Exclusive Update: Anne Brorhilker Reveals Persistence of Cum-Ex Scams
Rewritten Article:
Anne Brorhilker, the former lead investigator of the cum-ex tax fraud scandal, to this day, believes that such unlawful stock deal practices are rampant in the financial sector. As the current CEO of Bürgerbewegung Finanzwende, she declared, "Cum-ex still lives on - long after the 2012 legal amendments."
Cum-ex schemes peaked between 2006 and 2011, with banks and other investors creating a tangled web of confusion with shares, ultimately receiving unjustified tax refunds they never paid. Estimated losses to the state amounted to approximately €10 billion, leading to a 2012 legal change.
Cum-ex is not dead yet
Despite common belief, Brorhilker insists that tax fraud related to cum-ex and similar schemes continued following the legal amendments. She points to an alleged criminal foundation developed in 2016, specifically for cum-ex deals. She estimates a high probability that such activities are ongoing.
"They say these deals are no longer possible due to rule changes," Brorhilker stated. "But criminals have been conducting cum-ex deals across Europe, including in countries with disparate rules and systems. They may have had to alter their techniques, but make no mistake - it's definitely still a possibility."
Low-risk for banks
According to Brorhilker, banks' risk of involvement in criminal activities remains minimal, as she was responsible for cum-ex cases at the Cologne public prosecutor's office from 2013 to spring 2024. "Banks understand this - no one can prove it. We have a control deficit, no matter what rules we set. And the criminal energy in the industry never slows down."
A significant problem in investigating cum-ex cases is that banks store data abroad, Brorhilker said. "Banks and tax advisors transfer vast amounts of data to virtually lawless zones in other European countries, but the investigation grinds to a halt at the German border." She has witnessed banks supplying false information to authorities, which is often challenging to verify.
Brorhilker advocates for banks to store data in Germany. "If a hairdresser's salon or a restaurant is suspected of cheating, they can check if the cash register system is manipulated - but not with banks, whose technical systems are so secure that no government can access them without the bank's help."
"Banks steal from us"
Having previously been the key cum-ex investigator in Germany, Brorhilker announced her resignation from the civil service earlier this year, criticizing the handling of serious economic crime. She again called for a swift investigation of cum-ex and cum-cum deals, which she estimates have cost the treasury an additional €28 billion. "We allow international investment banks to rob us in Germany."
In cum-ex deals, shares were traded on a massive scale around the dividend record date, both with ("cum") and without ("ex") dividend claim, between parties involved. Many banks were implicated in the scandal. In 2021, the Federal Court of Justice ruled that cum-ex transactions represent tax evasion. In the case of cum-cum, banks generated unlawful tax advantages for foreign holders of German shares.
The scandal corrupts the highest echelons of politics, with allegations against Chancellor Olaf Scholz. He categorically denied political interference in the investigation by the Hamburg parliamentary committee on the cum-ex scandal. More and more suspects are being convicted in the scandal, with key figure Hanno Berger at the forefront. The Public Prosecutor's Office in Cologne is investigating around 1,700 suspects.
Brorhilker calls for a central authority
In Brorhilker's opinion, Germany requires a central authority dedicated to combating serious economic crime, much like Austria. Here, cooperation between various financial authorities, such as BaFin, the Federal Central Tax Office, the operational auditors at the Federal Ministry of Finance, and the responsible state tax authorities, is lacking.
Germany also lacks specialized and experienced public prosecutors. In the judiciary, it is routine for officials to frequently switch departments to learn various areas. "As a result, investigators do not have enough time to become familiar with the intricacies of the cum-ex matter. Some investigators have no trial experience." Consequently, the judiciary focuses on smaller, manageable cases to demonstrate progress. "The major cases remain stalled."
Sluggish clarification process
The clarification of illegal share deals is proceeding slowly, Brorhilker criticized. According to figures from the Federal Ministry of Finance (BMF) as of the end of 2023, the state has managed to secure only 3.1 billion euros of the lost cum-ex funds. There are currently 380 cases with a volume of 3.8 billion euros in process. The balance for cum-cum is even worse: by the end of 2023, the treasury had secured only 205 million euros, according to the BMF.
Brorhilker demands greater commitment from the new federal government, particularly the clarification of cum-cum deals. "I expect them to prioritize the battle against economic crime. Otherwise, many cases will expire, and billions in tax revenue will be lost forever."
- Despite the 2012 legal amendments, Anne Brorhilker, the CEO of Bürgerbewegung Finanzwende, contends that the likelihood of fraudulent activities related to cum-ex and similar schemes remains high in the industry, particularly in finance and business.
- In her role as the former lead investigator of the cum-ex tax fraud scandal, Brorhilker insists that these schemes, although altered, are still possible across Europe, audaciously conducted even in countries with disparate rules and systems.
- In the midst of the ongoing investigation of around 1,700 suspects, Brorhilker criticizes the storage of banking data abroad, claiming it hinders investigations and leaves banks practically immune to prosecution due to their secure technical systems.
- Having encountered false information provided by banks during her tenure as a cum-ex investigator, Brorhilker calls for banks to store data in Germany to facilitate investigations and combat potential fraud more effectively.
- In her resignation statement earlier this year, Brorhilker accused the handling of serious economic crime, such as cum-ex and cum-cum deals, of allowing international investment banks to steal from the German treasury, costing an estimated €28 billion.
