The cum-ex-trial that started today in a Zurich district court may be more political than it would appear. Venerable private bank J. Safra Sarasin is taking a very keen interest in the proceedings.
Starting today Tuesday at 8:15 a.m., three German citizens stand trial in Zurich, facing allegations of economic espionage, violation of banking secrecy laws and betrayal of secret.
The three are Eckart Seith, a lawyer, a former chief counsel of Bank Sarasin and another former Sarasin banker. Together they allegedly helped Erwin Mueller, a German drug store magnate, to win his lawsuit against J. Safra Sarasin. Seith was Mueller’s attorney.
Elaborate Tax Fraud
Safra Sarasin in February was ordered to pay Mueller 50 million euros ($56.5 million) to cover for losses he incurred with an investment in so-called cum-ex-funds. Cum-ex-deals were used to defraud several European states, with the estimated damage reaching a staggering 55 billion euros.
German news agency «dpa» described how the «business» was conducted: the people involved in the scheme moved shares with (cum) and without (ex) the right to a dividend at and around the ex-date back and forth in quick succession. The tax authorities thereby lost track of who was the actual owner of the stock and the finance departments returned tax on capital earnings that in fact never had been paid in.
Ill-gotten Gains
The Zurich attorney general now alleges that Mueller didn’t win his trial entirely in accordance with the law. The two former Sarasin bankers allegedly passed on internal documents regarding the chances of success of the lawsuit, copies of letters and recordings of client meetings with Mueller to his attorney. The prosecution alleges that they were promised a share of the compensation awarded to Mueller in exchange for their activities.
The accused reject the prosecution’s description of events. Seith described himself as a whistleblower, according to «Neue Zuercher Zeitung». He hadn’t simply used the documents for the lawsuit, but also informed the German financial regulator and filed a suit in Cologne on grounds of the cum-ex-business.
Protection for Whistleblowers?
Because of the latter, he appeared on the radar of the Swiss judiciary, he claimed. Some, including the Transparency International NGO, say that Switzerland doesn’t properly protect whistleblowers.
The German authorities tend to agree with the NGOs assessment. The foreign office has delegated an observer to the trial in Zurich, according to «Handelsblatt». Also, Fabio De Masi, a member of the German parliament for the SPD, also showed up.
New Approach by J. Safra Sarasin
Ironically, the German authorities are equally interested in the activities of the whistleblowers and the prosecution in Hamburg accepted a request for legal assistance sent by the Zurich judiciary. They asked for support for a probe against the editor in chief of «Correctiv», a German investigative network. Safra Sarasin had filed a suit against the journalist following his revelations about cum ex. Usually, private banks don’t expose themselves to such lawsuits, but since the Brazilian banking group assumed control of Sarasin, things have changed.
Nowadays the bank is presenting itself more as an investment than a private bank, insiders said. In keeping with this role, the appearance became more aggressive and public in nature. In the trial that started today, the bank has assumed the role of a private plaintiff.
