Sunday , October 24 2021

German Prosecutors Investigate BlackRock on Dividend Distribution Survey: Source



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Prosecutors searched the offices of BlackRock in Munich on Tuesday, a person familiar with the matter said, as part of the country's largest post-war fraud investigation.

The practice being investigated, known as cum-ex, quickly involved commercial company actions around a syndicate of banks, investors and hedge funds to create the impression of numerous homeowners, each of whom was entitled to a tax.

A BlackRock spokesman said the world's largest fund manager is "fully cooperating with an ongoing investigation related to transactions with former transactions in the 2007-2011 period."

The inclusion of BlackRock is significant because it oversees more than $ 6.4 trillion in assets, including shares of the company that lends to banks as part of its business.

State prosecutors in Cologne declined to comment on BlackRock's quest when German Finance Minister Olaf Scholz called on Europe to step up cooperation on tax evasion schemes after Reuters and other media revealed deals which cost billions of euros to taxpayers.

Numerous banks and investors are already being investigated on the mock trading.

BlackRock's president in Germany, Friedrich Merz, who helped secure his influence on Europe's industrial power, assumed his current role in 2016 – after the period under investigation – and condemned the withdrawal of illicit dividends.

Merz led the race to succeed Angela Merkel as leader of Germany's Christian Democrats and secure a chance to run for Chancellor next year.

"SCANDAL"

Earlier this week, Scholz described the stock-trading scheme as a "scandal" that underscored the need for better European cooperation in its strongest condemnation of practice, which hit Germany, Denmark, Austria and Belgium.

Denmark's tax authorities say they have lost $ 2 billion, while Germany estimates it was withdrawn from more than 5 billion euros ($ 5.71 billion) by a similar method.

Danish politicians have called for action after Reuters and other media, coordinated by Correctiv, a non-profit press room, have revealed the large-scale use of such schemes.

German prosecutors believe that participants in the cum-ex scheme misled the state, leading them to think that a lawsuit had several owners, who were due a dividend and a tax credit.

Germany changed and clarified the law in 2007, 2009 and 2012, but the coup struck Denmark, where authorities have hosted more than 420 companies and people, freezing hundreds of millions of euros of assets worldwide.

(US $ 1 = 0.8760 euros)

(Additional reporting by Douglas Busvine and Edward Taylor; Editing by Maria Sheahan and Alexander Smith)

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