Issue link: https://maltatoday.uberflip.com/i/1057934
27 maltatoday | SUNDAY • 2 DECEMBER 2018 OPINION The answer to this bankers' raid affecting at least 11 countries can only lie in a stronger Europe capable of protecting its citizens Cum-Ex Scandal: Europe, let's take back control A gang of bankers and lawyers has plundered the treasuries of eleven European countries. The estimated damage from what is known until now: over €55 billion are gone. Cum-Ex is reportedly the biggest tax scandal in history. The answer to this bankers' raid affecting at least 11 countries can only lie in a stronger Europe capa- ble of protecting its citizens. A Cum-Ex deal involves at least three co-ordinated trans- actions including short selling in the run-up to dividend day. The name refers to the fact that in one transaction shares are traded with a claim to receive a dividend (cum), and in another they are traded after the dividend has been paid (ex). Specific weaknesses in the administration of with- holding taxes combined with stock exchanges' settlement of transactions allow Cum-Ex traders to successfully claim two or more refunds of with- holding taxes that were only paid once. There are varia- tions such as cum-cum but the fundamentals are the same: the profit from these transac- tions comes exclusively from taxpayer pockets. An investigation headed by Correctiv, a German non- profit investigative journalism group, involving 38 reporters from 12 countries analysed 180,000 pages of documents to uncover the Europe-wide damage wrought by the bank- ers' greed: an organised theft from the tax coffers of at least ten European states, besides Germany, that cost taxpayers about €55.2bn. What needs to be done? First, the EU Council of Min- isters must, for the first time, grant European supervisory authorities crisis intervention rights in order to stop the dirty tax transactions on European financial markets. This system of supervisors was set up in 2010 and has never been activated. The supervisory authorities European Banking Authority (EBA) and Euro- pean Securities and Markets Authority (ESMA) must use all their special powers to restore the integrity of European financial markets. A tempo- rary ban on trading practices must not remain a taboo. It is the task of the EU's financial watchdogs to protect taxpay- ers against white-collar crime. Second, the 'Europeanisation' of the Cum-Ex scandal also reflects the power imbalance between transnational finan- cial criminals and national law enforcement and tax authori- ties. Therefore, I urge the EU Commission to start work on a European initiative for a European financial market police (Eurofinpol). Only a police force with Europe-wide investigative powers can stand up against Europe-wide organ- ised crime. Third, the European Com- mission has established a sys- tem of cross-border reporting of tax frauds by tax account- ants, lawyers, bank advisors and other intermediaries. Now Germany and other Member States must use this system consistently and report fully on incidents. What's more, intra-German aggressive tax arrangements must be report- able. It is outrageous in view of the Cum-Ex scandal that Peter Altmaier, German Minister of Economic Affairs, rejects a national reporting obligation. Fourth, also on other impor- tant issues, Germany is hinder- ing the fight against aggressive tax avoidance. For instance, the federal government has blocked ongoing negotiations for whistle-blower protection instead of strengthening the position of the very ones that helped to uncover the Cum-Ex scandal at great personal risk. And last but not least, the German government must finally draw the lessons neces- sary to avoid such dealings at home. The Green parliamen- tary group has formulated the necessary consequences after concluding the parliamentary enquiry into Cum-Ex. It is high time for CDU/CSU and SPD to switch from talking and ignoring the scandal to effectively tackling the illegal and fraudulent practices in financial markets and ad- dressing these demands. Law enforcement agencies and tax authorities need full support in clearing up this scandal. The biggest European tax scandal ever needs a deter- mined political response to regain lost confidence in the state's ability to act. To end the billion-euro losses for taxpayers requires determined political action. Every day of complacency costs Europe's public coffers millions. Gerhard Schick Gerhard Schick is a German Green MP who initiated the Bundestag's inquiry into Cum-Ex 2016 www.socialeurope.com