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The CumEx Files

Hoe banken en brokers miljarden roofden van Europese belastingdiensten. Lees meer

In heel Europa zijn landen jaren achtereen doelwit geweest van ‘bendes’ van bankiers, handelaren en hedgefondsen. Via ingenieuze constructies pleegden zij fraude met dividendbelasting. De schade loopt in de tientallen miljarden. In Duitsland loopt een strafrechtelijk onderzoek naar diverse banken en bankiers. ‘Georganiseerde misdaad in krijtstreeppak,’ noemt een kroongetuige het. Ook in Nederland is de Belastingdienst jarenlang slachtoffer geweest van dividendstrippende bankiers.

The CumEx-files is een onderzoek van 19 Europese journalistieke organisaties en wordt gecoördineerd door het Duitse nieuwsmedium CORRECTIV. Meer weten: cumex-files.com

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Few banks committed the CumEx fraud as fanatically as state bank ABN Amro did. Since 2006, the Ministry of Finance had detailed knowledge of this. However, even after the Ministry became the owner of ABN Amro in 2008, the bank knowingly remained involved in transactions that seriously affected tax authorities. The Ministry did not share the knowledge of this fraud with the Minister and did not interfere with the CumEx trading.

This article in 1 minute
  • In July 2014, the German Federal Office of Justice wanted to raid the Amsterdam-based ABN Amro Clearing Bank, using a request for legal assistance. This was part of their investigation into the CumEx fraud, the largest post-war fraud investigation in Germany.

  • In 2005, the Global Securities Lending & Arbitrage department (GSLA) of Fortis was first associated with the CumEx fraud. The Frenchman Stefan Stanciu blew the whistle within Fortis. In 2006, Stanciu extensively reported on Fortis’s CumEx fraud to the Fiscal Information and Investigation Service (FIOD). From that moment on, the Ministry of Finance was familiar with the fraudulent dividend arbitrage (the FIOD is part of the Ministry of Finance).

  • In that period, Gerrit Zalm was the Minister of Finance and Joop Wijn the Secretary of State. In September 2008, a year after Zalm and Wijn resigned, ABN Amro was nationalised by the Dutch government along with parts of Fortis. Zalm became the vice chairman of ABN Amro in November 2008, and later also brought in Joop Wijn. Neither Zalm nor Wijn are willing to share whether they had knowledge of CumEx transactions in 2006.

  • Compliance officer Nico Zwikker was responsible for managing the nationalisation. Previously, he had been the compliance officer of Fortis GSLA. At the time, he came along to visit clients, making them believe that there was nothing wrong with CumEx transactions. From 2009 to 2013, Zwikker was head of compliance at ABN Amro.

  • Until early 2010, the Kirchberg Group in Luxembourg was a full subsidiary of ABN Amro. Kirchberg engaged in dividend arbitrage, involving, among others, CumEx and CumCum transactions. After a management buyout, Kirchberg continued doing business exclusively with ABN Amro. It was not until late January / early February 2016 that ABN Amro suddenly informed the Kirchberg Group that it wanted to cut all ties. The reason: according to ABN Amro, Kirchberg was onvolved with ‘dividend stripping’.

  • The stock exchange prospectus drawn up for their IPO does not mention this tidbit about ABN Amro’s past. The great interest of the German judiciary in ABN Amro Clearing Bank remains unmentioned as well.

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This article was originally published on November 8, 2018. This translation was published on April 13, 2020.

On 2 July 2014, German public prosecutor Anne Brorhilker approves the request for a raid on the Dutch state bank ABN Amro. Brorhilker leads a team that has prepared a 51-page request for mutual legal assistance (MLA), which is sent to the International Legal Aid Centre (LIRC) in Zoetermeer, the Netherlands.

The request contains detailed information about the criminal investigation into one of the biggest financial scandals in German history: the CumEx fraud. With the fraud, the German tax authorities were disadvantaged for at least 31.8 billion euros between 2001 and 2016. Dozens of banks are involved in the scandal. They operate from London, Abu Dhabi, Luxembourg, Dubai, Basel and Amsterdam, and have managed to withdraw huge sums from the German public treasury.

After the fraud was discovered by the German tax authorities in 2011, criminal investigations have been launched in four German federal states. Cologne’s chief public prosecutor Brorhilker, from the federal state of North Rhine-Westphalia, is the most expeditious in her job. She wants to raid dozens of banks.  ABN Amro is high on her list, too.

