Bonn Court Makes Bank, Asset Managers Parties in Tax Fraud Case
Bonn Court Makes Bank, Asset Managers Parties in Tax Fraud Case
(Bloomberg) --
Bank of New York Mellon Corp., Societe Generale SA and M.M. Warburg & Co. were ordered to participate in Germany’s first trial over controversial Cum-Ex tax deals, risking the seizure of any funds obtained via the transactions, two people familiar with the case said.
The banks and German investment company Hansainvest were ordered to participate as associated parties in the case against two former London investment bankers, according to the people, who asked not to be identified because the proceedings are private. Warburg confirmed two of its units were among the companies targeted.
The Bonn Regional Court, which is scheduled to open the trial on Sept. 4, issued the ruling on Monday, according to a statement emailed by the tribunal. The court didn’t disclose the names of the companies. The case covers as much as 447.5 million euros ($497 million) of losses to German government coffers.
Under German law, businesses can’t be formally charged with crimes. Prosecutors and courts often make use of various administrative procedures in order to sanction companies for wrongdoing or to seize any money derived from crimes. In the Bonn case, the firms were ordered to participate because the court may seize money from them that’s linked to the transactions.
Read More: Ex-London Bankers to Face Cum-Ex Trial Starting in September
Warburg said that the key role in the case was taken by custodian banks and that the judges will appropriately look into their responsibilities. BNY Mellon and Societe Generale declined to comment.
Hansainvest said it never received any of the tax refunds in the transactions, only acted as a service provider and didn’t know of any multiple tax refunds.
Cum-Ex transactions took advantage of a now abandoned German practice for tax refunds on dividends. At the time, a corporation paying dividends automatically withheld the tax but the tax payment was certified by the shareholder’s bank.
To contact the reporter on this story: Karin Matussek in Berlin at kmatussek@bloomberg.net
To contact the editors responsible for this story: Anthony Aarons at aaarons@bloomberg.net, Peter Chapman, Marion Dakers
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