2023-05-19 14:31:58
Dhe British hedge fund manager Sanjay Shah has to pay back the equivalent of 1.2 billion euros (8.5 billion Danish kroner) in illegal tax refunds from cum-ex deals to Denmark. Shah lost his appeal this week before the high court in Dubai, where he has lived for years. An earlier judgment from the autumn of last year is now legally binding.
After the announcement, Denmark’s Tax Minister Jeppe Bruus reacted emotionally with a tweet and victory emojis on Twitter. In an interview with the Danish television station TV 2, the social democrat was more objective. “Of course this judgment is good, but it will only help us if part of the money goes back to the state coffers, where it belongs.”
Loss must “never repeat itself”
According to him, Denmark is unlikely to recover the total damage of the equivalent of 2 billion euros that was caused by the cum-ex stock transactions up to 2015. All in all, it is a very big loss that should never be repeated to this extent, Bruus emphasized.
As in Germany, investors, stockbrokers and beacons had exploited the tax legislation for themselves. From 2012 onwards, around the dividend record date, they traded in the securities of companies listed in the Danish leading index OMX Copenhagen 20. They then submitted their applications for foreign-based companies, often American pension funds, to the Danish tax and customs authority, Skat. A withholding tax that was incurred only once was reimbursed several times.
A whistleblower passed information on to Skat, the tax refunds were stopped from August 2015. The profits are said to have been laundered via financial institutions abroad, and Danish investigators later also focused on the now insolvent North Channel Bank from Mainz.
Danish tax investigators see Shah as the key puller of many stock deals. The former Morgan Stanley and Credit Suisse investment banker had relocated to Dubai and founded his hedge fund Solo Capital there. Shah has denied any guilt in the past.
Delivery to Copenhagen
Denmark applied for his extradition from the Emirates, after long struggles the 52-year-old Briton, who is already in custody pending deportation, is to be handed over to the authorities in Copenhagen as soon as possible. The Hamburg Regional Court has also admitted charges against Shah and six other defendants for tax evasion and money laundering. It is still unclear whether and when the process will take place.
The Danish Tax Authority is tackling organized tax evasion on several fronts. Overall, Skat announced that proceedings had been initiated in six countries against 500 people and companies involved in the cum-ex scandal. In addition to the civil proceedings in Dubai, there are numerous claims against US pension funds, and a lawsuit against the stock traders involved is ongoing in New York.
Skat has also sued Shah, Solo Capital and the banks involved in the High Court in London for damages. The defendants had a number of assets there that could only be confiscated on the basis of an English judgment, the authority also stated. “The judgment in Dubai will therefore not have a direct impact on the further proceedings in England.”
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