Mega tax fraud: British trader accused of stealing 1.2 billion euros on trial in Denmark

The trial of a British trader accused of defrauding the Danish tax administration of about 1.2 billion euros through financial agreements in the 2010s began on Monday in Denmark.

Sanjay Shah, 53, a British trader extradited from Dubai in December, is standing trial in Glostrup, a suburb of Copenhagen. He has pleaded not guilty in this case to facts covering the period from 2012 to 2015, for which he faces up to twelve years in prison.

The extremely complex case consists of more than 300,000 pages, prosecutor Marie Tullin explained in court. “It’s no secret that there are a lot of attachments,” she said.

According to the prosecution, shell companies controlled by Sanjay Shah pretended to own shares in Danish companies and received tax benefits to which they were not entitled. She identified more than 3,000 similar requests to the Treasury.

According to the prosecution, a “well-thought-out and methodical fraudulent scheme” allowed him to pocket more than 9 billion crowns (1.2 billion euros) in dividend tax refunds. It intends to confiscate $7.2 billion purchased directly by Mr. Shah. In January 2021, when the indictment was announced, the prosecution indicated that it had already confiscated approximately 3 billion crowns.

“The scale, complexity and international nature of the case, as well as the difficulties encountered in returning Mr Shah to Denmark, explain why it took almost ten years for this case to come to trial,” said one of the defendant’s lawyers, Kare Pielmann said AFP.

Extradited from Dubai

The financier was extradited in December 2023 from Dubai, where he was living in luxury, following a lengthy procedure in which Denmark entered into an extradition agreement with the United Arab Emirates in 2022. The accused has been in custody since his arrival in Denmark.

Ultimately, his former right-hand man Anthony Mark Patterson finally decided to plead guilty to being an accessory to tax fraud.

The Briton, who was tried separately in the same court, was sentenced on March 1 to eight years in prison and could be questioned as a witness. During the trial, he explained that he was “thrown into the deep end” of the scam as soon as he arrived at Solo Capital, an investment fund created and managed by Sanjay Shah in the spring of 2013. “I became aware of the transaction model when we had to plan operations for 2014,” Mr. Patterson detailed, expressing “regret that we participated in this strategy.”

Mr Shah’s lawyer did not want to comment on the merits of the case, other than to stress the importance of his client benefiting from a fair trial. “Government officials, especially ministers, have made numerous comments on this matter over the years, creating the impression that Mr Shah is guilty of fraud… This is a possible violation of the presumption of innocence,” he said.

In civil proceedings, a court in Dubai ordered Shah to pay about 1.5 billion euros to the Danish tax authority. There is also a trial going on in the UK. The scheme, known as “cum-ex” and exploiting a loophole in European tax laws, was practiced by several traders in Europe before being uncovered, affecting a number of EU countries, including neighboring Germany.

It consisted of buying and reselling shares around the day of dividend payment, so quickly that the tax authorities could no longer identify the true owner, which made it possible to illegally claim tax benefits on profits.

Financial agency Bloomberg estimates that various variants of “cum ex” and “cum cum” fraud have cost European taxpayers €150 billion.