Frankfurt prosecutors charged seven current and one former Deutsche Bank AG employees over a scheme to help the lender and clients evade taxes on carbon-emissions trades, according to two people familiar with the case.
The bankers are charged with being part of a group that tricked the authorities about value-added tax refunds on carbon-emissions trading in 2009 and 2010, Alexander Badle, a spokesman for prosecutors, said Thursday without naming the bank. The lender is Deutsche Bank, according to the people, who asked not to be identified because the process is private.
“The indictment is the first to target the bank’s employees for joining the value-added tax scheme,” Badle told reporters. “It’s also the first time the bank’s employees have to answer charges that they evaded taxes as part of a gang.”
The case is part of a seemingly never ending litany of legal headaches faced by the bank, including probes of currency manipulation and a Munich fraud trial where Co-Chief Executive Officer Juergen Fitschen and four former CEOs are defendants.
Frankfurt-based Deutsche Bank said in a statement that it’s still investigating the allegations while “cooperating with all the relevant authorities.” A court must now rule on whether the charges, which could carry penalties of as much as 15 years in prison, may go to trial.
2012 Police Raids
The investigation is one element of the biggest crackdown on emissions-related tax crimes since Europe began its cap-and-trade system in 2005 and saw police raid Deutsche Bank in 2012. Six men who traded emission certificates with Deutsche Bank were found guilty in December 2011 of evading 260 million euros as part of the probe.
Prosecutors identified Deutsche Bank as being the lender at the center of the probe in previous statements. Because of a change in policy, companies are no longer named in press releases, Badle said.
The bank paid back 220 million euros ($245 million) of tax refunds that were uncovered during the investigation, according to the prosecutor’s statement Thursday.
Prosecutors are still investigating 15 people who worked or are still working for the bank, Badle said. In addition, three bankers have settled claims concerning the tax payments.
At least 26 people at Deutsche Bank, including Fitschen and management board member Stefan Krause, were being investigated as part of the carbon probe, prosecutors have previously said.
11-Billion Euro Bill
Deutsche Bank’s bill for fines and legal settlements surpassed 11 billion euros in the second quarter, according to calculations by Bloomberg. The company said last month that the cost of litigation will “remain a burden in the coming quarters.”
The lender has yet to resolve investigations into its role in attempts to manipulate foreign exchange markets as well as a probe of whether it broke U.S. laws on processing payments for countries subject to trade sanctions. It also faces lawsuits that claim the company didn’t make adequate disclosures about U.S. mortgage-backed securities. The bank said last month that it is cooperating with regulators in these matters.
Prosecutors didn’t identify the individuals charged. They are a 33-year-old catering to corporate clients, his 48-year-old superior, a 34-year-old commodities trader, her 54-year-old supervisor, a 36-year-old employee in the trading department, a 40-year-old corporate banker in the commodities unit, a 46-year-old member of the tax department and a 64-year-old former manager whose remit included carbon emissions trading.