Vijaya Sankar, an ex-employee at asset manager Duet Group, was spared prison time for his role in a Cum Ex tax scheme that cost Germany €92 million ($100 million) after he confessed and apologized to the court.
(Bloomberg) — Vijaya Sankar, an ex-employee at asset manager Duet Group, was spared prison time for his role in a Cum Ex tax scheme that cost Germany €92 million ($100 million) after he confessed and apologized to the court.
The Bonn Regional Court convicted the 47-year-old man on Tuesday for his work at London-based Duet‘s back office where he helped organize the deals in 2010 worth €11 billion for an investment fund set up by German private bank, Varengold AG. The judges also seized €60,000 from Sankar, income he made while working on the transactions.
The two year suspended sentence was relatively mild because Sankar at the beginning of his trial in March confessed and said he was “very sorry” for getting involved in the controversial strategy. He was the lowest ranking man at Duet targeted by prosecutors and eventually cooperated with the probe after unsuccessfully fighting his extradition from the UK.
“The contributions made by the defendant, who worked in the company’s back office, were beneficial but not of central importance to the success of the actions,” the court said in a release after the verdict.
Cum-Ex, a strategy that took advantage of how Germany collected dividend tax, involved multiple parties claiming refunds on a tax that was paid only once. Germany changed the way it collected dividend taxes in 2012 to block the practice that may have cost the country’s tax authorities at least €10 billion in total. About 1,800 suspects are now being probed by several German prosecutors’ offices.
Sankar was charged last year alongside Duet co-founders Henry Gabay and Alain Schibl as well as ex-partner Osman Semerci. The trial of the partners is expected to start later this year. Semerci testified in the Sankar trial after opting to also cooperate with prosecutors.
A long list of financial institutions were allegedly key to making the tax ploy work at Duet. The deals were allegedly set up with the help of of many financial firms, including Morgan Stanley, SEB AB and Investec Bank Plc.
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