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Germany fines banker €14m

Publish date: 26 March 2020
Issue Number: 702
Diary: Legalbrief Forensic
Category: Criminal

Two former London bankers were handed suspended jail terms and one a €14m fine for tax fraud in a landmark trial that is likely to unleash dozens of similar cases across Germany. According to a report in The Guardian, the ruling is the first criminal conviction for what the judge, Roland Zickler, called ‘a collective case of thievery from state coffers’. Martin Shields and Nicholas Diable managed to avoid jail by closely co-operating with German prosecutors and shedding light on a complex fraud scheme that siphoned €400m out of German state coffers. Known as ‘cum-ex’, the scheme involved 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. Last week the judge stated that the trades were illegal rather than merely exploiting loopholes in the law. The chief prosecutor, Anne Brorhilker, said a harsher sentence would have ‘covered up the fact that the greatest tax robbery in German history was not conducted by two individuals but hundreds of people’. The Bonn court also seized €176m from MM Warburg, a Hamburg-based private bank that had links to most of the transactions under review in the trial. A spokesperson for the bank said it would appeal the decision. At least 130 banks are under suspicion of having taken part in cum-ex trades.

Full report in The Guardian