Audits of Deutsche Bank Suggest Illegal Share-Trading Scheme

By:
Chris Gaetano
Published Date:
Jan 7, 2019
Deutsche Bank Frankfurt

Internal audits of Germany's Deutsche Bank have found indications that the bank issued to clients tax certificates for withholding tax that had never been deducted and made loans to clients to allow them to participate in the scheme to claim tax rebates, according to Reuters, which acquired a copy of the audits, prepared by the law firm Freshfields. The matter is currently a topic of interest for German prosecutors, who said that the scheme involved tricking the government into thinking a stock had multiple owners on its dividend payday, each of whom were owed both a dividend and a tax credit. The German government believes this scheme resulted in 5.6 billion euros worth of invalid rebates being issued. The reports also suggest that employees knew about the scheme, and that they had multiple times discussed the possible reputation risks that it entailed. 

The reports faulted Deutsche Bank's internal controls, finding that the bank failed to properly supervise two traders who they say acted as middle men between the clients and the bank departments that lent money to fund the scheme and issued tax certificates. Deutsche Bank itself is cooperating with the German government's investigation into the matter.

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