The first pages of the MLA request explain in detail how the fraudulent transactions work and how they were set up in a cunning interplay between banks, investors and pension funds. The defendants’ aim was to reclaim dividend tax from the German tax authorities, although they knew they did not meet the conditions for a refund. According to the Cologne chief prosecutor, the Dutch state bank is involved in the fraud through their Clearing division. Brorhilker wants the offices in ABN Amro’s Amsterdam headquarters to be searched, evidence to be seized and witnesses to be interrogated.

Via the LIRC in Zoetermeer, the German request arrives at the Ministry of Justice and the Ministry of Finance. This immediately creates a peculiar situation: The Ministry of Finance has been the official owner of ABN Amro since September 2008. At the height of the financial crisis, Fortis Bank Netherlands and those parts of ABN Amro that had previously been taken over by the Belgian Fortis were nationalised. It had a hefty price tag: 21.7 billion euros, paid by Dutch taxpayers. The government is keen to let that money somehow flow back into the treasury. The Minister of Finance Jeroen Dijsselbloem believes that an initial public offering (IPO) is the best solution. In August 2013 – just under a year before the MLA request – he stressed his desire to return the company to a public listing in the near future. The Minister has a vested interest in this: bringing in the greatest possible proceeds for the treasury. News about men in black jackets entering the headquarters of ABN Amro, with ‘FIOD’ (fiscal information and investigation service) spelled in white on their back, is rather inconvenient.

The FIOD smells a rat

IPO or no IPO, the director of the FIOD – reporting to the Ministry of Finance – informs the Ministry of Justice on 1 September 2014 that it has no objection to the German request for legal assistance. The heading of the letter reads in capital letters: URGENT!

Through his international network, Stanciu receives the first worrisome signals

Years before, the FIOD had already become acquainted with the CumEx transactions that had caused so much damage to the German state. In fact, the investigative service knows in detail how much a business unit of the state bank had managed to capitalise on this in the past. The transactions, classified as criminal by the German judiciary, were carried out for years from the heart of Amsterdam.

Fortis GSLA was located a few tens of meters from Dam Square, at Rokin 55. Since the late 1990s, the GSLA department has been one of the leading European players in the field of securities lending. GSLA responds to small irregularities in the market and tries to make a profit from this. This specific practice is called ‘arbitration’ in the banking world. Bankers have also discovered loopholes in tax legislation and use these to their heart’s content. Without running any risk, there is a lot of money to be made. it’s called ‘dividend arbitrage’, although there are some who call it ‘theft’. Since the turn of the century, the FIOD has been targeting GSLA. The investigation service is aware that a lot of money is made with complicated tax transactions, but cannot pinpoint exactly how it is done. Only a few years later, the FIOD grasps how Fortis GSLA ended up in the champions league of the international CumEx trade.

At the end of 2004, banker Stefan Stanciu gets a hunch that something is going terribly wrong at his employer Fortis GSLA. Moreover, it’s his own department – Structured Products – where the misery occurs. Stanciu, a Frenchman with Romanian roots, has worked at Fortis since 2002. His business card reads Senior Equity Derivative Trader. Through his international network, Stanciu receives the first worrisome signals. Friends who work at large banks in London ask him about the huge equity positions that his relatively small department is building up with securities lending. They want to know why Fortis is willing to pay prices that are above the market level.

Not much later, a colleague of the Custodydepartment tells Stanciu how much he envies him to be working at Structured Products; the colleague would do whatever it takes if he could work with Stanciu’s boss, Frank Vogel. The colleague describes Vogel as a fantastic trader who is able to earn millions without taking any risks. He always does this around April, when the large publicly listed companies pay dividends to their shareholders.

Stanciu wants to know how his boss can rake in million-dollar profits for the bank within a few days, and starts an investigation. He quickly notices that when setting up these ‘risk-free’ transactions, the fixed telephone lines of the bank are avoided. Calls via these phones are recorded by default and people seem to avoid that; they use mobile phones instead. And it always involves large transactions, in which billions of positions are taken in shares such as Deutsche Bank and the Swiss pharmaceutical company Novartis.

Stanciu calculates that approximately 75 percent of Fortis GSLA’s revenues originate in fraudulent transactions

Within a few months, Stanciu figures out that a tax scam of unprecedented proportions is taking place. The main victims are the German and Swiss tax authorities, who refund dividend tax through large-scale CumEx transactions without dividends ever having been collected. The damage amounts to tens of millions of euros. The Dutch tax authorities also contribute to the extreme profitability of the Structured Products department of Fortis GSLA. Stanciu witnesses how millions are earned through the stripping of dividend tax from Shell and Unilever through CumCum transactions. He calculates that approximately 75 percent of Fortis GSLA’s revenues originate from fraudulent transactions.

