Blitz in French banks, because they risk a billion fine?

French banks face a billion-dollar fine for their role in the dividend scandal. The Transalpine National Financial Prosecutor is carrying out searches in the offices of Bnp Paribas, Société Générale, HSBC, Exane and Natixis. The goal is to find documents proving their involvement in the so-called “cum-cum” system.

It is a complex financial plot involving the purchase, loan and subsequent resale of shares between two or more investors residing in different countries. The ultimate goal of the mechanism is to disguise the real owner of the securities and above all to collect the tax refunds on dividends from several subjects, some of whom would not even be entitled.

French authorities suspect that local banks played a key role in building these fraudulent schemes, helping wealthy clients manage the whirlwind stock exchange. “The ongoing operations, which have required several months of preparation, are conducted by 16 investigating judges and over 150 investigative agents”, underlined the French prosecutor’s office, specifying that the German authorities are collaborating with the investigations.

Germany was in fact one of the countries most affected by the dividend scandal and also the first to take legal action. In December a German court sentenced a tax lawyer to eight years in prison for plotting a similar tax evasion scheme, dubbed “cum-ex”. The fraudulent tactic would have yielded a huge amount of undue tax refunds on dividends and would have cost Berlin’s public coffers over 10 billion.

The tax fraud was uncovered in 2012 by a consortium of investigative journalists, but it has not yet been possible to ascertain when it started or whether the investigations really put an end to it. Initially it was thought that the scandal concerned only Germany, but recent reconstructions have feared that the scheme has stolen tax revenue from 11 European Union countries, including France and Italy. Overall, according to the most up-to-date estimates, the “cum-cum” and “cum-ex” systems would have produced undue repayments of over 55 billion euros, so much so as to prompt some experts to speak of the “greatest tax theft in the history of the EU ”.