British trader Sanjay Shah, along with his hedge fund Solo Capital, is at the heart of a colossal fraud scheme that allegedly siphoned £1.44 billion ($1.8 billion) from Danish taxpayers, revealed a lawyer representing the Copenhagen tax authority in a London court.
The lawyer, Laurence Rabinowitz, detailed how the majority of the defendants in the intricate case utilized a “cum-ex” dividend trading scheme orchestrated by Solo Capital, primarily through entities based in England, to extract funds from Denmark’s tax authority, SKAT, under the guise of tax refunds.
“This Solo scheme comprises approximately three-quarters of the SKAT claim… It’s where the modus operandi was established,” stated Rabinowitz during the proceedings at London’s High Court, marking the commencement of a year-long civil lawsuit.
Shah, who was extradited from Dubai to face criminal charges in Copenhagen, refutes any wrongdoing. He contends that the tax refunds were legitimate at the time, Danish equities were suitable targets, and denies allegations of collusion with a select group of associates, as per court documents.
The civil trial in London runs parallel to legal actions in Copenhagen, the U.S., and Malaysia, amid widespread investigations across Continental Europe, particularly in Germany and Denmark, aiming to recover billions of euros lost in similar schemes.
The practice of cum-ex trading exploited tax frameworks in countries like Denmark, Germany, and Belgium following the 2008 financial crisis.
SKAT accuses Shah, 53, and others of meticulously planning and coordinating trades to secure tax rebates, despite lacking ownership of shares in relevant Danish firms, receiving dividends, or paying withholding taxes from 2012 to 2015.
Shah’s defense argues that he hired highly qualified independent individuals for pivotal roles in Solo Custodians and affiliated entities, including structurers, traders, operations personnel, IT experts, legal advisors, and compliance professionals, as indicated in court filings.
“It’s crucial to note that until 2023, English law, not Danish, did not deem these trades invalid or ineffective,” emphasized Shah’s legal team in their court submissions.
