A recent investigation into the scandalous international tax evasion known as Cum-Ex reveals that the losses caused to the United States and at least 11 European countries could almost triple to more than $175 billion.
The fraud was committed by investors who owned shares and distributed them among themselves in such a way as to confuse the tax authorities as to who the real owners were, allowing them to obtain refunds that exceeded the taxes paid on them, according to the German media Spiegel on Oct. 21.
While early estimates put the losses caused at around $60 billion, the results of investigations by 15 international media outlets almost tripled that figure.
The calculations involved experts from the University of Mannheim in Germany in collaboration with the German non-profit group Correctiv.
Although the fraud was committed over decades, it only became public in 2018. The German Federal Court of Justice (BGH) ruled that Cum-Ex share transactions should be considered tax evasion in Germany and therefore punishable offenses.
In this regard, at least 1,000 people are under investigation among junior and senior banking staff, lawyers and stockbrokers. 134 of them are British.
Germany could have lost around $42 billion as a result of this scheme. Countries such as the United States, Britain, Denmark, France, Belgium, Italy, Spain and Austria were also defrauded, according to the BBC.
From the point of view of one of those accused of enriching himself through this type of fraud, investment banker Sanjay Shah who now lives in Dubai, his operations were not fraudulent,
“If there’s a big sign on the street saying, ‘please help yourself’, then me or somebody else would go and help themselves,” Shah states, by way of justification.
The Correctiv group explains, “Shah has long been among the winners of a huge, and likely fraudulent, game in which a network of banks, consultants and investors used tricks, shorting and sophisticated trading patterns to scam billions from public funds.”
He adds: “With few exceptions, many countries effectively let them operate with impunity. The fraudsters operate in a fast-paced, globalized market with highly complex rules. At the same time, there are overburdened authorities, cumbersome procedures, rigid structures and a patchwork of administrative responsibilities.”
An extension of this behavior in which tax evasion is exploited on a large scale is represented by the so-called tax havens, where legislations are conducive to attracting the large fortunes of global personalities, who want to own more without paying taxes in their respective countries of origin.
Earlier this month, the International Consortium of Investigative Journalists (ICIJ) revealed the results of its monumental work called “Pandora’s Papers”, in which some 12 million documents were analyzed.
This work uncovered the procedures followed by at least 336 politicians, celebrities, religious leaders and drug traffickers from 90 countries to hide their immense fortunes and evade taxes.