I blew the whistle on a massive tax fraud

Theo LeggettBusiness CorrespondentJas BainsJas Bains alerted Danish authorities to a £1bn tax rip-off and so they hit him with a lawsuit”We would be met at airports in 20-foot limousines, and brought to locations just like the Atlantis resort in Dubai or the Singapore Grand Prix. There’d be 100 grand spent within the bar.”In 2013, Jas Bains was an bold younger lawyer, having fun with the excessive life that got here with working for a particularly worthwhile Metropolis hedge fund.At the moment, he’s jobless and has misplaced most of his wealth, having spent years preventing authorized battles and making an attempt to clear his identify of affiliation with an enormous tax rip-off.The irony, he says, is that he blew the whistle on the rip-off within the first place – solely to search out himself one of many targets of a £1.4bn lawsuit.He’s reflecting one month after the case ended, bringing to an in depth eight years of authorized arguments and one of many highest worth civil instances ever heard within the UK.The Danish tax authority was left licking its wounds, after failing to ascertain that a big group of defendants, together with Mr Bains, had been answerable for large losses it had suffered.All of it started in 2009, when a banker named Sanjay Shah established a London-based hedge fund referred to as Solo Capital. It additionally had workplaces in Dubai. It was one among a community of funds, banks and authorized outfits that had been to change into closely implicated within the so-called cum-ex commerce.This centered on transactions the place shares had been bought from one investor to a different instantly earlier than the fee of a dividend (cum, or with, dividend) however delivered afterwards (ex-dividend).These concerned exploited delays in processing the sale to create confusion over who truly owned the shares in the meanwhile when the dividend was paid. This tactic allowed each events to assert rebates on withholding tax – a levy which had solely been paid as soon as, when the dividend was issued.From the skin, it was difficult, however for these concerned it led to ever greater and extra elaborate trades which in the end price taxpayers throughout Europe billions.It initially grew to become widespread in Germany, earlier than spreading to different international locations together with France, Belgium, Italy and Austria. Solo Capital focused Denmark, with the majority of its cum-ex trades going down from 2013 onwards.Jas Bains joined the corporate in 2010, as its head lawyer, however went on to run the London workplace. On the time, Solo was “a profitable agency, creating wealth in 5 or 6 completely different areas fairly effectively”.Getty ImagesSanjay Shah was imprisoned in Denmark in a separate felony trial final 12 months And creating wealth meant having fun with the excessive life, with workers occurring sprees to locations like Las Vegas, Singapore and Dubai.”What I’ll say about Sanjay is he knew the way to throw a celebration,” he says.”One time we had been within the Ku De Ta membership on the Marina Bay Sands Resort in Singapore. He purchased 20 bottles of classic Dom Perignon champagne, and folks had been simply spraying one another with the stuff.”Individuals have likened it to Wolf of Wall Avenue and such like.”It did not finish there. “Sanjay organised non-public live shows in Dubai with Prince. A small room with him and his associates at three or 4 million {dollars} for a night … non-public live shows with Snoop Dogg.”By mid-2014, nonetheless, Mr Bains had fallen out together with his boss and left the corporate for a competitor. On the time, the cum-ex transactions focusing on Denmark had been dramatically selecting up.”I used to be listening to from individuals who’d left Solo that Sanjay was doing a little massive trades in 2014, however look, I would moved on, it did not have a lot to do with me,” he says.”However then I heard, truly Sanjay made near €100m in trades from Denmark in 2013, nearer to €250m in 2014 and he was on the lookout for a billion in 2015.”Alarm bells had been ringing.Jas BainsAt the peak of his profession Jas Bains loved dwelling the excessive life in Las Vegas, Singapore and Dubai.”I assumed this cannot be proper. It is not that I assumed the trades had been invalid or felony not directly. It is simply any nation that has a billion Euros syphoned off it should scream bloody homicide.”Solo Capital wasn’t the one firm now focusing on Denmark. Others had been getting in on the act. Jas believed it was solely a matter of time earlier than the home of playing cards got here tumbling down.”I used to be fairly assured I would finished nothing improper, however I knew if this carried on and blew up in spectacular fashion, I used to be going to get pulled in,” he explains.With that in thoughts, in 2015, he determined to blow the whistle.He contacted a Danish lawyer, who in flip put him in contact with the Danish police. He went on to spend two and a half years aiding them with understanding how the cum-ex rip-off labored.Danish prosecutors didn’t goal Mr Bains. Their consideration was centered firmly on Mr Shah. The 54-year-old was finally extradited from Dubai to face fraud prices – and in December final 12 months was sentenced to 12 years in jail.It was the heaviest penalty ever handed out in Denmark for a fraud case. He’s at the moment interesting.’Unattainable to get a job’However when the Danish tax authority, Skatteforvaltningen (Skat), launched its large case, looking for to get well its misplaced cash, Mr Bains was one of many greater than 100 particular person and company defendants initially focused – alongside Mr Shah.With that lawsuit hanging over him it grew to become out of the query for him to work as a lawyer, or to get a task within the Metropolis of London. “It is not possible to get a job if you happen to’re being sued as a part of a two billion greenback worldwide tax fraud case,” he says.Nonetheless, in October, Excessive courtroom choose Mr Justice Andrew Baker threw out Skat’s claims.Acknowledging that “greed could be a highly effective motive, and I contemplate there was substantial greed right here”, he however concluded that Skat has didn’t show it was a sufferer of deception.The authority’s “controls for assessing and paying dividend tax refund claims had been so flimsy as to be non-existent,” he mentioned.That appeared to echo a press release beforehand made by Mr Shah in a 2021 German TV interview, which was additionally cited within the ruling:”Why would they pay out for years and years after which, after 4 years of funds they are saying, ‘Oh, we made a mistake, or we had been cheated'”, he mentioned.”If there is a massive signal on the road saying ‘please assist your self’, then me or anyone else would go and assist themselves.”There should be an attraction. However for Mr Bains, the ruling supplied some much-needed closure – and, he says, an opportunity to maneuver on.