Sanjay Shah

9 January 2021.

Sanjay Shah a U.K. Citizen was charged by Danish authorities in a $1.6 billion tax-fraud probe. Danish tax authority, SKAT, has frozen all his assets including a £15m home near London’s Hyde Park, in order to recoup its losses from the scam.

He returned to London’s High Court to gain access to £13.6m in loan repayments, which he wants to use for his legal battle. His legal team claims is not part of the seizure order. He asked the people repaying the loan, who are also subjected to the same investigation by SKAT, to pay the money to him. But those repaying the loan are afraid that if SKAT seized the funds they will have to make repayment again. The court ordered the money to be paid directly to the court. Mr Shah’s legal teams will have to negotiate with the court to get the money. The next hearing will be held in July to decide who gets the money.

Mr Shah said that he won’t fight extradition from his home in Dubai.

Shah worked as a banker for Morgan Stanley, Credit Suisse and Rabobank over a period of almost 20 years. In 2008 he was unemployed. Then he founded the hedge fund firm Solo Capital in London, which employed some 100 financial experts across offices in London and Dubai.

The CumEx-Files is an investigation by European news media outlets into a tax fraud scheme discovered by them in 2017. A network of banks, stock traders, and lawyers falsely claimed at least $62.9 billion as dividend tax refunds from Germany, France, Italy, Denmark and Belgium.

The participants in the network would lend each other, shares in large companies. The owner and the borrower would claim dividend tax refund while only the owner is entitled. The bank that was used in stock trading would then issue a “confirmation” to the investor that tax on the dividend payment had been paid, without it being done. Therefor banks have also been party to the fraud.

The elite London tax firm Freshfields Bruckhaus Deringer gave tax advice which was used to justify the legality of the scheme. In November 2019, Ulf Johannemann, a former Freshfield lawyer was arrested.

In 2010, in an audit report, the Danish Ministry of Taxation was found to have ignored warnings on multiple occasions of a legal tax loophole concerning dividend tax. In June 2020, it was reported by investigators that such transactions took advantage of European rules on the taxing of dividends, which made it possible to get refunds by using a combination of short sales and future transactions. These European nations ignored the writing on the wall for 10 years. In May 2020, the European Banking Authority announced a 10-point action plan to enhance the future regulatory framework surrounding dividend arbitrage trading schemes. According to the report, in some countries, the cum ex deals are still not criminal offences.

Source: Wikipedia and