The Frenchman’s estimate is supported by, among other things, the bank’s published figures. Fortis GSLA is part of the Information Banking department until 2005. ‘Strong Q2 trading results in Information Banking due to seasonality,’ the 2004 Fortis annual report states. In the so-called dividend season, that falls in the second quarter, the division earned 104 million euros. The result before and after the quarter was more than 80 percent lower.

Fortis GSLA is the baks’s most profitable part, and the management team led by Frank Vogel receives millions in bonuses every year. Vogel is one of the best paid employees in all of Fortis. He even earns more than CEO Jean Paul Votron.

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The first CumEx whistleblower ever

Stanciu makes good money at the bank as well, but believes that the fraud goes against all principles of ethical banking. In February 2005, he decides to report his findings. He confides in a senior manager in Brussels, who advises him to use the whistleblower mechanism within Fortis. In agreement with Stanciu, the Brussels manager shares the report with Filip Dierckx, member of the Fortis managing board, and Anthony Smith-Meyer from the compliance department. The next morning Stanciu discusses the matter with the compliance officer and agrees to come to Brussels two days later to explain his disclosure. That makes him the first CumEx whistleblower.

Six hours later Stanciu gets fired by Vogel and is escorted out of the building by manager Bas Cohen. The next morning, Stanciu sits in front of four people in Brussels to relate his story; he is told that he is protected under the whistleblower policy that applies within Fortis. After this meeting, he will never hear from the compliance department again; the protection he would receive through the whistleblower policy turns out to be mere window dressing. Stanciu is jobless.

According to the bank, the CumEx transactions that Stanciu had revealed were completely legal

‘His dismissal process was completed only after it had been ascertained that Stanciu’s disclosure did not indicate irregularities,’ a Fortis press officer told business magazine Quote in 2006. According to the bank, the CumEx transactions that Stanciu had revealed were completely legal. ‘The economic background of these transactions is the application of a fiscal possibility that can provide an advantage,’ Fortis said in 2006. ‘The settlement system used in Germany makes it technically possible for authorised economic operators to reclaim dividend tax over the same shares, in whole or in part (subject to jurisdiction).’

‘Some matters in the financial world sound crazy and seem weird,’ Frank Vogel told Quote in 2006. ‘But if it looks like a duck, swims like a duck, and quacks like a duck, I am sorry but then it just is a duck.’ The alleged legitimacy was endorsed by his former lawyer Remco Verkerke. There is no doubt about it: CumEx was completely legal, according to the bank. Verkerke: ‘Nico Zwikker, the direct compliance officer of GSLA, even came along to visit customers to explain that the transactions were legitimate.’

The new state bank and (former) politicians

That same Nico Zwikker later became chief of compliance at ABN Amro, and from 2009 onwards he would help to steer the bank’s nationalisation in the right direction. As head of compliance, Zwikker assesses whether the activities of the state bank comply with the applicable laws and regulations. He must therefore check whether the state bankers are behaving properly and are not making any ethical missteps. That is an important task. Since the 2008 financial crisis, Dutch citizens have been more concerned about this than ever before. After all, it was the banks that caused the crisis and then had to be rescued by taxpayers. The nationalisation of ABN Amro costed the Dutch taxpayers no less than 21.7 billion euros. As a former compliance officer at GSLA, Zwikker should have been thoroughly aware of the reputational risks that fraudulent CumEx trading could entail: a state-owned bank that knowingly harms tax authorities, is playing an extremely dangerous game.

The huge operation to integrate the nationalised parts of Fortis and ABN Amro is led by former Minister of Finance Gerrit Zalm. He has previously gained banking experience as chief economist and financial director at the troubled DSB Bank of Dirk Scheringa. Compared to ABN Amro, DSB is a tiny bank, but according to Minister Wouter Bos, Zalm is the ideal candidate to integrate the Dutch parts of Fortis into the state bank. One of those components is Fortis GSLA, which was renamed into Global Securities Financing Group (GSFG) in 2006.

Zalm seems to have the proper background to put an end to the fraudulent CumEx practices within the state bank. As Minister of Finance, he had been in charge of the FIOD. The investigation service is aware of what happened at Fortis GSLA: at the beginning of 2006, Stefan Stanciu shared his inside knowledge about the CumEx scam at the invitation of the FIOD, his former lawyer told FTM. The FIOD confirms that they were informed by the whistleblower about the CumEx transactions at Fortis. As a result, within the Ministry of Finance, the new owner of the bank, knowledge of the fraudulent trade conducted by a section of the new state bank was amply available. It is unknown whether that knowledge was also shared with the politically responsible people.

