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Last updated: December 12, 2012 7:17 pm
Two of Deutsche Bank’s top executives have been drawn into a tax fraud inquiry by German prosecutors, casting further dark clouds over the country’s largest bank.
Police and investigators raided the bank’s headquarters as part of a probe into tax evasion, money laundering and obstruction of justice involving carbon trading.
Jürgen Fitschen, the bank’s co-chief executive, and Stefan Krause, chief financial officer, are involved because they signed the bank’s value-added tax statement in 2009, Deutsche said.
Arrest warrants against five employees were issued and premises in Berlin and Düsseldorf as well as Frankfurt were searched, prosecutors said. Lines of police vans remained outside the offices on Wednesday afternoon.
The extensive operation – which prosecutors said involved some 500 officials across Germany – widens the scope of a long-running investigation into tax fraud over trading carbon emissions permits.
Six people were jailed in Germany last year for their part in a trading scheme to create transactions to evade almost €300m of VAT on carbon permits, with the judge in the case criticising Deutsche for its role in how the permits were traded.
Prosecutors said on Wednesday their investigations involved 25 employees of what they referred to as a “large German bank”. They said they suspected staff of having withheld evidence.
The investigation centres on an allegation of “carousel fraud”, where profits are made through evading VAT tax in a series of import and export transactions. Deutsche, the eurozone’s largest bank by assets, has already taken a writedown of more than €300m in its accounts in connection with the case.
Deutsche said the VAT statements being probed had been corrected voluntarily by the bank and it was co-operating with authorities.
The inquiries by Frankfurt prosecutors are one of multiple legal cases in which Deutsche, the eurozone’s largest bank by assets, or its staff have become embroiled.
The bank is involved in worldwide probes into attempts to rig the Libor benchmark interest rate, while the Financial Times revealed this month that the US Securities and Exchange Commission was investigating whistleblower allegations that Deutsche did not account properly for some complex derivatives transactions during the financial crisis, which the bank denies.
On Friday, the bank and Rolf Breuer, its former chief executive, are due to take part in the latest court hearing in a civil case brought by the heirs of Leo Kirch, a media entrepreneur, who allege that the bank cast doubt on his group’s financial health.
Deutsche has estimated that legal cases for which it has not yet made provisions could end up costing the bank more than €2.5bn.
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