Deutsche Bank Execs Were Aware of Tax Fraud Scheme

In what is being described as Germany’s largest post-World War Two fraud scandal, audits into a tax rebate scheme run by have allegedly revealed that senior management at firm were aware that they were scamming the government.
According to a Reuters report published on Friday, the German bank misled authorities into thinking that certain stocks had multiple owners. Each of these owners would then be eligible for a dividend and, significantly, a tax credit.
German say that the scheme, which also involved several other global firms including Santander and Macquarie, cost them a grand total of €5.6 billion ($6.36 billion).
An internal report from Deutsche Bank, written by legal firm Freshfields, indicated that senior management at the German bank were aware of the scheme. The bulk of the trading involved that facilitated the scheme took place between 2006 and 2011.
Phoney credits
Two traders, Simon Pearson and Joe Penna, appear to have been the key figures involved in enabling the scheme to take place.
In order for the scheme to work, Deutsche Bank would loan money to firms who would then make trades which, in turn, they could then claim tax credits on.
Reuters claims that Pearson and Penna acted as middlemen in these deals. They worked with companies wanting to invest in the scheme as well as the divisions at Deutsche Bank who were responsible for loaning cash.
For example, Deutsche Bank issued a company called Seriva with 5.8 million euros of tax certificates, allowing the firm to make claims for tax rebates. According to Reuters, senior figures at both Deutsche Bank and Seriva were aware that no withholding tax had been levied.
It has not been a good couple of months for Deutsche Bank. As it attempts to stymie ongoing losses, it has also been Danske Bank’s Estonian money laundering scandal.