Dubai resident fights Denmark over £1.5 bn tax fraud allegations
Sanjay Shah is accused of making bogus claims to defraud the Danish tax office of £1.5 billion (Dh4.7bn)
A British businessman and Dubai resident accused of being at the centre of Denmark’s largest tax fraud case said he acted within the law.
His claim comes as authorities argue over which country will prosecute a criminal case into the alleged fraud, worth £1.5 billion (Dh7.01bn).
Sanjay Shah, who owns a £1 million yacht in Dubai, is accused of making bogus claims that defrauded the Danish tax office of £1.5bn between 2012 and 2015.
But Mr Shah said he used a loophole in the law to legally take the funds.
In papers lodged in London’s High Court as part of a civil case brought by the Danish tax authority Skat, Mr Shah’s lawyers rejected the allegations against him.
A 204-page defence statement that was seen by The National said: “Solo Capital Partners [Mr Shah’s firm] provided clearing services for clients to engage in lawful and legitimate trading strategies that were conducted at all times in accordance with Danish law: doing so was neither dishonest nor unlawful.
“This case has caused significant embarrassment to Skat and to the Danish government generally, particularly because dividend arbitrage trading is a widely known and wholly legitimate trading strategy.
“Other European governments have taken steps to limit such trading activity. Skat is attempting retrospectively to amend Danish fiscal law and to cover up or remedy Skat’s earlier failure to limit such trading activity and thereby attack the defendants, who have done nothing dishonest nor illegitimate.”
Skat alleges Mr Shah set up a scheme submitting bogus claims to fraudulently receive tax relief on share dividends in Denmark.
In the High Court last year, Skat said Mr Shah was “the primary individual said to be responsible for the fraudulent scheme”.
Mr Shah’s lawyers said that description was “gross and misleading".
“The allegations that Mr Sanjay Shah was ‘the primary individual responsible for the scheme’ is embarrassing for want of particularity. It is denied,” his lawyers said.
Skat launched a civil legal action to recoup the funds in London’s commercial court more than a year ago. It also lodged identical proceedings with Dubai’s International Finance Centre, which are also ongoing.
A case against Mr Shah’s wife Usha, the founder and chief executive of Dubai’s Autism Rocks Support Centre, was thrown out by a Dubai court but Skat is appealing this ruling, court papers revealed.
Mr Shah is also facing an international criminal investigation into the matter.
The inquiry involves police forces in Denmark, the UK, Germany, Belgium and the US.
Britain’s National Crime Agency told The National: “The UK continues to work jointly with our operational partners to ascertain which country is the most appropriate jurisdiction to bring any offenders to justice.
“The UK investigation Team continue to investigate this case and are working closely with the Crown Prosecution Service.”
This month three former employees from Mr Shah’s UK hedge fund Solo Capital filed denials of wrongdoing with the High Court.
Anupe Dhorajiwala, chief operating officer of Solo Capital’s Dubai unit; Graham McKenzie Horn, chief operating officer in London; and Rajen Ramal Shah, who is no relation to Mr Shah, are accused of taking part in the tax fraud.
In Rajen Shah’s defence statement, his lawyers said: “Skat alleges that the trades which gave rise to the [withholding tax refund] applications were a sham and/or based on fictitious records and never occurred. This is denied.
“At all material times, Rajen Shah honestly believed that the businesses for which he worked supported the pursuit of a lawful trading strategy by their clients.”
Mr Shah’s assets in Britain and the UAE have been frozen.
The father-of-three, who grew up in London, moved to Dubai in 2009 and lives on The Palm Jumeirah development.
He founded UK charity Autism Rocks which set up Dubai’s Autism Rocks Support Centre in 2017.
The charity, according to its latest UK accounts, has benefited from more than £1.1m from Mr Shah’s companies.
It has held charity rock concerts featuring Prince, Elvis Costello, Michael Bublé and Joss Stone to raise money for autism research.
Updated: June 13, 2019 08:43 AM