‘As far as I can remember, this has not been presented to me. But you know, just as well as I do, that one’s memory can be fallible’

‘I know about the German scandal, via the media, and that’s about it,’ former Finance Minister Jeroen Dijsselbloem says about CumEx. ‘I don’t know if ABN Amro or parts of the bank have been involved in this. As far as I can remember, this has not been presented to me. But you know, just as well as I do, that one’s memory can be fallible.’

Did Gerrit Zalm, while he was Minister of Finance, have any knowledge of the CumEx trade? ‘I wouldn’t dare to answer that,’ he tells FTM.‘That was part of the portfolio of the State Secretary at the time.’ Zalm is referring to Joop Wijn (CDA). Before becoming state secretary, Wijn worked for ABN Amro for four years; after leaving politics in 2007, he became a banker again, now at Rabobank. In 2009, Zalm brings him to ABN Amro, where Wijn joins the transition team to ensure that the nationalisation is on the right track. In April 2010, Wijn joins the bank's managing board and becomes the head of ABN Amro Corporate Banking. This is how he becomes the direct supervisor of Bas Cohen, manager of ABN Amro GSFG (the former GSLA). ABN Amro Clearing Bank also falls under Wijn's responsibility. And that is precisely the division in which the German judiciary demonstrates interest in 2014 and whose Amsterdam offices it wants to raid. Wijn says he cannot respond to questions, because he is bound by secrecy.

Compliance and risk profiles

Had ABN Amro wanted to, the bank could have stopped dividend stripping and the facilitation of this type of customer transaction immediately after it became state-owned. But the bank did not do that. Although Germany took legal measures to combat CumEx in 2007 and 2009, there are still possibilities to claim the risk-free profits that put tax authorities at a disadvantage. The ABN Amro department that Bas Cohen runs, is eager to make use of these possibilities to perform ‘dividend arbitrage’.

Cohen’s so-called ‘Delta One Trading Desk’ isn’t halted until November 2012. Delta One is, in fact, a continuation of the fraudulent arbitrage practices that came to fruition at Fortis GSLA. In January 2013, a spokesperson informed the professional website Securities Lending that the bank prefers to avoid large risks. ‘We’ve decided that Delta One arbitration no longer fits our risk profile.’ For people who understand how Delta One arbitration works, that is a supreme irony. After all, the essence of CumEx trading is that risk-free money is being made – at the expense of tax authorities.

Australian investment bank Macquarie considered ABN Amro to be one of its few competitors capable of delivering the bespoke customisation required to finance CumEx transactions

Even after the nationalisation the bank remains an active participant in financing CumEx deals, as becomes apparent from the German criminal file of which FTM can view large parts. The Australian investment bank Macquarie considered ABN Amro to be one of the few competitors capable of delivering the bespoke customisation required to finance CumEx transactions. The criminal file also shows that even after the nationalisation ABN Amro Clearing Bank still processes transactions relating to CumEx and CumCum.

Heading the clearing bank is a manager who started working there in the late nineties. He knows exactly how this CumEx and CumCum game is being played and how to make money with it. In addition, the state bank owns several subsidiaries – in which ABN Amro Clearing Bank plays a part as well – that are actively involved in dividend stripping. One of them is the Luxembourg partnership Kirchberg Investment Management SARL. It is being run by a team that has been active in the CumEx trade for years, and has earned its spurs at Fortis GSLA. Furthermore, these men – Frank Hodyjas and Paul White – are close friends with Bas Cohen, manager of ABN Amro GSFG and the Delta One Trading Desk.

Nico Zwikker, head of compliance, is also familiar with Hodyjas and White. he knows them from the days he himself was recommending CumEx transactions to his clients. In April 2010, Hodyjas and White take over several subsidiaries from ABN Amro, including Kirchberg. They do this through a management buyout, which places the dividend stripping activities well outside the bank for the first time. But this does not mean that ABN Amro is quitting the game. Under the watchful eye of Zwikker, ABN Amro Clearing Bank remains in business with its dividend stripping ex-subsidiaries by concluding transactions and even financing them. With regards to CmEx deals, that is usually where very generous transaction fees are being paid.

In her MLA request, German prosecutor Brorhilker claims to have evidence proving that ABN Amro Clearing Bank is involved with the CumEx trade. It regards security transactions that the bank has performed for funds that are used by the main suspects to mislead the German tax authorities. The MLA request contains a list of people and companies that the German justice department considers to be the main suspects. On the list are several clients of ABN Amro. For instance the Brit Grenville Solomon, one of the managing directors  of Zeta Financial Partners (ZFP) from Dubai. ZFP also uses the Emirat branch of ABN Amro, as is shown by documents in possession of FTM.

