The state has made blatant mistakes in the fight against highly controversial cum-ex-tax deals, the statement of a centrally involved actor. A law adopted in 2007 had not drained the business, but only really fanned, said the 48-year-old lawyer on Tuesday before the Bonn district court, where he appeared as a witness in the first cum-ex-criminal trial (Az: 62 KLs 1/19). "It was meant to curb Cum-Ex, but it was an accelerator." The players had partially outsourced their business abroad and then continued to do more business than before. Only in 2010, these businesses would have reached their peak.
The 48-year-old was a long-time advisor to investors who made a lot of money by tossing shares with ("cum") and no ("ex") dividend entitlement: Investors used a once paid withholding tax on stock dividends with the help of banks Repay several times over and over the years billions at the expense of the state treasury. The lawyer appeared as a witness, but because of his deep entanglement in cum-ex-transactions, he is in other cases but also accused.
According to the witness, the banking and consultant lobby, including its law firm, had a significant impact on the 2007 tax law. They had succeeded in having the bill drafted so that it was able to outsource the deals abroad - and that, after that, the treasury Law change continued to refund multiple taxes.
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Cum and Ex: Simplified model of a dividend dealAfter intense lobbying, the law had been adopted exactly as requested by the Cum-ex-actors - "one to one without a comma being changed," said the witness. So probably the goat was made a gardener, said the chairman Judge Roland Zickler.
According to the witness, the banks and law firms involved considered the business model to be legally watertight by 2009. Cum-Ex was "an established phenomenon, an industrial phenomenon". Only when the Federal Ministry of Finance presented cum-ex-transactions as problematic did uncertainty spread.
"A bit like Pippi Longstocking"
"It was a disturbance - we knew that could possibly be hairy." One has gone over to excluding risks against better knowledge and to gloss over topics. "It was a bit like Pippi Longstocking's: I make my world the way I want it," said the witness.
The inner circle of the cum-ex-actors have gone into an "ivory tower", where even after 2009 no objections were tolerated. The tax refunded several times to investors by the Treasury did not require the state to spend much money elsewhere. According to the witness, the actors were unscrupulous. To suppress emerging concerns, one of his business partners said at a meeting: "If you have a problem with fewer kindergartens being built because of our work - here is the door."
The "greed" had been very large, both on the side of the banks and consultants as well as investors. Did investors even know what they were doing? Some private investors probably not, many very rich investors, however, so the witness. Now when he reads that these sometimes rely on ignorance, then that would be nasty, and he gets "abdominal cramps". Virtually risk-free funds would have brought a return of 15 percent in three or four months - "on the whole," everyone had known what it was about.
"Handle the treasury"
As "confiscators", five banks and other financial institutions are involved in the lawsuit - they had participated in the cum-ex-deals, and now they could be severely cashed. Among them is MM Warburg.
The presiding judge asked whether the leading figures of the Hamburg private bank had also been aware of the central components of the business - that is, the "hold on the treasury". "Yes," said the witness, who said he attended an important meeting with the bank in 2007. All participants were aware of the facts, they all had a goal: "It was all about profit maximization."
The costly criminal process is at least until the beginning of 2020. Accused are two British ex-stock traders, they are accused of 33 cases of particularly serious tax evasion and an attempt in the period 2006 to 2011, it should have incurred a loss of 447 million euros. There are many other cases - the total cumulative damage to the treasury should be in the tens of billions.
