Deutsche Bank CO2 Trade Partner Convictions Upheld by Top Court

Germany’s top criminal court upheld the first convictions in a tax-evasion probe that has spread to two of the highest ranking officials at Deutsche Bank AG.

The Federal Court of Justice rejected the appeals of four of six men found guilty in December 2011 of evading a total of 260 million euros ($347 million) in taxes on carbon emission trades, according to a ruling posted on the court website today.

The ruling is part of a wider probe in which Deutsche Bank co-Chief Executive Officer Juergen Fitschen and Chief Financial Officer Stefan Krause, are being investigated. The bank was raided for a second time in December and five bank employees were arrested.

The case is part of the biggest crackdown on emissions-related tax crimes since Europe opened the cap-and-trade system in 2005. German authorities enlisted assistance from 10 countries in 2010 and froze 100 million euros in funds as part of the probe.

Christian Streckert, a spokesman for Deutsche Bank, declined to comment on the ruling.

The men in today’s case 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 bought the allowances.

A Frankfurt court had sentenced the men to prison terms of as much as seven years and ten months. Only four of them appealed. Prosecutors are meanwhile investigating about 190 people in total over the issue.

The appeals court rejected arguments that tax authorities waited too long to make arrests after learning about the trades and allowing more to take place.

“Criminal perpetrators have no right to claim that tax authorities or prosecutors take timely action against them to prevent completion of the crimes,” the judges said in a statement on the court’s.

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