Bankers in Tax Scandal Trial Fear ‘Financial Annihilation’
12 Mar 2020

The two former investment bankers standing trial in Germany over their role in controversial dividend-tax deals have sought to avoid jail time by cooperating with authorities. Now the pair face another threat: a massive, 207 million euros ($233 million) tax bill slapped on them by the Federal Tax Office.

Martin Shields and Nicholas Diable were served with letters by the tax authorities outside the courtroom in Bonn on Feb. 19, according to a court spokesman. The letter, a required step before any tax order can be issued, raises the prospect that the two defendants will have to pick up the tab for the damage stemming from the tax deals under review in the case dating back to 2009.

The latest development, which is independent of any sanction the court may issue if it convicts the two, is a setback for the men, who had aided the investigation with detailed insights into the world of so-called Cum-Ex trades. Making them pay for the overall tax losses also risks deterring other suspects who now may have second thoughts about collaborating.

Stefan Kirsch, a lawyer for Diable, said his client views such a bill tantamount to “financial annihilation.” He declined to comment further, as did Hellen Schilling, the attorney for Shields. A spokesman for the Cologne prosecutors declined to comment.

Germany’s Finance Ministry, which supervises the Federal Tax Office, said the authorities can’t comment on individual tax cases.

Shields and Diable are liable for the amount because they participated in tax crimes that lead to the losses, the tax office wrote in the letter, according to a transcript of the Feb. 19 hearing. The agency lists four funds which received tax refunds based on Cum-Ex transactions.

By Karin Matussek, Bloomberg, 11 March 2020

Read more at Bloomberg

Photo (cropped and edited): Wolkenkratzer / CC BY-SA 4.0

RiskScreen: Eliminating Financial Crime with Smart Technology

Count this content towards your CPD minutes, by signing up to our CPD Wallet