Macquarie-Linked Suspects in German Cum-Ex Probe Rise to 60
Macquarie Says 60 Suspects Identified in German Trading Probe
(Bloomberg) --
Macquarie Group Ltd. said German prosecutors have designated about 60 current and former staff as suspects in their probe of so-called Cum-Ex trades, a doubling of the number within just over a year that reveals mounting pressure on the Australian bank caught up in the controversial strategy.
The lender has been responding to requests for information in the industry-wide investigation, the Australian bank said in a statement on Thursday. Most of the suspects no longer work at Macquarie and some were already identified, including Chief Executive Officer Shemara Wikramanayake, it said. No current staff have been interviewed.
Macquarie is embroiled in the German investigation into Cum-Ex trades that lawmakers say deprived the state of 10 billion euros ($11 billion) in lost tax revenue. The company has faced litigation from former customers as well as a backlash in Denmark, where a similar $2 billion scandal has roused anger.
The Cum-Ex scandal has also roiled countless other financial institutions as prosecutors allege bankers helped investors reap billions of euros in improper tax refunds from a loophole in the process dividend were taxed. There are more than 500 people being probed in Germany by prosecutors in five cities, with 80 having links to Deutsche Bank AG.
A court in Bonn currently hears the first criminal case over the issue against two former investment bankers on charges they helped organize Cum-Ex deals that led to more than 400 million euros in lost taxes. Both are cooperating with the probe. A former Macquarie trader who is also cooperating with prosecutors testified in the trial about the bank’s involvement.
Cologne prosecutors, who are leading the biggest probe in the country, have identified Macquarie as one on the central players in the scandal. The Australian bank participated in various roles in these deals, including as a Prime Broker for funds investing in Cum-Ex as well as a short seller, according to their findings.
In a Sept. 2018 statement the lender had said there were about 30 people Cologne prosecutors were interested in. A lawyer in a Munich investor suit against Macquarie last year said there were 22 suspects from the bank in the criminal probe. That the number now jumped shows the pressure is mounting on the bank. Aside from Wikramanayake, her predecessor Nicholas Moore is also on the list of people under investigation.
Earlier this week, a Munich court ruled that investors seeking to make Macquarie cover their losses from the Cum-Ex deals can’t sue the lender in the Bavarian capital, where it has no banking branches. They could sue the lender in the U.K., where Macquarie operated, the court said. The investors will appeal, their lawyer has said.
To contact the reporters on this story: Russell Ward in Tokyo at rward16@bloomberg.net;Karin Matussek in Berlin at kmatussek@bloomberg.net
To contact the editors responsible for this story: Marcus Wright at mwright115@bloomberg.net, Peter Chapman, Benedikt Kammel
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