Germany’s largest bank has once again come under the scrutiny of authorities, this time for allegedly helping hedge funds in the United States avoid paying as much as $6 billion ($4.5 billion) in taxes on trading profits and skirting regulations on borrowing for more than a decade.
Deutsche Bank and London-based Barclays bank reportedly earned $1 billion from the scheme, which is under investigation by U.S. tax authorities and was the subject of a 93-page report this week by U.S. senators Carl Levin and John McCain. The banks insisted they were operating within the law.
Mr. Levin, the long-serving Michigan Democrat, called for any loopholes to be closed, lost taxes to be recouped from hedge funds and for the banks to be penalized for their involvement. He labeled the scheme “a series of fictions, one piled on top of another – fictions that major banks and their hedge fund clients used to avoid taxes and federal leverage limits.”