The banking supervisory authority BaFin learned of alleged cum-ex tax fraud as early as 2007. Research by WDR and SZ. But she did not pass on any information. The state lost billions in taxpayers’ money in the years that followed.
From Massimo Bognanni, WDR The email that popped up on May 7, 2007 at 10:07 a.m. on the screen of an employee of the BaFin banking supervisory authority came from the world of big money. A whistleblower answered with confidential information, apparently from within the financial industry. The whistleblower sent BaFin a five-page document. Possibly, wrote the whistleblower, the banking supervisory authorities were interested. After all, it is about huge share deals that would have cost the German state hundreds of millions of euros in previous years. For many years, this entry was kept in the BaFin’s portfolio as a secret. She did not forward the notice to law enforcement officers or tax investigators. WDR , “Süddeutsche Zeitung” (SZ) and the Dutch investigative platform “Follow The Money” (FTM) were now able to view the relevant BaFin documents. A picture of a banking supervisory authority comes to light, which apparently could be fobbed off with the information of an affected financial institution. The financial overseers meanwhile in the criticism because of the Wirecard scandal , therefore also play a dubious role in the cum-ex tax scandal.
Could Cum-Ex have been discovered in 2007?
The notice from 2007 was even suitable to blow up the global cum-ex industry, which was still undiscovered at the time. An industry where bankers, stock traders, and advisors used complex stock deals to recover taxes that no one had paid before. Their booty is estimated at ten billion euros – just at German tax money . Billions that the state urgently needed in recent years for schools, daycare centers, health and social care, for modern infrastructure, affordable housing and much more. Specifically, the whistleblower stabbed through details in 2007 about alleged cum-ex deals, in which the then powerful and scandalous North Rhine-Westphalian state bank WestLB is said to have been involved. A document in English from inside the Belgian-Dutch Fortis Bank was attached to the mail as evidence. In the internal report, the WDR , SZ and FTM are available, the statement of a Fortis employee is documented. The Fortis banker described transactions with which a tax could be reimbursed twice that had only been paid once. As an example, he cited a billion-euro share deal from 2004, in which those involved in Germany would have had taxes of around 100 million euros reimbursed. The NRW-Landesbank WestLB, to which taxes were ultimately paid, played an important role. The “profit” was shared among those involved: WestLB collected ten million euros itself, Fortis 60 million euros, and intermediary financial firms around 30 million euros. What he put on record with detailed knowledge and a diagram was the first concrete report of an alleged cum-ex case.
BaFin contacted the accused instead of the authorities
BaFin seemed to take the petition seriously. A supervisor noted in handwriting on the printed whistleblower email that the management had been informed. In an initial assessment, the BaFin experts stated that it could be tax evasion. But instead of involving the public prosecutor or tax investigators, BaFin informed: WestLB. In the letter dated May 11, 2007, a BaFin auditor turned to the state bank that information had been provided anonymously to him. Paragraphs from the Fortis internal report were also included. The Landesbanker learned that the clues had to come from inside Fortis – an explosive detail for a bank that might have something to hide.
This is how cum-ex and cum-cum deals work At Cum-cum In business, a domestic bank helps a foreign investor get a tax refund that the foreign investor is not entitled to. The profit is shared.
Cum-Ex -Businesses are related, but far more complicated. The specialty: a tax is paid once and reclaimed several times by the tax authorities. So a network of banks, consultants, lawyers and wealthy investors had taxes reimbursed that were never paid.
WestLB reassured BaFin
Two weeks later, WestLB gave the all-clear. The facts have been examined. Legally, they see no problems, and moreover, they have found evidence of transactions that could be classified as cum-cum transactions that are less criminally critical. A sedative pill poured in lines, as it seems today. The BaFin swallowed it – the case was apparently closed for the supervisors. On request, BaFin confirmed that the information had been “taken up by the responsible specialist department”. However, at that time the passing on of information “to other authorities, especially tax authorities” was not allowed because of the confidentiality obligations of the Banking Act. According to BaFin, this only became possible in 2015 through a change in the law. The public prosecutor’s office in Cologne, currently involved in countless cum-ex proceedings, strongly contradicts this. There is a duty of confidentiality for alleged tax evaders “neither currently nor has it existed in the past”. There were no relevant changes to the law in 2015, as a spokesman announced. Confronted with the clear announcement from Cologne, BaFin remains silent.
Investigations only nine years later
The fact that there were investigations into the WestLB and Cum-Ex matters was due to the purchase of a so-called tax CD years later. In 2015, the NRW Ministry of Finance bought the information from another Cum-Ex-Insider for five million euros. Among the banks listed there: WestLB. Nine years after the information from the BaFin whistleblower, the Düsseldorf public prosecutor initiated investigations against former WestLB board members. She recently handed over the procedure to Cologne, where it continues to this day. The tax authorities are one step further in the WestLB case. The Düsseldorf tax office demanded from the legal successor of the now insolvent WestLB, the Portigon, back tax money of more than 450 million euros because of the entanglement in cum-ex deals . Portigon has lodged an objection – and tries to pass some of the costs on to the processing company EEA. On request, Portigon stated: “Without the means and options available only to the public prosecutor and tax investigators, it was neither in 2007 nor today for WestLB or Portigon whether it was a critical transaction.”
Ministry of Finance: Events have been dealt with
The Federal Ministry of Finance considers the whistleblower events of 2007 to have already been “processed” by the Cum-Ex investigation committee. In fact, in 2017 the then Green MP Gerhard Schick brought the relevant documents to the committee. But even there they were classified as “trade secrets” – and their explosive content was never made public. Schick, meanwhile board member of the non-governmental organization “Finanzwende”, is relieved that the events of 2007 are still public: “It was hard to bear how long BaFin could publicly claim that it could not have done anything. That was grossly misleading the public.” The obligation of secrecy for these documents in the committee of inquiry would have protected people who had failed miserably, “be it in the financial supervision or in the committees of WestLB”.
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