The bank goes public

The black coats of the FIOD won’t raid ABN Amro Clearing Bank (AACB) at the Gustav Mahlerlaan in Amsterdam. The request is denied by a prosecutor of the Functioneel Parket (part of the Public Prosecutor’s office). He believes that a voluntary information transfer will suffice. After a seven-headed delegation of ABN Amro receive the claim under the guidance of top lawyer Joost Italianer, the FIOD employees receive a hard drive with information on October 24 in 2014; they can finally send the drive to Cologne. The witness testimonies that Brorhilker requested, do not take place. Two of the bankers turn out not to be employed by the AACB, and another one is active for the London Branch of the clearing bank, which turns out to be a valid reason to decline to be interrogated. If the prosecutor wishes to hear them, she will have to put in another request. In England.

Six days later, the Minister of Finance cancels the bank’s scheduled IPO

In March 2015 Het Financieele Dagblad runs a story about fraud at ABN Amro’s Dubai branch. Almost the entire senior management team got fired: they had supposedly assisted in fraud committed by Indian private-banking clients. Minister Dijsselbloem is not informed by the bank about the Dubai affair. A week and a half later, the annual report of the state bank is published and it turns out that 6 of 7 top executives at the bank have gotten a substantial raise. The public outcry is substantial: this is a state bank, after all.

Minister Dijsselbloem says that the raises are defendable from a legal point of view, but ‘morally it’s hard to understand’. Six days later, he cancels the scheduled IPO. That decision gets political approval, also from Dijsselbloem’s party member Henk Nijboer (PvdA): ‘We have to be able to trust ABN. This is clearly not easily realised. While employees are being let go and entrepreneurs are having a hard time getting credit, management is putting their own interest first.’ Later ABN Amro commissioner Peter Wakkie steps back and the managing board waive their bonuses.

Meanwhile, Gerrit Zalm appears to have received a letter from the regulator De Nederlandsche Bank (DNB), as is revealed by newspaper Het Financieele Dagblad that month: ABN Amro gets an ‘inadequate/unsatisfactory’ score for its approach of corruption risks. ‘Integrity is the number one risk factor for banks,’ according to the paper. At the end of May, after a remarkably short period, Dijsselbloem decides to take the bank public before the end of year after all.

Long before the IPO, on 11 August 2015, another employee of ABN Amro gets discredited. ‘Justice suspects ABN banker of mega fraud,’ Het Financieele Dagblad writes. The suspected banker is Willem Pieter V., managing director of the ABN Amro Clearing Bank. According to the bank, V’s activities supposedly occurred ‘out of sight’. However, what the newspaper doesn’t know at the time is that these actions are connected to dividend stripping, as was recently revealed to FTM by anonymous sources. A spokesman of the prosecutor’s office confirms this: ‘The investigation you are inquiring about, concerns a suspect who has made profit abroad by stripping dividend with foreign publicly-listed funds.’

The Cologne prosecutor has now focused her attention on the German branch of the AACB in Frankfurt. On 27 October 2015, the clearing bank is requested to provide access to the trading data of several companies affiliated with prime suspect Zeta Financial Partners (ZFP) Dubai. The bank promises to cooperate.

ABN Amro has already made a reservation of 150 million euros for possible claims

The official launch of ABN Amro's IPO takes place on 27 October. Nothing has yet been leaked out regarding the interest of the German judiciary in ABN Amro Clearing Bank; nor does the stock exchange prospectus make note of it. Under the heading 'Discussions with tax authorities in Switzerland and Germany', the CumEx activities that have caused major damage to the relevant tax authorities are briefly mentioned:

‘The Group [ABN Amro, ed.] has received inquiries from authorities regarding such customer contacts in the past, and it cannot be excluded that the Group may be affected by official investigations in the future. The Group could be subjected to requests to pay taxes and interest, as well as possible other sanctions, which may be material.’

A reservation of 150 million euros has already been made for possible claims. What the prospectus fails to menton, is that also parts of the bank itself – in particular Fortis GSLA and ABN Amro Clearing Bank – have been directly involved in CumEx transactions. The prospectus does point to the dividend arbitrage activities of two foreign subsidiaries, one in Germany and one in Luxembourg. Those subsidiaries had already been sold. The prospectus does not state their name nor when they were sold; ABN Amro refuses to  answer FTM’s questions about this. Through our own research, FTM finds out who the Luxembourg subsidiary is: Kirchberg Investment Management. And that dividend-stripping subsidiary is still doing business with the ABN Amro Clearing Bank at the time of the IPO.

In Germany, the press has been paying a lot of attention to CumEx for several years now, and the hunt for the fraudsters has been set in. But in the Netherlands, there is no journalist or analyst who puts the subject on the agenda. Nobody notices the clauses in the prospectus.

