Investec fingered in massive international tax fraud: report
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Banking and wealth management group Investec has been implicated in a damning report about its involvement in shady deals worth hundreds of millions of euro.
The deals resulted in European governments being defrauded through the infamous "cum-ex" withholding tax scam.
In an article written by Amabhungane, an investigative journalism organisation, and published on News24, Cum-ex is a jargon term of investment banking, a complex type of trading "strategy".
"It involves multiple role players who rapidly buy and sell shares among each other immediately before and after the declaration of dividends by a company listed on a stock exchange. The point is to claim back a withholding tax on the dividend that got paid out – but to claim the reimbursement twice," it said.
Amabhungane said it accessed the German leak as a member of a partnership between newrooms worldwide. The collaboration was co-ordinated by German non profit independent newsroom CORRECTIV.
The report said trades exploited an interpretation of the tax code that appeared, at the time, to let multiple people claim ownership of the same shares.
"This technically enabled more than one investor to claim a refund on a tax that was paid only once."
The report said that evidence contained in the leaked papers raised the likelihood that senior staff members were aware of the fraud and may have approved the bank's involvement.
"This allegedly includes the current chief executive of Investec Europe, Michael Cullen, and a former executive director, Alan Tapnack (since deceased) – the latter signed a key contract that facilitated Investec's participation in cum-ex schemes."
The leaked documents show Investec providing funding and other services to various groups of collaborators between at least 2008 and 2012. German prosecutors have been digging for evidence on Investec since as far back as 2014.
Amabhungane said it sent a list of questions to Investec but the group declined to provide answers.
BUSINESS REPORT ONLINE