(This version of the October 19 story corrects Kofod’s nationality in paragraph 9)

FILE PHOTO: Mobile police surveillance cameras are pictured in front of the steeples of Cologne Cathedral REUTERS/Wolfgang Rattay/File Photo

FRANKFURT (Reuters) - European politicians have called for action to tackle dividend stripping after Reuters and other media revealed how large banks were involved in trading schemes that cost taxpayers billions of euros.

In Germany’s biggest post-war fraud investigation, prosecutors in Cologne are investigating banks involved in the trades, which secured illicit double tax rebates on dividend payouts.

Danish authorities are also seeking to recover hundreds of millions of euros in tax rebates they paid out after falling victim to a similar scheme and have filed dozens of lawsuits this year against individuals in the United States.

“It is large-scale greed, and we will pursue the culprits,” said Danish prime minister Lars Lokke Rasmussen.

“That this is a problem across Europe makes me even more upset ... The answer ... is closer international cooperation.”

Reuters spoke to bankers, officials and people directly involved in the probe and reviewed thousands of pages of internal bank files, correspondence and legal papers obtained as part of a European media investigation called the “cum-ex files” coordinated by non-profit newsroom Correctiv.

These documents showed that prosecutors in Cologne opened a tax investigation into Santander SAN.MC in June. They believe its role in the scheme was to carry out trades. Other banks are being investigated as part of the wider probe.

Santander said it was “fully cooperating” with German authorities and conducting an internal investigation.

Jeppe Kofod, a Danish member of the European Parliament’s committee on tax evasion and financial crime, called for a public hearing by lawmakers to quiz banks about the scheme.

“Several of the biggest European banks are involved,” Kofod told Reuters. “It is a European issue.”

Germany made three attempts to stamp out the practice by changing and clarifying the law in 2007 and 2009 before finally succeeding in 2012.

TIGHTER CHECKS

The discovery of the trades in Germany and Denmark has prompted other countries, including Austria and Belgium, to open their own investigations. They have discovered that they were also affected, albeit on a far smaller scale.

A spokeswoman for the Belgian finance ministry said it was investigating a similar fraud after it discovered illicit tax reclaims. It repaid 201 million euros before halting far larger reclaims, some as recent as 2017.

State prosecutors in Austria have also opened an investigation into similar trades, a spokeswoman said.

“The culprits tried to replicate the fraudulent scheme used in Germany in Austria,” she said, adding that a joint investigative team had been launched with prosecutors in Cologne. “The investigation is very advanced,” she said.

Norway also fell victim to the fraud in 2013 with a loss of 580,000 Norwegian krone ($71,270) according to the tax authorities. Norway was able to stop 10 further attempts in 2015 in fraudulent claims of $4.3 million.

“After discovering these fraud attempts we introduced much tighter checks before paying refunds,” said Hans Christian Holte, director general of the Norwegian Tax Administration.

The circle of countries that theoretically could have fallen victim is even wider, according to the Organization for Economic Cooperation and Development, which has monitored the situation.

Responding to the investigation, French Budget Minister Gerald Darmanin said on twitter: “If the frauds are confirmed, we will be ruthless.”

The scheme involved trading a company stock rapidly around a syndicate of banks, investors and hedge funds to create the impression of numerous owners - each entitled to a tax rebate.

“We need to look at our laws to make sure they can stop this kind of large-scale tax fraud,” said Tove Maria Ryding of the European Network on Debt and Development, which campaigns on tax issues.