Deutsche Bank AG (ETR:DBK) (FRA:DBK) (NYSE:DB) Co-CEO Juergen Fitschen and CFO Stefan Krause have been drawn into a tax evasion investigation, after investigators and tax inspectors raided the bank’s offices today. About 500 agents and inspectors descended on the bank’s offices in in Frankfurt, Duesseldorf, and Berlin, and five staff members were arrested on the spot. Officials hauled out suitcases and backpacks filled with files and documents. Police even brought in armed officers, who coordinated the high-profile search of the bank’s large headquarters.
Prosecutors reportedly told Reuters that they were investigating at least 25 members of the bank’s staff in the tax probe, which is related to a possible tax scam involving carbon trading. Potential charges for those implicated in the investigation include money laundering, obstruction of justice, and severe tax evasion.
A statement from Deutsche Bank AG (ETR:DBK) (FRA:DBK) (NYSE:DB) said Fitschen and Krause are both involved because they signed the bank’s value-added tax statement from 2009. At that time Fitschen was Germany’s chief, and Krause was already the bank’s CFO. The statement also said public prosecutors’ search of their offices was related to tax evasion investigations related to carbon permit trading, which have been going on since 2010.
Reuters cites an anonymous source, who said the bank suspended some employees in October, after an investigation into possible tax evasion in connection with carbon trading permits. Six men were sentenced to jail time in that case, although at that point, Deutsche Bank itself was spared from charges. The judge in that case did however say that the bank’s conduct could leave it open to charges of tax evasion.
Deutsche Bank AG (ETR:DBK) (FRA:DBK) (NYSE:DB) has been attempting to correct its image recently, so this round of raids is not helping. Lawsuits have been filed against the bank in the U.S. and the U.K. in connection with alleged manipulation of Libor and mis-selling subprime assets during the recent financial crisis, which spanned from 2007 to 2009.
Tax evasion investigations related to this same carbon trading permit case are also ongoing in other European Union countries.