Danish Government to Investigate the Equity Release Scam
Early this week the Audiencia Nacional chose to reject the investigation of the “Equity Release” alleged fraud on grounds that include, on the one side, the argument that they lack “geographical” jurisdiction and on the other, that there is not enough evidence within the claim (250 pages) to merit starting a criminal investigation by their Courts. And if those grounds were not enough, to further convince themselves of the wisdom of their decision, they also mentioned that we had not managed to prove enough the relationship between the cowboy coastal IFAs and the reported banks (informally known in Spain as “chiringuitos financieros”), as if to suggest that we should have eavesdropped on their board meetings or tapped their telephone conversations. I would be lying if I said that we were not aware that it would very be difficult to get these elitist Magistrates to deal with white-collar crime, even if as serious as this.
In our opinion, this is a clear case of judicial apathy by the Court which, after probably not reading the claim, considered it nevertheless irrelevant in what is a steadily worsening record of protecting rights of consumers.
In stark contrast to this indignant “skimping over”, the Danish Government has reacted forcefully to the allegations published by the largest newspaper in Denmark, the Morgenavisen Jyllands-Posten. According to the daily newspaper, Sydbank targeted wealthy expat residents of Spain, encouraging them to take out a Danish mortgage on their property and offering to transfer the released money to Switzerland. Jyllands-Posten claims that the Aabenraa-based bank was aware that Swiss bank secrecy rules would allow these assets to be hidden from the Spanish tax authorities.
The newspaper points to an internal mail sent from a director of Sydbank Switzerland to senior management in Denmark, including CEO Karen Frøsig. EPN.dk quoted the email admitting that in Spain, tax on inheritance on real estate only applies on the equity. Mortgaging serves primarily the purpose of inheritance tax reduction. It was also mentioned that Sydbank may not even have had a license for operating in Spain, let alone offering tax evasion products.
The Danish Tax Minister, Thor Möger Pedersen, has indicated that It is clear that my awareness increased if a large bank is proposing a maneuver in which the tax due on the loan is placed in a tax haven country without accountability. If it is a widespread traffic in the financial sector, it is definitely something we will look at.
According to Johnny Schaadt Hansen, director of The Danish Tax Office Special Department of Economic Crime, there may be a counselor responsibility, which the bank may be punished for. It does not sound very good if a Danish bank is involved in such a concept. It will be included in our priorities, and one should not forget that in such a case can be a counselor responsibility, as one can be punished for, whether you are accountant, lawyer or banker, said Johnny Hansen Schaadt.
The articles also quotes Lars Krull, a senior consultant and expert in banks from Aalborg University, saying that if it is primarily tax that drives it, and not a real need for funding, you should be wary. Also, the specialized financial daily Finanswatch.dk openly regards this practice as a scam.
Finally, a few days ago we learned that three Swiss bankers are charged in a New York indictment with conspiring to hide more than $1.2 billion of taxpayer assets from the Internal Revenue Service, in what is a very similar tax dodging scheme (they were using offshore companies, straw-men and other mechanisms to defraud).
News from the Danish Media (in Danish)
- Sydbank hjalp med at skjule formuer 09-01-2012 – epn.dk
- Flere banker arbejder i skattely 10-01-2012 – epn.dk
- Sydbank: Vi var måske for offensive 10-01-2012 – epn.dk
- Spansk advokat jagter danske banker 13-01-2012 – epn.dk
- Skyer over Solkysten 14-01-2012 – Finans Watch (Subscription Required)
- Kommentar: Bankernes kulsorte hemmelighed 15-01-2012 – Finans Watch (Subscription Required)
News like this is ill-timed. The financial industry has a bad enough name for itself right now, without stories like this emerging.
Hello Sharon, I fully agree with you, but this mess has to be cleared up if this particular industry is to ever start getting the good name it deserves. These Danish banks, and some British ones, have caused untold suffering to pensioners, some of which have died as a direct consequence of the struggle.
There is never a wrong time to expose schemes like this, they need to be brought into the open and aired if the banks are to get their good name back. Being of the old school I had always such trust in my bank and bank manager, in fact there were many times in the UK that I would meet my manager in the local pub for a good old chin wag about our problems. As far as I am aware many old age pensioners have had their life savings taken and then the roof over their head has also gone. Recently I became aware of one victim dying of a stroke which the stress of foreclosure of his property, another recently has undergone treatment for a heart complaint. A further victim with Nordea Bank who recently underwent cancer surgery has now had the bank apply to the court to put his property up for auction anbd the stress of it all has broken their marriage another pensioner by the way. Why should we not expose these banks.