Denmark has charged two UK nationals with fraudulently reclaiming $1.6bn in dividend tax as part of a sprawling European investigation.
Sanjay Shah, who now lives in Dubai, has been charged by Danish prosecutors over his alleged involvement in one of the country’s biggest ever frauds for unlawfully claiming DKr9.6bn ($1.6bn) in tax refunds from Denmark’s tax authorities together with another British national.
“This is a case of extremely serious and extraordinarily extensive crime committed against the Danish state, and we believe that the two defendants committed cynical and meticulously planned fraud in a scheme where they defrauded the Danish state of DKr9bn,” said Per Fiig, acting state prosecutor for serious economic and international crime.
Denmark, Germany, Italy and France are among the European countries hardest hit by the “cum-ex” scandal, in which governments were duped into refunding billions of euros of dividend taxes that had never been paid. The schemes involved trading shares repeatedly around dividend payment days to give the appearance of multiple owners, each of whom could claim a tax refund.
Danish prosecutors declined to give the names of the two people charged other than to say one was resident in Dubai but Mr Shah’s spokesperson confirmed to the Financial Times that he had been indicted.
“I have spoken to Mr Shah and he and his lawyers have no more information than the media has. Mr Shah continues to deny any wrongdoing and stresses that he took professional advice before carrying out the trades,” the spokesperson added.
A £15m property belonging to Mr Shah in central London was seized by Danish prosecutors last year.
Prosecutors believe that the two UK nationals submitted more than 3,000 separate applications to claim DKr9.6bn in tax refunds. The scheme allegedly involved setting up 24 Malaysian companies, 224 US pension plans and the participation of more than 70 companies from countries including the British Virgin Islands, Cayman Islands, the United Arab Emirates and the UK.
Prosecutors have charged the two with fraud of an aggravated nature and attempted fraud, crimes that normally have a maximum sentence of eight years in jail. They said in this case they would seek an increase to 12 years.
Denmark claims it suffered losses of about DKr12.7bn in total from the alleged fraud. Prosecutors are investigating other suspects in the case involving Mr Shah and expect to make a decision on whether to charge them in the next few months. They are also looking into other networks of people for the remaining DKr3.1bn. So far they have seized assets worth about DKr3bn as part of the probe.
“It is our experience from major fraud and money laundering cases that the proceeds originating from crime are often paid out to organised criminal networks which distribute the money globally through clever systems. This generally means that it is very difficult or almost impossible to get to the money again — and, as a rule, all seized assets must be shared with the country which carried out the actual seizure,” said Mr Fiig.
Two London bankers were found guilty of tax evasion in March in the first cum-ex scandal trial in Germany.
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