The third Cum-Ex trial at the Bonn Regional Court is about to be completed. After 20 days of negotiations, the public prosecutor’s office and the defense presented their pleas on Thursday morning. Prosecutors asked for a seven-year prison sentence for the accused manager M., while his defense attorneys believe a suspended sentence is appropriate. The expectations of the two sides are thus far apart. Now the criminal court in Bonn has to decide.
The former boss of the investment company Warburg Invest, a subsidiary of the Hamburg private bank MM Warburg, is accused. In this role, the 63-year-old is said to have enabled so-called cum-ex deals together with other participants. These are complicated stock exchange deals in which the players sent large packages of shares in circles around the dividend date. They then had the state reimburse them for taxes that no one had previously paid. Tax investigators estimate today that the tax authorities suffered a total loss of more than ten billion euros.
The current process involves two investment funds that Warburg Invest set up in 2009 and 2010 specifically for the Cum-Ex district business. With these two funds alone, the parties involved would have cheated the tax authorities by millions of euros, according to the indictment. At that time, M. was responsible as managing director.
More than 100 million euros tax damage
The Cologne public prosecutor sees the allegation of particularly serious tax evasion confirmed at the end of the main hearing. The business in which M. was involved resulted in tax damage totaling more than 100 million euros, the representative of the investigating authority explained in his plea. That is much more than with other tax offences. He also emphasized that cum-ex deals were a direct “grab in the treasury”. That weighs more heavily than withholding taxes from the state.
The public prosecutor does not classify M. as an assistant, but as a perpetrator. In her opinion, the fact that M. himself did not make any profit from the business had a mitigating effect. Unlike other actors in the cum-ex deals, he has not received any increased bonuses or even payments in the millions. As a result, according to the prosecutor’s office, a prison sentence of seven years is appropriate.
The defendant’s four defense attorneys partially agree with the prosecutor’s office – at least they no longer dispute that the deals were tax-damaging cum-ex transactions and that their client was involved. M. had taken a spectacular turn in the middle of the process a few weeks ago and stood up after a long wall. He had previously glossed over his actions, he explained, and had not stopped the business despite his feeling of disturbance.
The defense attorneys see this admission as a mitigating measure. M. was also only guilty of assistance, they explained. Despite the amount of tax damage, they hope for a lenient verdict. A sentence suspended on probation would allow M. to continue his current life – provided he remains unpunished.
“I see it as the biggest mistake of my professional life”
How important was M’s contribution to the success of the cum-ex funds in question? The defense and the public prosecutor’s office are far apart on this issue in particular. Defender Ingo Heuel, for example, said his client “didn’t earn a cent” from the deeds and therefore had little self-interest in the deeds, even if he didn’t pull the “emergency brake”. M. was also not the determining force. The decision to set up the two funds was made by Warburg co-owner Christian Olearius, among others. In summary, M. was an important, but still only a small cog in a large industry. The defense demanded that this be taken into account – even if M. was aware of his guilt and now wanted to bear the consequences for his actions.
In the end, the defendant had the floor. He leaned over the microphone and only said a few sentences, including: “I see this as the biggest mistake of my professional life”. The verdict will come next week.