The IPO of November 20 2015 is a ‘milestone’, according to Gerrit Zalm. The introduction proceeds satisfactorily, and the bank is back on the Amsterdam stock exchange after an absence of more than seven years. The sale of the first 20 percent of the bank’s shares yield 3.3 billion euros for the treasury.

The Luxembourg subsidiary

Answering the questions that prosecutor Brorhilker asked the clearing bank in Frankfurt just before the IPO takes quite some time. Despite its commitment that the bank would fully cooperate, they seem to be in no hurry. At the end of November, a month after her request to view the trading data of ZFP Dubai, Brorhilker is told by ABN Amro Clearing Bank Frankfurt that its Amsterdam and London colleagues cannot supply any data whatsoever. According to the bank, handing over that data would go against Dutch and British law. If she wants to get that data, the AACB in Amsterdam and London suggests, Brorhilker needs to file a request for legal assistance.

The bank has ‘suddenly’ observed that there are business transactions that go against the so-called ‘principles of fair and orderly trading’

Brorhilker persists. In January 2016 she calls on the AACB again, now with questions about a series of companies that were full subsidiaries of ABN Amro in 2010, including Kirchberg Investment Management from Luxembourg. In February 2016, a month after Brorhilker posed these questions, ABN Amro Clearing Bank imposes trade restrictions on the Kirchberg companies. The bank has ‘suddenly’ observed that there are business transactions that go against the so-called ‘principles of fair and orderly trading’. In other words: the Kirchberg group carries out business that does not bear close examination.

Two weeks later, the bank terminates the relationship with the Kirchberg group. In its letters of cancellation, the AACB states that Kirchberg uses trading strategies that are incompatible with the bank’s risk profile. They are practicing ‘dividend stripping’, ABN Amro says. But the former ABN Amro subsidiaries have been implementing these strategies for many years. The bank never found fault with it; until now, it has always completed and financed all transactions. Since the existence of the Kirchberg group is based on these trading practices, they make a bold decision: they will take ABN Amro to court.

On February 25, 2016, ABN Amro and several former subsidiaries lock horns in the Amsterdam court. Kirchberg has until the end of June to find another clearing bank, until that time the group demands ‘that the AACB will in any case be prohibited from imposing more stringent restrictions than it has put on the Kirchberg Group for the past five years’. Without that guarantee, the Kirchberg group fears for the continuity of its business, according to its claims in the court ruling. ABN Amro opposes this demand: it ‘does not wish to facilitate activities that may be related to dividend stripping. That is stock trading aimed at tax avoidance. This type of trade is increasingly being combated in the Netherlands and in other European countries. Under certain circumstances, the tax authorities may recover damages from those who have facilitated these transactions.’ The bank further argues that ‘if discontinuity is immanent, that [is] because the Kirchberg Group itself exhibits socially undesirable behaviour due to market abuse and tax evasion.’

The court decides in ABN Amro’s favour. After all, the bank ‘has its own social responsibility to prevent inadmissible transactions from taking place’.

Commotion in Germany

At the end of 2015, it becomes clear in Germany how many banks are involved in the CumEx game and what damage the treasury has suffered as a result: approximately 12 billion euros. ‘Dividend stripping’ becomes a pressing public concern in Germany. There are political debates: the government must ensure that the money is recovered from the banks. In February, the Bundestag decides to conduct a parliamentary inquiry.

The main question: did your bank carry out transactions in the period 2000-2012 around the dividend date whereby dividend tax was reclaimed multiple times?

In August 2016, parliament’s committee of inquiry requests documents from the ABN Amro office in Frankfurt. On 17 August, the bank informs the committee that the relevant documents are not in Frankfurt or Amsterdam. The committee of inquiry is persistent, it is convinced that those documents must be with ABN Amro. On 8 September 2016, the committee decides to call upon the German Ministry of Foreign Affairs, they are to ask the Netherlands whether ABN Amro is prepared to provide the requested documents. The request ultimately arrives at the Amsterdam headquarters. But ABN Amro does not respond. A spokesman for the bank tells FTM: ‘The bank is very reluctant to provide confidential (customer, bank) information on a voluntary basis. This may jeopardise the interests of third parties and can result in significant liability risks. The request to which FTM refers came from a public investigation committee (not from an authority) and had no legal basis.’

The German financial regulator Bafin is also starting to move and sends questionnaires to hundreds of banks and asset managers. ABN Amro also receives the list. The main question reads: did your bank carry out transactions in the period 2000-2012 around the dividend date whereby dividend tax was reclaimed multiple times?

