Raids at Germany's biggest bank

In April 2010 EU police and tax investigators raided hundreds of offices and homes across Germany, including those of Deutsche Bank in Frankfurt. The bank was ordered to repay €145m (£124m) of lost VAT on trades between August 2009 until the raids in April 2010 that were connected to fraud. Deutsche Bank told the Bureau it “exited carbon emissions trading in 2010 and reimbursed the German state.”



Court documents reveal allegations that the fraud uncovered in Germany had its seeds in the UK in the months before the raids. Grant Thornton's lawyers also alleged that an employee at the London branch of Deutsche Bank, Hector Freitas, who was trading carbon credits in the UK in June and July 2009, was then “instrumental” in setting up trades in Germany after HMRC clamped down on the fraud. He is about to be charged for his alleged part in the fraud in Germany, according to German press reports.

Seven Deutsche Bank employees in Germany have been prosecuted to date. In 2016 Helmut Hohnholz, formerly the regional sales manager in its global markets division in Frankfurt, was jailed for three years for what the judge said was a particularly "severe case of tax evasion”. Five former bankers received suspended jail sentences for abetting this, though one case was overturned on appeal. A seventh former employee was cautioned with a fine.

None of the traders in Deutsche Bank’s London office have faced criminal charges.

The documents piece together how the carbon credit carousel fraud began in France, moved to the Netherlands and the UK, before migrating to Germany and Italy. In total VAT carousel frauds have cost EU governments tens of billions of euros.

By early June 2009 a series of scandals meant it was widely known across Europe that the market for carbon credits was teeming with frauds. The Paris-based BlueNext Exchange, the main trading exchange for carbon emissions, closed for two days on June 8 and 9 as the French tax administration opted to charge a zero rate of VAT on carbon credits to prevent carousel fraud. A few days later the Paris prosecutor’s office admitted it was investigating a multi-million euro VAT fraud in the French carbon emissions market. Within a week, the Netherlands had also introduced a mechanism to combat the fraud.

This pushed the fraud to the UK - where VAT was still charged on sales of carbon credits - and HMRC had been given only a day’s notice about the changes in France. An internal RBS email sent in early July said “It seems the UK’s carbon emissions market is rotten” and “ is being targeted by carousel trading fraudsters”. RBS said this email reflects that individual’s opinion and not the wider team’s.