Cologne in the turmoil: Revision against probation penalty in the Cum-Ex scandal!

Cologne in the turmoil: Revision against probation penalty in the Cum-Ex scandal!

In the spectacular CUM-Ex Tax fraud, the Cologne public prosecutor's revision has announced against the current judgment in the procedure against the former lawyer Kai-Uwe Steck. Steck was sentenced by the Bonn district court for a suspended sentence of one year and ten months and a fine of 23.6 million euros. He has already paid 11 million euros of this sum. These legal steps are related to a fraud that took place from 2007 to 2011 and brought in tax damage of 428 million euros. The CUM-EX scandal is one of the largest financial criminal cases in Europe, with estimated losses for the tax authorities in the double-digit billion dollar area, whereby the total damage in Europe is estimated at over 150 billion euros.

Steck played a central role in the Cum-Exskandal and became key witness of the indictment in 2016. His statements led to the processing and punishment of numerous participants. His former law firm Hanno Berger was sentenced to an eight year sentence in 2022 and is therefore in prison. While the public prosecutor originally called for a prison sentence of three years and eight months, the defense was relieved by the suspended sentence.

revision of the public prosecutor's office

The Cologne public prosecutor sees a serious deviation between the judgment and the original indictment. Therefore, the investigators call for a thorough examination of the reasons for the judgment. Anne Brorhilker, the leading investigator in the CUM-EX scandal, criticized banks and their lawyers because they have severely hindered the investigation. She escaped from the judicial service at the end of May 2024 and is now the managing director of the Citizens' Movement Financial Wende, where she works against financial crime.

The CUM-Ex complex enables financial actors to reimburse capital gains taxes that have never been paid for several times by postponing shares around the dividend date. The processing of the scandal is far from being closed. Despite Brorhilker's success, she encountered massive resistance and lack of support within the judiciary and politics. There were initial information on the problematic business in 1999, but the Federal Ministry of Finance did not take any measures, but legalized CUM-EX transactions by assuming a legislative proposal from the banking association.

The influence of Warburg-Bank

Another central element of the scandal is Hamburger Warburg Bank, which was heavily involved in Cum-Ex-deals. In 2016, the tax office claimed 47 million euros from the bank. The then mayor of Hamburg, Olaf Scholz, met with bank board members to prevent the repayment. It remains unclear what happened to the 43 million euros of the ex-boss of the Warburg-Bank after his criminal trial was discontinued.

The entanglement and the scope of the CUM-Ex Caups show the challenges in fighter control. German politics and judiciary continue to face the task of examining the background of this scandal comprehensively and taking those responsible for accounting. As Anne Brorhilker emphasized, such practices must be made decisively in order to avoid the financial damage to the state in the future.

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