Six Men Guilty of Tax Evasion in Deutsche Bank CO2 Trades
The six helped to start a chain of trades with the sole purpose of evading value-added tax, Presiding Judge Martin Bach said at a hearing today as he sentenced them to as long as seven years and 10 months in jail. Deutsche Bank, which bought the securities, should have known the trades were illegal, he said.
“These sales had no economic sense” and deprived the government of 300 million euros ($394 million) of income, Bach said at the court in Frankfurt today. “The suspects knew or could have known they were part of a criminal scheme.”
The case is part of the biggest crackdown on emissions- related tax crimes since Europe began its cap-and-trade system in 2005. German authorities enlisted assistance from 10 countries last year and froze 100 million euros in funds as part of the probe. Frankfurt prosecutors are investigating a total of 170 people, among them seven Deutsche Bank employees.
The men in court today worked at small trading companies that bought certificates from suppliers overseas and resold them. Each sale generated VAT which the buyer could reclaim from the tax authorities as a refund.
Deutsche Bank, which bought the allowances, set aside 310 million euros in October in case the government seeks the return of the money.
Christian Streckert, a spokesman for Deutsche Bank, declined to comment on the case, saying the bank hadn’t been access to the public prosecutor’s files. He said an internal investigation by an outside law firm has so far shown no sign of criminal involvement by the bank’s employees.
Germany became the center of that form of tax evasion in mid-2009 after France, the Netherlands and the U.K. changed their tax laws to block illicit trading, Bach said. Germany changed its rules in 2010 to end the practice, the judge said.
To contact the reporters on this story: Karin Matussek in Frankfurt via firstname.lastname@example.org
To contact the editor responsible for this story: Anthony Aarons in London at aaarons@Bloomberg.net