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Hanno Berger: Alleged 'cum-ex' fraud architect detained

Swiss police have arrested the German lawyer accused of masterminding a tax evasion scheme that authorities say cost taxpayers billions.

    

The 'cum-ex' scandal is believed to have cost the German state billions

Hanno Berger, a German lawyer suspected of having promoted a major fraud scheme that stopped many billions in tax revenue being collected, has been arrested in Switzerland, German and Swiss authorities said on Friday.

Berger was arrested in the Swiss canton of Grisons on July 7 based on an extradition request from Germany, the Swiss Justice Ministry said.

What was the cum-ex scandal?

The 'cum-ex' scandal was a share-trading scheme that is reported to have cost the German state billions of euros and state treasuries across Europe more than €55 billion ($65 billion). It was Germany's biggest post-war tax fraud.

It involved shifting shares from major companies rapidly around a group of banks, investors and hedge funds around the time dividends were paid out to make it seem as if there were numerous owners, each entitled to a tax rebate.

The scheme ran from 2005 through 2012, when the loophole allowing it to occur was closed.

The scandal is the focus of several investigations across Germany, with the government wanting to retrieve the billions of euros that it says were stolen from state coffers.

Last year, two British bankers were handed suspended jail terms and one a €14 million penalty in the first criminal convictions associated with the scheme.

In June of this year, a former German bank employee became the first to be jailed over the scam.

What happens with Berger now?

Following his arrest, Berger's extradition is now pending a decision by Switzerland's Justice Ministry, although any decision it takes can be further appealed to the Swiss Federal Criminal Court.

Kai Schaffelhuber, a lawyer for Berger, said he did not believe that extradition would succeed and that his client was innocent.

"Switzerland isn't dumb," Schaffelhuber said.

The 70-year-old Berger, who has been living in exile in Switzerland, is a defendant in a case that is being tried in Wiesbaden, near Frankfurt. He has always denied any wrongdoing.

tj/rt (Reuters, dpa)