Judge condemns Denmark’s pursuit of Dubai tycoon Sanjay Shah over alleged £1.5bn tax fraud

Hearing in June will determine if freezing order on hedge fund founder's assets is lifted

DUBAI, UNITED ARAB EMIRATES. 20 September 2017. CEO of Autism Rocks Mr Sanjay Shah at his offices in DIFC (Photo: Antonie Robertson/The National) Journalist: Suzanne Clocke. Section: Business.
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A UK judge said Denmark’s pursuit of Dubai hedge fund tycoon Sanjay Shah and his associates over a £1.5 billion ($2.11bn) alleged tax fraud was “politically motivated” and designed to make an example of those involved.

The Danish tax authority Skat last month lost its attempt to launch legal action in London's High Court against Mr Shah and 70 other defendants, many of which are companies in the UK, on the grounds that the UK was not the proper place to bring a foreign tax claim.

Mr Justice Andrew Baker, who dismissed the case, stopped short of lifting the global freezing of British businessman Mr Shah's assets, an issue that will be determined at a hearing next month.

The judge ruled this week that Skat was liable for all the defendants' legal costs, and he condemned the judgment of leading Danish politicians for bringing the case.

"It was litigation that was politically as well as financially motivated," he said. "The litigation was the subject of ill-judged public statements by senior Danish politicians appearing to pre-judge the factual issues that would have fallen to be determined by the court.

“They both confirmed, or reinforced, the impression that there was a substantial political dimension to the bringing and vigorous pursuit of the claims brought here, in particular that their purpose was punishment and deterrence as much as it was financial recovery for the Danish taxpayer, and also involved a degree of 'playing to the gallery' in response to the significant media interest this affair has generated in Denmark.”

The London court case played prominently in Danish media, drawing comment from the country's public prosecutor and tax minister, while the government faced scrutiny over substantial loss of funds.

Skat claimed Mr Shah was a central player in a scheme in which foreign businesses pretended to own shares in Danish companies, then claimed tax refunds for which they were not eligible.

The London case – which was expected to be the longest in UK High Court history – is just one avenue Denmark is pursuing in a bid to recoup the rebates it says it unwittingly granted Mr Shah and others.

Mr Shah said his schemes were a “widely known and wholly legitimate trading strategy”.

This year, Denmark brought criminal charges against Mr Shah and is seeking his extradition from Dubai.

Acting Danish State Prosecutor Per Fiig said that the severity of the case was such that Denmark could seek a 12-year prison sentence for Mr Shah – a longer sentence than such crimes would usually carry.

Last year, Danish authorities froze many of Mr Shah's assets, including a £15 million ($20.8m) home near Hyde Park in London.