Continuing Operations of the Cum-Ex Trade: Anne Brorhilker's Perspective
Rewritten Article:
Anne Brorhilker, the former lead Cum-ex investigator, firmly believes that tax fraud through illicit stock deals persists in the financial world, despite the 2012 legal amendment. Now the CEO of Bürgerbewegung Finanzwende, she proclaimed that Cum-ex fraud isn't just a thing of the past.
Between 2006 and 2011, Cum-ex deals were rampant, as banks and investors tangled the stock market with suspect trading, raking in tax refunds they hadn't earned. Estimates suggest that the state lost a minimum of 10 billion euros due to these deals, triggering political action and the 2012 legal amendment.
Persistent Fraud
But according to Brorhilker, tax fraud didn't cease following this amendment. She points to a foundation established by suspected criminals in 2016 for Cum-ex deals as a prime example of continued fraud. Brorhilker believes the likelihood of Cum-ex deals and similar Cum-cum deals ongoing today is high.
"Everyone says these deals are no longer possible because the rules have changed," said Brorhilker. However, she asserts that perpetrators have managed to execute Cum-ex deals across Europe, even in countries with different rules and systems than Germany. "The perpetrators have to adapt their techniques, but rest assured, these deals are still happening."
Minimal Risk for Banks
As for the risk of banks being caught in these fraudulent activities, Brorhilker contends that it remains extremely low. Responsible for Cum-ex cases from 2013 to spring 2024 at the Cologne public prosecutor's office, she significantly advanced the investigation. "Banks know that nobody can prove it. We're dealing with a control deficit, no matter what rules we set in place. And the criminal vigor of the financial industry is unending."
Data Storage Issues
A significant hurdle in Cum-ex investigations, according to Brorhilker, is that banks store data in foreign locales, which impedes effective investigation. "Banks and tax advisors transfer massive amounts of data into almost lawless zones within other European countries. In effect, the investigation stops at the German border." She has witnessed banks making false statements to authorities—a claim notoriously difficult to verify.
Banks Should Store Data in Germany
"Suppose a financial authority suspects a hairdresser's salon or a snack bar of dishonesty," said Brorhilker. "They can check if the cash register system is manipulated, but this isn't possible with banks, whose technical systems are so secure that no state can access the data without the bank's help."
Banks Robbing Us Blind
Once the most crucial Cum-ex investigator in Germany, Brorhilker has since voiced criticism of the handling of severe economic crime. She calls for a more expeditious resolution of Cum-ex and Cum-cum deals, which are estimated to have cost the treasury another 28 billion euros. "We allow international investment banks to steal billions of euros from us in Germany."
The Cum-ex scandal reached the highest levels of politics, with allegations against current Chancellor Olaf Scholz. He categorically denied political influence in the Cum-ex scandal investigation in Hamburg. As more and more suspects face conviction in the scandal, with key figure Hanno Berger at the forefront, the public prosecutor's office in Cologne is investigating approximately 1,700 suspects.
Central Authority Needed
According to Brorhilker, Germany lacks a central authority battling serious economic crime. Modeled after Austria, this authority would facilitate cooperation between the financial supervisory authority BaFin, the Federal Central Tax Office, auditors stationed at the Federal Ministry of Finance, and responsible state tax authorities.
Germany also lacks specialized and experienced public prosecutors. Frequent department changes in the justice system mean that investigators often don't have sufficient time to master the intricacies of Cum-ex materials, and many have no trial experience at all. Consequently, the justice system focuses on smaller, more manageable cases. "The big cases are left in the dust."
Sluggish Investigations
The clarification of illegal share deals continues at a snail's pace, according to Brorhilker. As of the end of 2023, the state has only secured 3.1 billion euros of the lost Cum-ex funds in a legally secure manner. The state is currently processing 380 cases with a combined worth of 3.8 billion euros. The Cum-cum balance is even worse, with 205 million euros secured by the end of 2023.
Brorhilker demands more engagement from the new federal government, particularly in clarifying Cum-cum deals. "I expect them to make the fight against economic crime their top priority. Otherwise, many cases will expire, and billions in tax revenue will be lost forever."
Notes:
- Cum-ex deals involve trading shares cum (before) and ex (without) dividend claim between parties involved. These deals are illegal because they enable traders to claim multiple tax refunds on a single dividend payment.source
- Cum-cum deals are similar to Cum-ex, but revolve around derivatives mirroring dividend payments, and they involve foreign holders of German shares.source
- Given the assertions by Anne Brorhilker, the former lead Cum-ex investigator and CEO of Bürgerbewegung Finanzwende, the likelihood of tax fraud through Cum-ex deals persisting in the financial industry, particularly in the realm of business and politics, is high.
- Brorhilker's analysis points to a foundation established by suspected criminals in 2016 as evidence of continued Cum-ex fraud beyond the 2012 legal amendment.
- Despite the 2012 legal amendment, banks seem to face minimal risk of being caught in these fraudulent activities, as they are aware that it's hard to prove their complicity.
- Data storage issues pose significant hurdles in Cum-ex investigations, as banks store data in foreign locales, making effective investigation challenging.
- Brorhilker advocates for banks to store their data in Germany to facilitate more efficient and effective investigations.
- The Cum-ex scandal has extended to the general-news and crime-and-justice sectors, with allegations against high-level politicians and the investigation of approximately 1,700 suspects by the public prosecutor's office in Cologne, indicating the scope and impact of this fraudulent activity on the economy and politics.
