Saturday, June 17, 2017

The Great Tax Robbery

A single application for multiple tax refunds was submitted to the German Federal Central Tax Office in Bonn on June 22, 2011. It was assigned the numbers 1100000001 to 1100000025. It landed on the desk of Anna Schablonski, on the ground floor of a gray, five-story, single-purpose building with shelves stacked full of ring binders with the German federal eagle emblazoned on their spines.

At the time, Ms. Schablonski was 30 years old, tall and slender, with brown eyes and a chin-length bob haircut. She had been in the job for only half a year. She didn’t know a thing about complicated stock market transactions. But when something looks fishy to Ms. Schablonski, such as this claim, she’s determined to get to the bottom of it.

For one thing, there were these unusually high sums. In only two months, the applicant, a pension fund in the United States, had bought German stocks worth €6.4 billion ($7.2 billion), only to sell them again shortly afterwards. Now it was claiming almost €54 million in taxes back from the German state – €53,882,080 and 94 cents to be exact. Strangely enough, the fund had only one beneficiary, and that made Ms. Schablonski particularly suspicious. Why, she asked herself, was a one-man pension fund speculating with so many billions?

Instead of the money, Ms. Schablonski sent the fund a long list of questions. It was a moment for bankers, brokers, consultants, and investors to start panicking all over the world – in New York, London and Basel, in Munich, Frankfurt and in the Bavarian city of Neumarkt. Lawyers were engaged and experts brought in to write supporting briefs, which only dodged her questions with evasive answers. That just made Ms. Schablonski all the more suspicious. "Okay," she said, relating later what she thought at the time, "we can’t let this slide, something’s wrong here."

And so it wasn’t a state prosecutor, judge or finance minister that first put a stop to the greatest tax robbery of all time. It was an office clerk handling the application.  (more...)

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