Dubai court orders Sanjay Shah to pay $1.25bn to Danish authorities in tax fraud case

Hedge fund trader loses final appeal in civil lawsuit

Sanjay Shah has lost an appeal to Dubai's highest court over a tax fraud civil case. AP
Powered by automated translation

Dubai's highest court has rejected a final appeal by hedge fund trader Sanjay Shah against a civil lawsuit ordering him to pay Denmark's tax authority Dh4.6 billion ($1.25bn).

The Dubai Court of Cessation issued a binding ruling on Tuesday, meaning that Mr Shah, a British citizen who lived on The Palm Jumeirah, must pay the amount as part of a civil case that was filed by Denmark's tax authority (Skat) five years ago.

An additional 5 per cent interest on the sum, accrued from the date the case was lodged in August 2018, must also be paid to Danish authorities.

“The process of execution in terms of how this money will be paid back to Skat, has already been initiated,” said OGH Legal, the Dubai firm acting on behalf of the Danish tax agency.

“This conclusive ruling after a nearly five-year pursuit of justice underscores the serious and uncompromising stance of the UAE authorities against financial misconduct.”

Skat accused Mr Shah of being a key player in a scheme in which foreign businesses pretended to own shares in Danish companies to claim tax refunds for which they were not eligible.

The scheme involved 126 fake companies.

One month before the case was filed, an asset freezing order against Mr Shah was issued by Dubai authorities.

Timeline of a billion-dollar case

An initial ruling by the Court of First Instance dismissed the claim in August 2020, after which the case was taken to the Court of Appeal.

In March last year, a court-appointed panel of three experts were given the task of analysing the case.

The panel presented its report, naming some of the foreign businesses that were involved in the scheme, including how much money was illegally obtained from Skat.

In September, Dubai's Court of Appeal found Mr Shah and others, who were not identified, had unlawfully obtained money from Skat between 2012 and 2015.

It stated that Danish authorities were seeking to recover an amount of Dh7bn from Mr Shah and his accomplices.

It also said the case file included nine million documents.

Mr Shah's legal team appealed the ruling, leading to the final judgment made by Dubai's Court of Cassation this week.

Shah faces extradition

In April, the Court of Cassation ruled that Mr Shah would be extradited to Denmark for prosecution over the tax fraud allegations.

Mr Shah has previously denied the charges and said he was operating within Danish law.

A UAE official said last month that the process of extraditing Mr Shah was set to begin.

The two countries signed an extradition treaty in March 2022 and the official said this was “fully ratified and enshrined” in UAE law.

“We note the decision by the Dubai Court of Cassation to reject the appeal of Sanjay Shah, a British national wanted by Danish authorities,” the official said.

“The extradition process will now begin.”

Updated: May 17, 2023, 11:58 AM