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Barclays Frankfurt offices raided in fraud investigation

Barclays Frankfurt offices raided in fraud investigation

Investigation looks into controversial Cum-Ex deals that cost European taxpayers over €150 billion
Barclays HQ in London
Barclays HQ in London
Photo credit: Shutterstock

Barclays Plc’s Frankfurt offices were raided as part of the German probe into the controversial Cum-Ex tax trades, just one week after Bank of America Corp.’s Merrill Lynch premises were hit as prosecutors ramp up scrutiny of foreign banks potentially caught up in the scandal. 

The Cologne prosecutor said homes of two suspects were also searched. Investigators are looking for evidence of Cum-Ex and related trades. About 70 police and tax officers took part in the action.

A London-based Barclays spokesperson said that Cologne prosecutors carried out the raids “related to an investigation into historic Cum-Ex trading activity, and we are continuing to cooperate with the authorities in Germany.”

Cum-Ex was a trading strategy that siphoned off at least 10 billion euros in government revenue. Named for the Latin term for “With-Without,” Cum-Ex took advantage of German tax laws that seemed to allow multiple investors to claim refunds of a tax that was paid only once. The nation moved to abolish the practice in 2012.

The Luxembourg taxman lost out on €2.2 billion euros due to Cum-ex deals in the last two decades - considerably higher than the previous estimate of €10 million, German investigative platform Correctiv reported in October.

The total loss of tax revenue in 12 countries - including Germany, France and Belgium - is estimated to be €150 billion, Correctiv said in October, almost three times the original amount that the platform reported in 2018 when it broke the Cum-Ex scandal.

Barclays has long been entangled in the German probes over its involvement in the tax scandal. The lender’s name and alleged role has come up regularly in court documents and also at hearings, where they were named as short sellers in the deals.

The Handelsblatt newspaper reported the searches earlier on Wednesday.

(Additional reporting by Yannick Hansen)

©2022 Bloomberg L.P.

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