FRANKFURT (Reuters) - German prosecutors filed criminal charges against two British bankers, accusing the pair of involvement in a fraud that cost the state 440 million euros ($494.4 million), a German court said on Monday, as the country’s biggest post-war fraud probe gathered pace.
The move by state prosecutors in Cologne paves the way for the first criminal trial from a years-long investigation into a scheme devised by bankers to make illegitimate double tax reclaims for share trades.
The German regional court in Bonn said that the two had been accused of involvement in fraudulent reclaims between 2006 and 2011. This statement is an important step toward launching a trial in the coming months.
The practice, known as cum-ex, typically involved trading company shares rapidly around a syndicate of banks, investors and hedge funds to create the impression of numerous owners, each of whom was entitled to a tax rebate.
Last year, Germany’s finance minister Olaf Scholz described the stock-trading scheme as a “scandal” that underscored the need for better European cooperation.
Tax authorities in Denmark say they lost $2 billion in rebates that should not have been paid, while Germany estimates it was tricked out of more than 5 billion euros ($5.62 billion)by a similar method.
The discovery of the trades in Germany and Denmark has prompted other countries, including Austria and Belgium, to open their own investigations. They have discovered that they were also affected, albeit on a far smaller scale.
Reporting by John O'Donnell, editing by Louise Heavens