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British banker told to pay 14 million euros in German fraud trial

This content was published on March 18, 2020 - 20:36

By Matthias Inverardi and John O'Donnell

BONN/FRANKFURT (Reuters) - Two British bankers were handed a suspended jail sentence on Wednesday and one was told to pay a 14 million euro penalty in Germany's biggest post-war fraud trial of a scam involving multi-billion-euro trades to get bogus tax reclaims.

The ruling is the first criminal conviction for what judge Roland Zickler dubbed "a collective case of thievery from state coffers", activity that thrived during the years after the financial crash and as banks were bailed out by the state.

German state prosecutor Anne Brorhilker had outlined criminal charges against Martin Shields and fellow British banker Nicholas Diable, who she said organised a network of traders and lenders to make double tax reclaims with sham share trades.

Brorhilker outlined more than 30 instances of double-tax reclaims totalling 447 million euros.

The court ordered Shields to pay 14 million euros, clawing back profits he had made. He received a suspended jail sentence of one year and 10 months. The judges imposed a one-year suspended jail term on Diable.

"I have made mistakes," Shields told the court during the trial. "I have learned my lesson."

Diable told judges that his wedding, honeymoon, career and birth of his children had been overshadowed by the investigation, expressing regret that he had taken part in the so-called "cum-ex" scheme.

The trial comes after a years-long probe into the sham trades, fuelling a public outcry over the government's failure to stop a scam that cost Germany more than 5 billion euros. Experts believe most of the money will not be recovered.

The conviction, however, potentially paves the way for the prosecutions of others in the network of big global banks, hedge funds and investors who profited.

(Reporting By Matthias Inverardi and John O'Donnell. Editing by Jane Merriman)

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