News about the regulator's questionnaire is picked up in the Netherlands: De Telegraaf reveals in March 2016 that ABN Amro is on a list of banks that may have engaged in dividend fraud. ‘The bank says it has nothing to fear from the judiciary,’ the newspaper writes. ‘“We are not under suspicion in this matter,” a spokesperson said. But according to insiders, ABN Amro played a much darker role than it is letting on.’ Het Financieele Dagblad reports about the news on the large-scale fraud with CumEx transactions as well. The paper quotes an ABN Amro press officer who states that he is ‘close [..] contact with the German authorities on this matter’ and refers to the reservation of 150 million euros that was mentioned in the stock exchange prospectus.

In November, more news about fraudulent practices at the bank follows, which is still largely state-owned. Het Financieele Dagblad has documents demonstrating that the German company ‘Mainhattan Finance & Trading GmbH – the former Fortis division GSLA Finance Holding GmbH in Frankfurt – in October 2012' got taxed with 98 million euros by the German tax authorities for ‘illegal dividend stripping in the period 2007-2009’. ABN Amro once again informs the FD that it is ‘in close and good contact’ with the German authorities. ‘We are transparent and cooperate fully and constructively with the authorities.’

Brorhilker is fed up

There’s someone in Cologne who thinks otherwise. Brorhilker gets no proper response to her questions about ZFP Dubai and the Kirchberg companies: the bank deflects with verbal obscurities, according to the correspondence between the two parties. Brorhilker knows from other sources that the bank has the information that she is after, but the bank has has been dragging its feet for months now. Brorhilker continuously asks questions about the Kirchberg group: companies that were previously full subsidiaries. When ABN Amro procrastinates again, Brorhilker has had enough. At the end of March 2018, she points out to ABN Amro that reluctant witnesses may be forced to cooperate by the police. That has its effect. The bank’s lawyer apologises, and claims that the bank was not able to reconstruct internally why they refrained from answering.

Both before and during the nationalisation, detailed knowledge was available within the Ministry of Finance about the CumEx transactions. FTM has tried to assess whether this information was shared at the highest level. Was Minister Dijsselbloem informed by his staff about the fraudulent practices within the bank, at the time of nationalisation? What has the ministry done to counter fraudulent dividend arbitrage after the nationalisation? Not much, according to the answers FTM received from the ministry. ‘The information FTM refers to has never been shared with the minister because the departments involved in nationalisation at the time were not aware of it.’

When asked whether Gerrit Zalm and Joop Wijn, former members of the managing board of ABN Amro, were informed during their term of office at the Ministry of Finance about the fraudulent practices at what was then Fortis, there is no clear answer: 'Generally speaking, members of the ministry are not actively involved in tax matters of individual taxpayers.’

Responses from individuals:

Jeroen Dijsselbloem and Gerrit Zalm, both former Minister of Finance:

Former minister Jeroen Dijsselbloem cannot remember anything about the request for legal assistance regarding the requested raid on the bank in 2014 and refuses to answer questions about the ABN Amro prospectus. Dijsselbloem: ‘I cannot answer that. It may be that I have been informed about CumEx in my five years as Finance Minister, but I don’t remember.’

Gerrit Zalm says that he did have knowledge of CumEx, the previous CumEx activities of parts of the bank and the interest of the German judiciary in some of those parts. ‘What might be interesting to do is to look at what is in the stock exchange prospectus,’ Zalm said. He does not want to comment further: ‘I am no longer with ABN Amro. For any questions 

 the bank, I must refer you to ABN Amro.’

Joop Wijn (via the spokesman of his current employer Adyen):

‘Mr. Wijn can well imagine the journalistic interest in the matter and would be happy to assist you in answering your questions, but he is unfortunately limited by confidentiality. As a former secretary of state, he is bound by a legal duty of confidentiality that has remained in full force after his term of office expired (and, secondly, also by the use of constitutional law not to make public statements in the immediate area of a successor in office).

Regarding ABN Amro, Mr. Wijn is bound by a Non-Disclosure obligation (as usual with ABN Amro) and by bank secrecy. Mr. Wijn realizes that this may seem disappointing but hopes for your understanding of the legal restrictions he is faced with. He states that he has always acted responsibly.

 

Two public facts may be of relevance to your assumptions and interpretation:

 

1: Mr. Wijn only became operationally responsible for the day-to-day affairs of some former units of Fortis Bank Nederland as of 1 July 2010. Until then (in the so-called transition phase prior to the merger) he had been assigned to ABN Amro N-share. He was not a member of the Executive Board of Fortis Bank Nederland and had no control over the business operations.

2: The Tax Department was under the responsibility of the CFO the entire period.’

