What business is money in 2017

Billions from the treasury: the tax robbers

Status: 07.06.17 2 p.m.
by Lutz Ackermann, Manuel Daubenberger, Philip Faigle, Karsten Polke-Majewski, Felix Rohrbeck, Christian Salewski, Oliver Schröm

More than 30 billion euros have disappeared. Tax money with which the state could have renovated a lot of schools and bridges. Instead, banks, stockbrokers and lawyers have been collecting the money that the tax authorities would have been entitled to for years. "It is the biggest tax scandal in the history of the Federal Republic", says the financial scientist Christoph Spengel.

Spengel conducts research at the University of Mannheim. For Panorama, ZEIT ONLINE and DIE ZEIT and he has evaluated historical financial market data and calculated the damage that the Federal Republic has suffered since 2001. The result: through purely tax-motivated share transactions around the dividend date (so-called cum-cum and cum-ex transactions), the state lost at least 31.8 billion euros.

Highly complicated business

In cum-cum transactions, a domestic bank helps a foreign investor get a tax refund to which they are not entitled. The profit is shared. According to Spengel's calculations, the state has lost at least 24.6 billion euros since 2001 through such cum-cum deals.

Cum-ex deals 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. According to Spengel's calculations, between 2005 and 2012 there was damage of at least 7.2 billion euros, i.e. an average of over one billion euros per year. "The damage caused by cum-ex deals is likely to be even higher overall, since they were made before 2005," said Spengel. This business was only stopped in 2012.

The center of the gang: London

But how did banks, stockbrokers and lawyers manage to relieve the state of billions? And why have politics and authorities been unable to stop the goings-on for over 25 years?

To answer this question, a research team from Panorama, ZEIT ONLINE and DIE ZEIT evaluated secret investigation files for six months, including transaction tables, e-mails, account statements, subscription slips, search logs and recordings of tapped phone calls. Reporters spoke to prosecutors, suspects, injured parties, whistleblowers, academics and a former finance minister. They traveled to the places where it happened, to the USA, Switzerland - and Great Britain.

In London, the reporters came across traces of a suspected criminal gang of just a dozen investment bankers. They arguably caused the bulk of the billion-dollar Cum-Ex damage. Several members of the alleged gang are currently giving extensive testimony to the Cologne public prosecutor's office. The London investment bankers therefore agreed in a highly conspiratorial manner in equity transactions around the dividend date.

Man in shorts

The members of the alleged criminal network gave each other such illustrious names as “the man in shorts” or “the gentleman”. In order not to get caught, they used a new prepaid mobile phone for every trade. The alleged gang was also connected via a posh Indian restaurant, which apparently functioned as a kind of cum-ex box. Although the cum-ex market was huge, it was "very few people who pulled the strings," reported an Insider Panorama, the ZEIT and ZEIT ONLINE. The alleged gang acted not only on their own account, but offered the cum-ex business also to third parties.

Investigations into the biggest tax scandal in the Federal Republic

An example from 2011 shows the huge sums involved. At that time, the London-based group carried out share transactions for two cum-ex funds of the Luxembourg fund provider Sheridan, in which Carsten Maschmeyer, drugstore entrepreneur Erwin Müller and Schalke Boss Clemens Tönnies invested. Panorama, DIE ZEIT and ZEIT ONLINE have determined the extent of these deals alone in 2011: According to investigation files, London brokers were trading for two cum-ex funds around the dividend date with more than a billion German DAX shares worth over 47 billion euros.

In the case of these funds, however, the Federal Central Tax Office ultimately refused to pay out several hundred million euros in taxes, thus triggering the public prosecutor's investigation into the largest tax scandal in Germany.