British bankers on trial in Germany

On Wednesday 05.09.2019 two British former investment bankers faced a German court in the first criminal trial relating to the “cum-ex” tax fraud scandal, which cost European treasuries billions of euros. Reporters have called it “the biggest financial fraud trial” and at the same time “the most complicated” tax case trial in the modern history of the country.

The two and many others were involved in the schemes in between 2006 and 2011. Simplifying the procedure cum-ex transactions work by trading shares at high speed on or just before the dividend record date – the day the company checks its records to identify shareholders – and then claiming two or more refunds for capital gains tax which had in fact only been paid to the state once.  Used across Europe, the practice cost Germany 7.2 billion euros, Denmark 1.7 billion euros and Belgium 201 million euros since 2001, according to an investigation published in October last year.

The two men, former employees of UniCredit SpA subsidiary HypoVereinsBank, would be both defendants and key witnesses at the trial in Bonn, Germany, as they look to avoid or reduce a potential prison sentence of up to 10 years by cooperating with the authorities. The trial, which is scheduled to last until January 2020, is being followed with interest across Europe because many more investment bankers, working for clients including Deutsche Bank, Barclays and Sweden’s SEB, are suspected of having practised cum-ex deals between 2001 and 2012, when legislators closed the loopholes that made the practice possible.

AM, Verificators

- 05 September 2019 - EN