Four Deutsche Bank AG employees arrested on allegations of obstruction of justice and money laundering were ordered to remain in custody while the investigation is pending.
The fifth suspect arrested yesterday was released because of health issues, Guenter Wittig, a spokesman for the Frankfurt General Prosecutor, said by phone today. He declined to explain the court’s ruling or identify any suspects.
The case is part of a criminal probe over tax-evasion allegations linked to the sale of carbon-emission certificates in which prosecutors are investigating a total of 25 people at Deutsche Bank. The lender’s German offices were raided yesterday and Co-Chief Executive Officer Juergen Fitschen and Chief Financial Officer Stefan Krause, who weren’t arrested, are subjects of the probe.
Under German law, a court can only detain suspects in non-murder cases if there is a risk they may flee or tamper with evidence.
Deutsche Bank fell 2.7 percent, closing at 33.345 euros in Frankfurt trading. Deutsche Bank said earlier today fourth-quarter profit will be “significantly” reduced as it offloads riskier assets and faces higher restructuring costs.
The tax probe has been pending for more than two years and led to Europe-wide raids in 2010, including at the offices of Deutsche Bank. People at the bank were warned ahead of the 2010 raids.
Fitschen and Krause are under investigation because they signed value-added tax statements for 2009 that prosecutors claim were wrong, Deutsche Bank said yesterday. The document was voluntarily corrected in a way that rules out any violations, the bank said. Prosecutors say the correction came too late, the lender said.
Prosecutors are investigating about 190 people in total, according to Wittig. Six men linked to small trading or sham companies were convicted of aggravated tax evasion by a Frankfurt court a year ago over sales of carbon-emission certificates to Deutsche Bank. The lender should have known the securities were designed to illegally evade value-added tax, Presiding Judge Martin Bach said at the time.
Deutsche Bank chose not to claim back about 310 million euros ($405 million) of VAT refunds as the case evolved. Last year, the lender made a provision in that amount as a “precautionary measure on legal advice” and reserved the right to reclaim the tax at a later date, a position the bank subsequently gave up.