Wir waren Papst

“We were Pope.” Süddeutsche Zeitung’s recent riff on a famous headline from the notorious Bild magazine.

(Vir   varren   pop st.)

Umsatzsteuer-Karussell

“Value-added tax carousel.” On 12 Dec 2012 there was a razzia at the Deutsche Bank in which 500 finance police searched its offices and employees’ apartments in several cities for evidence of German Umsatzsteuer tax fraud for CO2 pollution permits sold abroad. Again, the scheme seems to have been to pass the paper back and forth across borders until it was unclear whether the tax due in Germany had been paid, after which the bank printed receipts saying it had and asked the German I.R.S. to refund, in this case, the 19% V.A.T. for the supposedly foreign transaction. Süddeutsche Zeitung described it as the government’s advance payment of V.A.T. to dummy companies that never paid it back and then evaporated. Trade in CO2 pollution permits shot up between 2008 and 2010, and the German fiscus refunded billions of euros to such schemes, according to the Bundeskriminalamt.

The Frankfurt general district attorney, who has been investigating this since 2010, voiced concern that Deutsche Bank employees, among other things, did not report suspected money laundering as they were required to. Germany’s largest bank, DeuBa garnered at least 230 million euros via the scheme.

The first razzia looking for evidence in this carbon emissions trading carousel scheme was carried out in April 2010 (and an unknown person warned the bank the day before). In December 2011 a decision by the Frankfurt District Court [Landgericht] listed instances in which the Deutsche Bank apparently did not care to ask questions about its business partners. Journalist Klaus Ott described some of them in an article in the Süddeutsche Zeitung dated 30 April 2012: “A business account for a furniture store that wants to engage in emissions trading? A business account for a company that doesn’t have any offices yet? A C.E.O. who doesn’t speak German but signs German-language bank papers with no prior translation? No problem! And what about the risk management documents of the company bringing in the new partner? The bank isn’t interested, even though it is well known that something stinks in this industry.” Spiegel-Online reported that in one case a ten-minute conversation sufficed to set up this million-euro deal. People behind the scheme appear to have been located in London.

Update on 20 Dec 2013: Europe’s carbon emissions market is merely ~100 billion euros, Süddeutsche.de wrote, but the continent’s “more vulnerable” “scarcely monitored”  electricity and gas market is about nine times as large. It looks like the carousel tax scheme has been used there too, by Germany’s third-largest utility company EnBW but they’re not the only ones. Europol said that “criminals” used the carousel to avoid ~5 billion euros in value-added taxes in the carbon emissions market, but that the tax fraud may have been correspondingly higher in the bigger market.

The alleged electricity trading carousel was set up quickly, growing very large very fast. At EnBW, for example, tax auditors either found or made an in-house note that in 2011 “tax-free sales increased from circa one billion euros to ten billion euros within one year.” Germany’s F.B.I., the Bundeskriminalamt, was quoted as saying setting up the scheme required specialist expertise and in fact looked rather “organized.”

Süddeutsche.de indicated they learned these details from internal confidential papers from e.g. tax auditors in Karlsruhe and a central corporate I.R.S.-type office in Stuttgart [Zentrales Konzernprüfungsamt Stuttgart]. Europol, German prosecutors from multiple cities and German tax officials from multiple states are said to be investigating.

(OOM zots SHTOY err   car OO! sell.)

“Man muss dafür nicht genial sein. Facebook bietet einfach zuviele Angriffspunkte. Und irgendeiner muss es ja machen.”

“You don’t have to be a genius to do this. Facebook offers simply too many points vulnerable to attack. And someone’s got to do it.”

Words from Viennese law student Max Schrems, who with “Europe vs. Facebook,” a group of about a dozen people, is working to get Facebook into better compliance with European data protection laws. After the Irish authorities declined to follow up on complaints Schrems filed, the group is now crowdfunding a lawsuit against the European authorities responsible for regulating the social networking company. They can’t sue the company itself, only its European regulators; but this lawsuit could be appealed all the way to the European Court of Justice. The group estimates the lawsuit will cost about 300,000 euros, of which they’ve collected 20,000 euros since the campaign started last week. Schrems’s legal activism uses 1200 pages of information collected by fb about him and his network of friends, including all his deleted posts, that he received from fb two years ago. He was inspired to request his data from the company after hearing an “absurd” presentation by one of its employees during a study abroad semester in Silicon Valley.

