Cases of money laundering are spilling out of the city of London where two British investment bankers left German coffers bleeding.
Martin Shields (41) and Nicholas Diable(38) have now been put on trial in Bonn in Germany. They have been accused of having defrauded the German state of €447.5m (£405m) from London’s banking district through the controversial cum-ex trading schemes, a complex shell game of share transactions.
The German media has called this “the biggest financial fraud trial” in the country’s postwar history.
Martin Shields and Nick Diable were known to be seasoned tax lawyers and boys who were bright in Math. Both have now come into limelight for allegedly conspiring to siphon at least €60bn in taxpayers’ money from the state coffers of several EU countries. With their fraud coming to light in Germany, there is more to be discovered in the next few weeks.
The incident was hidden into the shadows as Britain was putting all its attention into moving itself out of the European Union binding. Germany, for starters, now feels that as this scandal comes to light, it is far better for Britain to split from EU. It will actually give a big blow to the investment banking arena of London which has been playing ball with European financial institutions.
Shield practiced and made huge money under what is called the Cum-ex transactions. Some financial experts have described this practice in the banking sector to the equivalent of parents claiming child benefit for multiple children when they only have one. Shield use the chances of what the economy wanted between 2006 and 2011. Everyone was moving towards maximum profit optimization.
So the cum-ex transactions gave that edge- work your way up by trading shares at high speed on or just before the dividend record date or on the day the company checks its records to identify shareholders, and then claim two or more refunds for capital gains tax which had in fact only been paid to the state once.
The fraud could not be caught up until now. Shields and his partner have pleaded guilty to a reduced sentence of maximum 10 years. He practiced cum-ex trades through Gibraltar-based investment vehicle Ballance Capital. He enjoyed a lavish lifestyle where his personal income only came to €12m. In 2010, along with his wife, Shields purchase a £9.7m mansion on Chelsea’s Egerton Crescent, followed by a €6m Edwardian terrace on Shrewsbury Road, Dublin’s most expensive residential street.
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