Dubai hedge fund manager Sanjay Shah will not fight extradition over tax scheme
Denmark's tax agency says $2bn was obtained unlawfully in a scheme to make double tax claims
Dubai hedge fund manager Sanjay Shah will not fight extradition to Denmark if requested in its investigation of a $2 billion tax fraud scheme.
Prosecutors in Denmark charged two British citizens, one in Dubai and one in the UK, with unlawfully obtaining more than $2.03 billion via a bogus trading scheme to make double tax claims.
They have not yet identified the individuals.
Mr Shah, who was identified by Denmark's tax agency Skat as the alleged mastermind behind the controversial Cum-Ex'trading scheme in its civil case, said he “would rather go to Denmark than be a fugitive”, according to his spokesman, Jack Irvine.
“He would go at the beginning of any trial they have," he said.
Mr Shah denied the charges and said he was working within Danish law.
The tax fraud scheme investigation has expanded across Europe, and on Wednesday Belgium announced it was seeking the extradition of a UK trader.
Guenther Klar, who previously worked for Mr Shah’s Solo Capital hedge fund, is being sought for questioning by Belgian prosecutors as part of an investigation into Cum-Ex trading.
At least three countries, Belgium, Denmark and Germany, are seeking the extradition of London financial professionals related to Cum-Ex strategies.
Prosecutors say investors illegally made billions of euros by rapidly trading shares to obtain several refunds on dividend taxes paid only once.
Mr Klar would be the first trader extradited from the UK to another country as part of a Cum-Ex inquiry.
Prosecutors want to question the 51-year-old in relation to an alleged $26.7 million tax fraud, according to London court documents.
Kevin Robinson, a lawyer for Mr Klar, said that the veteran trader “is not the subject of any prosecution or similar process in Belgium”.
“The Belgian authorities have made it clear in writing that the only purpose behind the request for extradition is to conduct an interview, nothing more than that is sought,” Mr Robinson said.
He said that Mr Klar had offered to be interviewed and has “already provided hundreds of pages of documentation demonstrating the true nature of his trading activities”.
“The offer to be interviewed has been declined which, given the admitted sole purpose of the extradition request, defies logic and casts serious doubt on whether this extradition request is being made in good faith,” the lawyer said.
Mr Klar was arrested under a European Arrest Warrant while boarding a flight from Manchester airport in June 2019, according to court documents.
He appeared at Westminster Magistrates Court in London the next day, and was released on bail.
Belgian prosecutors confirmed the proceedings in a statement. Extradition requests frequently take months, if not years, to resolve.
Belgium alleges in the arrest warrant that Mr Klar’s acts took place from June 2012 to May 2016.
“The Belgian state has very probably been defrauded out of over €22 million ($26.7m), of which €11 million was paid out as a result of unlawful reimbursements of withholding tax on dividends paid by Belgian quoted companies,” an investigating judge said in the arrest warrant.
Mr Shah and Mr Klar are defendants in a civil lawsuit filed by the Danish tax authority in London.
The agency says it suffered a loss of $1.6 billion as a result of Solo Capital’s trading.
The first trial in the case is scheduled to begin in March.
Austria is investigating 15 companies and 30 people, while Luxembourg is talking to seven investment firms and has conducted a series of raids. France’s financial prosecutor is carrying out fact checks and the UK's Financial Conduct Authority is reviewing 14 companies and six people in relation to the investigation.
Updated: January 15, 2021 02:17 PM