More banks in crosshairs as Denmark tax probe grows

Bloomberg

Denmark is trying to find out just how many banks were involved in suspicious stock trades executed for the sole purpose of getting a tax rebate.
The transactions in question started more than a decade ago, after Denmark and Switzerland made it possible to claim back taxes on dividends through a revised double-taxation accord between the two countries.
Nordea Bank has already been implicated in the trades, and Denmark’s parliament recently discussed whether to take measures against the lender. The bank has said it operated within the letter of the law, but that it wouldn’t conduct such transactions today. It’s also made clear it’s cooperating with the authorities. Denmark “will of course look into this,” Business Minister Rasmus Jarlov told Bloomberg.
“The crucial point is to find out whether people operated within standard rules for double taxation treaties or whether there’s a clear case of trying to get dividend taxes refunded, even if such taxes were never even paid in the first place,” Jarlov said. “There’s a very big difference between those two situations.”
The comments follow a high-profile resignation in Danish financial circles related to questionable dividend tax claims. Christian Hyldahl stepped down last month as chief executive of ATP, Denmark’s biggest pension fund, after it emerged that a unit he oversaw 10 years earlier at Nordea had conducted such transactions. Hyldahl says the trades were legal, but that it was “wrong” to do them all the same.
“We have learnt from the issues of the past. That is why we have changed our focus and worked intensively in recent years with our culture, to ensure that we live up to our corporate social responsibility – for the benefit of society, our customers and our employees. Today we ask ourselves whether we should rather than whether we could make a
certain transaction.
To make sure that that change of mentality runs through the whole organisation, we have rolled out extensive education and training in for example our Code of Conduct and ethical conduct. During the last year, our staff has undergone more than 15,000 hours of training in our Code of Conduct alone.
This means that no employees today should be in doubt about our ethical standards and moral compass or the importance of making the right decisions every day.” Julie Galbo, Nordea’s chief risk officer.
Nordea used a fund created by Nykredit, a Danish mortgage lender, to help it execute the trades. Denmark now wants to find out how many other banks might have been involved.
The Swiss-Danish dividend tax case is the latest in a string of scandals to surface in Denmark’s financial industry. Danske Bank A/S is still waiting to learn how much it may have to pay in fines as the US Justice Department investigates its alleged involvement in money laundering. And another probe is under way to track billions of dollars stolen from Danish state coffers in a separate case of dividend tax fraud.