FRANKFURT (Reuters) - Deutsche Bank (DBKGn.DE) employees alleged to have evaded tax when buying and selling carbon emission certificates had concerns over whether their trading activity was legal but carried on anyway to maximize profits, a Frankfurt court heard on Monday.
A Frankfurt prosecutor said on the first day of the trial that between August 2009 and March-April 2010 seven current or former Deutsche Bank employees deliberately ignored red flags and withheld information from their managers, despite knowing about the tax evasion practices of six external carbon traders making similar trades.
The seven defendants have not yet entered a plea, as is usual in trials in Germany, although lawyers for six of them say they will react to the allegations on Thursday, which is the next day of proceedings.
“Why do we do this? Because we are so greedy,” the prosecutor quoted one of the defendants as saying.
The case stems from an investigation into so-called carousel trades in the European Union’s carbon market in 2009 and 2010, in which some buyers imported emissions permits in one EU country without paying value-added tax (VAT). The buyers then sold them to each other, adding VAT to the price and generating tax refunds when no tax had been paid.
Deutsche Bank’s Frankfurt headquarters were raided by around 500 police and tax inspectors in late 2012 as part of the investigation.
In all, Frankfurt prosecutors have investigated more than two dozen current or former employees at Germany’s largest bank.
Deutsche Bank, which did not comment on Monday’s court proceedings, has said it had stopped trading carbon dioxide rights in 2010, suspended those alleged to have evaded tax, repaid what was owed and cooperated with investigations.
At least 14 people have already been jailed in three countries for their involvement in VAT fraud, which European police agency Europol has estimated has cost taxpayers more than 5 billion euros (3.86 billion pounds) since 2008.
Only two of the seven people charged are still on Deutsche Bank’s payroll. They have been suspended from their duties.
During the course of the investigation, Deutsche Bank repaid 220 million euros for VAT refunds which were found during later court proceedings to have been falsely claimed.
At the start of the trial on Monday, the defendants’ lawyers tried to have the leading judge Martin Bach replaced, arguing that he had presided over the case of the external carbon traders who worked together with Deutsche Bank.
Reporting by Alexander Hübner; Writing by Arno Schuetze; Editing by Alexander Smith