRW) finance ministry who was searching for details of German tax investigators.

On Friday last week, German police arrested a 54-year-old man suspected of trying to find out how German states had obtained CDs with details of secret Swiss bank accounts set up by Germans to evade tax.

"If it turns out to be true that the FSI is spying on the financial administration of NRW, I would consider this a scandal - a scandal that shows that we have to continue our fight against tax evasion," German Social Democrat leader Martin Schulz told Swiss television SRF.

"The Swiss government will also have to answer some questions on whether they placed a spy inside the financial administration and to what purpose," Mr Schulz said in a version of the interview available on SRF's website.

Mr Schulz's party is the junior coalition partner of Chancellor Angela Merkel's conservatives and he will stand against her in elections later this year.

The Swiss government said the federal police had asked the FSI in 2011 to help with an investigation related to stolen data CDs in Germany, the "normal way to proceed in a criminal investigation when police cooperation and international judicial assistance are not possible", government spokesman Andre Simonazzi said in an e-mail statement.

The Swiss government was informed in 2011 by then Defence Minister Ueli Maurer, who is now Finance Minister, of FSI's activities that ended in 2014, Mr Simonazzi said, declining to comment further.

"Today, the situation is very different. The Swiss-German relationship is very good and has evolved over the last years in financial and tax affairs," Mr Simonazzi said.

Mr Norbert Walter-Borjans, Finance Minister of the state of NRW, expressed alarm at the reports of a spy in his ministry.

He said the case showed how strongly protected was the Swiss system that allowed tax evasion.

NRW has for years irritated Switzerland by buying data as part of a crackdown on tax evasion by Germans stashing away cash in secret accounts. The state has bought 11 CDs of data since 2010 and paid €17.9 million (S$27.6 million) to informants. It has recovered nearly €7 billion in tax revenue which would have been lost.

The spying allegations could be embarrassing for Switzerland, which has increased transparency in its financial system in the last few years to stop international tax dodgers abusing its secrecy rules.

German Foreign Minister Sigmar Gabriel spoke to his Swiss counterpart on Wednesday about the case.

REUTERS