New trial in Zurich for lawyer in ‘cum-ex’ scandal

New trial for lawyer in "cum-ex" scandal. Keystone-SDA

German lawyer Eckart Seith, considered in Germany to be the whistleblower in the cum-ex transaction scandal, is set to appear for trial again in Switzerland on Monday.

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A day of hearings is scheduled at the Zurich Cantonal Court, but it is not yet known when sentencing will be announced.

Seith is charged with economic espionage and violations of the Banking Act for obtaining internal documents from Bank J. Safra Sarasin and passing them on to German investigators.

The intertwining of the fight against tax evasion in Germany and the protection of banking secrecy in Switzerland has repeatedly caused friction between the two countries. While Seith is on trial in Switzerland, in Germany he is considered a whistleblower who helped expose the cum-ex scandal.

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The Stuttgart-based lawyer is under indictment along with two former Sarasin bank employees for forwarding to German justice bank documents related to German billionaire Erwin Müller, 92, owner of the Müller grocery chain also present in Switzerland. The latter was sentenced in April 2019 in the first instance to a suspended fine.

In Germany, on the other hand, Müller, who has been on Forbes‘ list of the richest men on the planet for years, won a €45 million (CHF41.8 million at today’s exchange rate) lawsuit in 2017 against the private bank in Basel, which he blamed for being misled and misguided when it came to tax optimisation.

Billions in tax losses

According to papers made available by the bank’s two former employees – themselves sentenced in the first instance to suspended sentences for economic espionage and duress – the Basel bank induced Erwin Müller to invest in a highly risky Luxembourg fund: the Sheridan fund practised the controversial cum-ex (dividend-splitting) transactions.

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The trick consisted of buying and selling shares before (“cum” with) and after (“ex” without) the payment of the dividend, which allowed for a refund of the withholding tax paid to the German state twice.

The cum-ex system, unmasked by an international journalistic investigation, caused billions in losses to the tax authorities of several European countries. In 2012, this type of transaction was banned in Germany, and the Luxembourg fund collapsed like a house of cards. Four years later, the practice was also banned in Switzerland.

In July 2021, the German Federal Court of Justice also ruled, in a ruling that has been deemed historic, that cum-ex transactions are to be considered tax evasion by the German tax authorities.

Translated from Italian by DeepL/ts

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