BONN (Reuters) – A top German banker went on trial on Monday accused of playing a role in a multibillion-euro German tax fraud scheme that has ensnared scores of domestic and global banks and hundreds of individuals.
In the scheme, known as “cum-ex” or dividend stripping, banks and investors would swiftly trade shares of companies around their dividend payout day, blurring stock ownership and allowing multiple parties to falsely reclaim tax rebates on dividends.
The loophole that allowed the trading to thrive between 2005 and 2012 is now closed, but a lengthy investigation has taken on vast dimensions as courts and officials try to hold wrongdoers to account and claw back an estimated 10 billion euros ($10.66 billion) lost from government coffers.
The trial that began on Monday in Bonn involves Christian Olearius, the 81-year-old former CEO and chair of the Hamburg-based bank M.M. Warburg and the most senior banker yet to stand trial. He has denied any wrongdoing but made no statement in court on Monday.
Prosecutor Stephanie Kerkering told the court that Olearius had conspired with others inside and outside Warburg to engage in the transactions.
The profit was “based on the fraudulent obtaining of taxpayers’ money”, she said.
Prosecutors claim damages of nearly 280 million euros.
Warburg declined to comment.
Earlier this year, a tax lawyer alleged to have masterminded the fraud received a second eight-year jail sentence, the longest to date.
Others, including a former employee of Warburg group and two British bankers, have also received sentences and fines.
The case has taken on political dimensions as well.
German Chancellor Olaf Scholz – formerly the mayor of Hamburg – has faced lawmaker questions about whether he intervened in the tax matter on Warburg’s behalf, but he has dismissed such suggestions.
($1 = 0.9377 euros)
(Reporting by Matthias Inverardi; writing by Tom Sims, editing by Friederike Heine and Bernadette Baum)