Former chief compliance officer of ABN Amro Nico Zwikker:

Nico Zwikker is driving his car and reacts surprised when FTM calls him on 30 October 2018 with questions about his role at Fortis GSLA. ‘It is a bit difficult for me and you surprise me a bit,’ Zwikker says. He promises to call back, and we mail him our questions. He does not call back. A few days later he says he will respond by email. That does not happen. Zwikker was sent a deadline twice. After passing the first one, he replies: ‘I am still considering.’ After the second deadline has passed, he no longer responds and refers us to his former employer, ABN Amro.

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Response ABN Amro:

‘We fully cooperate with the investigations of the authorities and we are transparent,’ the ABN Amro spokesperson repeatedly said.

The statements in the prospectus about ABN Amro Clearing Bank are not about the investigation by the German public prosecutor. According to the ABN Amro spokesperson, the statement in the prospectus concerns ‘a general description of the risks of the clearing company and is not specifically written on the cum/ex file.’ ‘The risks about the cum ex dossier that were known at the time are described elsewhere in that prospectus.’ The spokesperson refers to page 295 [and 296, ed.].

The bank does not wish to respond to specific questions. ‘The investigation by the German authorities is sill ongoing. If you have specific questions, you may be able to turn to them.’

Jan Willem Hoevers van de Brauw Blackstone Westbroek, lawyer of ABN Amro:

‘Unfortunately, we cannot make statements about individual cases.’

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Responses of the Ministry of Finance and various regulators:

The Financial Markets Authority (AFM)

Question from FTM: Does the regulator still believe that the prospectus of ABN Amro contained all information to allow investors to make a responsible judgment about the bank and the risks it ran?

‘The prospectus has been reviewed and released by the AFM,’ a spokesperson said. ‘That means we believe there is enough information to properly inform the market.’

De Nederlandsche Bank (DNB):

DNB exercises prudential supervision. This means that it is mainly concerned with the stability of the financial sector. In other words: to ensure that banks do not fail. The supervision of conduct is exercised by the AFM. Within the legal framework in which DNB operates, however, there is some scope to discuss the behaviour of financial institutions. DNB also ensures that these companies have sound and controlled business operations and are aware of the social decency with which these organisations operate.

Question from FTM: It is now clear to FTM that DNB was well aware of the CumEx trade. In the past 15 years, has DNB attempted in any way to discourage Dutch financial institutions from implementing these trading strategies? How did DNB do that? Is DNB satisfied with the results it achieved?

Answer DNB: ‘DNB has repeatedly encountered transactions in the past fifteen years, of which is clear that they are exclusively tax-oriented and are not in accordance with the spirit of the law. We have always been clear that this cannot be the intention.’

Further answer from the Ministry of Finance:

‘The stated information is included in the prospectus from November 2015. The prospectus includes information about the discussions with the German authorities and the investigations of the German authorities on page 295. The prospectus also states that there have been requests for information and that ABN AMRO could be requested to pay tax. The annual reports of 2015, 2016 and 2017 also contain information about the discussions with the German authorities. The annual reports indicate that ABN AMRO has made a provision for this.

 

Pursuant to the first paragraph of Section 5:13 of the Wft (Financial Supervision Act), ABN AMRO must include in the prospectus all information that is important for shaping a responsible judgment by potential investors. This concerns, for example, information about the issuer’s capital, financial position, result and prospects. The prospectus should also state whether the responsibility for the information contained in a prospectus rests with the issuer, its management or supervisory body or the board, the offeror, the person asking for admission to trading on a regulated market or the guarantor (Section 5:13 (3) Wft).

In the matter of the prospectus of ABN AMRO, the responsibility for the content of the prospectus resided with the company (see also page 128 of the prospectus). For that reason, the prospectus in the process of the IPO in November 2015 did not require the approval of the minister. The Ministry of Finance was not responsible for the prospectus and was therefore only involved to a limited extent. ABN AMRO shared the prospectus with the Ministry of Finance in November 2015 prior to its publication. It was not the task of the state as a shareholder to prescribe what should be included in the prospectus. The minister had to approve, among other things, decisions about the number of shares to be issued, the determination of the price and the allocation of shares. The AFM assesses whether the prospectus, in accordance with the Prospectus Regulation, contains all mandatory information and whether the prospectus is consistent and understandable.

 

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Eric Smit
Eric Smit
Mede-oprichter van FTM. Als voormalig professioneel squasher gewend om klappen te incasseren en uit te delen.
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Siem Eikelenboom
Was eerder onderzoeksjournalist bij Zembla, Nova en Het Financieele Dagblad, waar hij meewerkte aan de Panama Papers.
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