Swiss police carried out a series of raids across German-speaking Switzerland in the early hours of Thursday morning, including the premises of private bank, J. Safra Sarasin. The authorities were acting on a request for legal assistance from Germany in a fraud and tax evasion case against the bank and others.This content was published on October 24, 2014 - 11:28
Numerous bankers and lawyers in the cantons Basel City, Basel Country, Graubünden, St Gallen, Schywz, Zurich and Zug received a visit from the police and public prosecutors.
In an unusual act of cooperation with Germany over the thorny issue of Swiss banks helping German citizens evade taxes, the Zurich Public Prosecutor’s Office coordinated the raids, and confirmed a report on the events published in the Swiss newspaper, the Tages-Anzeiger.
Investigators would generally arrange for a financial institute to submit documents required by an investigation. But in this case, as leading bank employees and lawyers are allegedly among those suspected, it was judged to be too sensitive for prior warning, according to the newspaper.
The Cologne public prosecutor is investigating 30 people for involvement in what are called ‘Cum-Ex’ deals. Perpetrators exploit a quirk in the system that allows them to claim twice as much in tax rebates as should be allowed.
The trick works when shares are borrowed from the owner just before the dividend payout is due. Both the owner and borrower receive confirmation that the dividend has been paid, minus a withholding tax that can be reclaimed.
This allows both parties to claim back withholding tax despite only one dividend payment having actually been made.
The practice has been banned in Germany since 2012, and in Switzerland since four years earlier.
Some €462 million (CHF557.3 million) is alleged to have been fraudulently obtained using the method in this case. German authorities are investigating whether the bank advised clients to invest in specific funds, but kept quiet that the funds would be used for this purpose.
Bank J. Safra Sarasin declined to comment.
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