Author: Azizur Rahman 13 February 2020
Nicola Sharp considers the repayment problems faced by Martin Shields as a result of the huge tax scandal.
A former London investment banker may have to pay back $16M due to his involvement in controversial Cum-Ex deals.
Martin Shields could have to repay this amount as it is a calculation of the money he made while working on the deals, according to a German court. The figure (which is 14.7M euros) has been cited as the amount Shields received from the profits that asset management company Ballance Group made while involved in Cum-Ex transactions from 2008 until 2011.
This finding is preliminary. It could change before the verdict of the court on Shields and another former London banker, Nicholas Diable. Both are accused of helping arrange deals that led to the German state losing more than 400 million euros in tax revenue. With the judge indicating that the court can also seize any interest that Shields earned on the money it is possible that, depending on the outcome of the trial, the $16M figure will increase.
Neither man is challenging the facts. It is for the court to decide if their actions are criminal. Shields has told the court that he will pay back the money independently of any criminal guilt being established. He had calculated that the amount he should pay back was 12.7M euros.
Cum-Ex helped investors exploit a loophole on dividend payments, allowing a number of people to claim the same tax refund – a tactic that the authorities say cost European governments tens of billions of euros in lost tax revenue.
Learn more about the German Cum Ex scandal here.
Shields was a partner and Diable was a trader at Ballance Group, which specialised in such deals. Court calculations have stated that Ballance made 58.8M euros in the Cum-Ex deals that are under review in this case. This figure does not include transactions managed by Shields when he worked at UniCredit before founding Ballance. These transactions are also on the indictment.
Aziz Rahman is Senior Partner at Rahman Ravelli and its founder. His ability to coordinate national, international and multi-agency defences has led to success in some of the most significant corporate crime cases of this century and top rankings in international legal guides. He is recognised worldwide as one of the most capable legal experts regarding top-level, high-value commercial and financial disputes.