The German justice system investigates a large case of fraud related to the share trade that has cost taxpayers billions of euros, according to the German authorities. The Bank of Santander, together with Deutsche Bank and the Australian Macquarie Bank, is one of the entities involved, according to Reuters. Santander defends that there were three former employees, behind the bank's back, those who participated in the fraud, consisting of claiming tax refunds derived from stock dividends.
The prosecutor's office of Colonia opened a fiscal investigation to Santander in June, according to confidential documents to which the agency and other European media have had access, including The confidential in a case called "the cum-ex archives", which refers to the purchase of shares "cum dividend" (before dividend payment) and ex dividend (after).
A letter from the Cologne prosecutor's office sent to Santander's lawyers in June notes that suspicions that the bank "planned and executed exchanges" that facilitated "serious tax evasion" between 2007 and 2011.
As reported by Santander in a note, is "cooperating closely" with the German authorities and conducting its own internal investigation. "As far as we know at this moment, the central focus of the investigation affects certain activities carried out between 2007 and 2011 by three employees who left the Group a few years ago," says the entity, clarifying that for the moment it has not been found " There is no evidence that the bank's top management participated in the activities being investigated or that the governing bodies of the Group or its subsidiaries were aware of them. " Finally, it ensures that "it does not tolerate behaviors that do not comply with the standards, regulations and applicable standards in the markets in which it operates" and that if in its investigation "inappropriate behaviors are identified, it will take the measures it deems appropriate".
As explained by Reuters simplifying, those involved in the plot, which began to be investigated in 2013 deceived the German Government by making it believe that the shares had multiple owners on the day of dividend payment and that each of them was owed the dividend and a tax credit derived from it. And he gives an example: A bank agrees to sell shares of a company, for example, to a fund, before the dividend is paid, but makes the sale effective after the dividend has been paid. Then, the bank and the fund claim the German tax withholding tax. In some cases, banks sold borrowed shares to buy later, which is known as short positions. The shares were swapped quickly among a group of banks, investors and vulture funds to create the impression that there were numerous owners. Afterwards, they shared the profits, say the prosecutors.