Systemrelevante Banken

System-relevant banks, that are “too big to fail,” otherwise known as GSifi (global systemically important financial institutions). The head of the USA’s FDIC and a hohes Tier from the Bank of England published a proposal in the Financial Times on 10 Dec 2012 for reregulating system-relevant banks and making them less of a global economic risk. Under this proposal, if these huge banks got in trouble their top managers would be able to be fired by the responsible regulatory authorities, their shareholders would lose part or all of their investment, their creditors would not be able to collect all their unsecured debt, and rules would be applied to the company/ies at the top level of the holding hierarchy rather than the shuffle of subsidiaries. To promote national financial stability, healthy subsidiaries around the world would be preserved even if the top-level holding company is wound down. There are currently said to be 28 system-relevant banks in the world, of which 12 are in the UK and USA.

(Cis TEHM rellll ev ont eh   BONK en.)

Dividendenstripping

Dividend stripping.” A tax avoidance scheme the HypoVereinsBank is accused of, wherein they allegedly transferred customers’ stocks back and forth between German and foreign banks until it was unclear whether the Kapitalertragssteuer had been paid and then claimed more capital gains tax credits than were owed. Reuters and the Süddeutsche Zeitung reported that a single Frankfurt investor working with HVB and other banks was told he owed 124 million euros in tax for 2006–08 after the IRS-equivalent refused to accept his capital gains tax break from the scheme; he has been fighting in court since 2011 to get HVB to pay the tax bill. HVB and this investor split the profits 65% HVB, 35% investor. Wikipedia says dividend stripping lost its tax-law basis in 2000, Spiegel says it hasn’t been accepted by German tax authorities since 2007, and Süddeutsche Zeitung says since 2012.

Weird story about the HypoVereinsBank in Spiegel-Online on 30 Nov 2012: A guy accused his ex-wife and other HVB employees of large-scale tax avoidance schemes that moved money to Switzerland, was declared non compos mentis by the Bavarian justice system and has been locked up in a mental institution ever since (2006). The man probably was violent, but he may have been correct about the tax avoidance. He cited names and numbers when he blew the whistle to the Bavarian tax authority, but a judge who was not involved in that case called the tax office and told them not to investigate the bank because the whistleblower was crazy. The institutionalized whistleblower’s case was re-opened in 2013. He was set free  in the summer of 2013, after seven years of confinement. Laws committing people to mental institutions and keeping them there are going to be reformed as a result of his case. This started with an 05 Sep 2013 decision by the supreme court in Karlsruhe, the Bundesverfassungsgericht, which prioritized a review of the whistleblower’s case and announced failures of the various state courts and criteria that need to be met in future.

The Frankfurt district attorney’s HVB razzia last week found a trail leading to “a Swiss private bank.” Süddeutsche Zeitung says it is thought that Swiss banks will be a very fruitful place to investigate this German tax scandal. Deutsche Bank and UBS are now implicated as well.

Update on 16 Dec 2013: HSH Nordbank has been accused of dividend stripping.

(Dee veed END en shtrrrip pink.)

“Andere Journalisten stellen sich nicht so an.”

“Other journalists aren’t doing that.” “Other journalists aren’t taking that attitude.” Spiegel-Online reports that this was the CSU response in late May 2011 when asked for a written statement on the Bavarian government’s position in the ongoing German search for “final storage” (Endlager) locations for nuclear waste. At the time, the CSU indicated that Bavaria might reverse its position and become a candidate for permanent nuclear waste disposal. The state’s environmental ministry did not respond to Spiegel’s follow-up questions, even though the government “is legally obligated to provide information.” Finally, they agreed to a phone interview but no written statement, because “other journalists weren’t” demanding written statements. CSU party spokesperson Ulrike Strauß told der Spiegel that written statements weren’t normal.

Spiegel emailed Strauß their versions of her oral statements for her approval, and she called the top editors’ secretary (Sekretariat der Chefredaktion) to complain. Instead of the senior editors, the business editor returned her call, repeating that the magazine was going to insist on written quotes. Ultimately, nine days after Spiegel’s initial query on 23 May 2011, the state environmental minister announced that Bavaria would not be used for permanent nuclear waste disposal.

Spiegel goes on to report that, according to the Süddeutsche Zeitung, in March 2011 CSU spokesperson Ulrike Strauß phoned the Bayerischer Rundfunk (Bavarian {Public} Broadcasting, BR) news department to complain about a critical report about a CSU politician. The critical report was then replaced in subsequent news programs; it aired only once. BR says no pressure was exerted. Strauß says she acted entirely alone, on her own. The report in question was about environmental minister Markus Söder (CSU)’s contradictory statements before and after the Fukushima nuclear disaster regarding whether the Bavarian nuclear power plant Isar I was entirely safe. Before Fukushima it was safe. After, not so safe.

(ON derr eh   journaLIST en   SHTELL en   zichh   nichht   zoh   ON.)

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