‘This Was Fraud’

Danish authorities have been trying to unravel Mr. Shah’s handiwork for over three years. Much of his modus operandi was revealed, experts believe, in 2017 when police in Germany, who were acting at the behest of the Danes, used a search warrant to sift through the records of North Channel Bank, a small bank in Mainz, a city outside Frankfurt. A team of 60 investigators found that the bank was used by 27 of the American pension plans, which were ultimately paid a total of about $168 million by SKAT.

What investigators found is that the accounts didn’t actually own any shares of Danish companies, said Prof. Christoph Spengel, who served as an adviser to Germany’s Parliament during an inquiry into the questionable trades. He studied the results of the North Channel investigation, issued in a report by a German district attorney. He said that the 27 plans primarily traded with one another. One would place an order to short a chunk of shares of Danish stock — essentially, a promise to buy the shares once they dipped below a certain price.

Soon after, an order was placed by another of the 27 plans to buy the order for the shorted shares. That open buy order — essentially, a promise to purchase shares that the other plan still didn’t own — was proof enough for SKAT to approve a refund. Once the refund was issued, the buy order was canceled.

“This wasn’t a transaction, this wasn’t tax planning,” Professor Spengel said. “This was fraud.”

A spokeswoman for North Channel said the bank was cooperating with the authorities and had no comment.

After funds were wired to North Bank, Professor Spengel said, they were shunted to two banks, first in London, then another in Germany. Finally, he said, they were sent to accounts controlled by Mr. Shah and his wife, Usha.

Jack Irvine, Mr. Shah’s spokesman, said none of this was true.

“Neither Solo nor Sanjay have had anything to do with North Channel Bank,” he wrote in an email, “so there appears to be confusion, which is not unusual in this case.”

There has been outrage in Denmark over the SKAT scandal but so far the repercussions have been surprisingly limited. No ministers have been fired. The director of SKAT was laid off in August 2016, though Mr. Shah’s machinations were among several causes. A new investigation into the cum-ex disaster was ordered by the justice minister in February, which could last years. For now, politicians here seem to emphasize pragmatism over finger-pointing.