I blew the whistle on a massive tax fraud

“We’d be met at airports by 20-foot limousines and taken to places like the Atlantis hotel in Dubai or the Singapore Grand Prix. Hundreds of thousands of dollars would be spent at the bar.”

In 2013, Jas Bains was an ambitious young lawyer enjoying the high life of working at a hugely profitable City hedge fund.

Today he is unemployed and has lost most of his wealth; He spent years fighting legal battles and trying to clear his name in a massive tax fraud.

The irony was that he had reported the fraud in the first place and found himself one of the targets of a £1.4bn lawsuit.

Reflects one month later the case was concluded, We bring to an end eight years of legal wrangling and one of the highest value civil cases ever heard in the UK.

The Danish tax authority continues to lick its wounds after failing to establish that a large group of defendants, including Mr Bains, were responsible for huge losses suffered.

It all started in 2009, when a banker named Sanjay Shah founded a London-based hedge fund called Solo Capital. They also had offices in Dubai. This was one of a network of funds, banks and legal entities that would be heavily involved. so-called cum-ex trading.

This focused on transactions where shares were sold from one investor to another just before the dividend was paid (with or without the dividend) but delivered later (external dividend).

Those involved took advantage of delays in executing the sale to create confusion about who actually owned the shares at the time the dividend was paid. This tactic allowed both parties to claim a withholding tax deduction, which was paid only once when dividends were distributed.

From the outside it was complicated, but for those involved it led to increasingly larger and more complex trades that ultimately cost European taxpayers billions of dollars.

It initially became popular in Germany, then spread to other countries such as France, Belgium, Italy and Austria. Solo Capital targeted Denmark with the majority of its cum-ex transactions from 2013 onwards.

Jas Bains joined the firm as lead lawyer in 2010 but continued to run the London office. At the time, Solo was “a successful firm making pretty good money in five or six different areas.”

And making money meant enjoying the high life, where staff hosted entertainment in places like Las Vegas, Singapore and Dubai.

“What I will say about Sanjay is that he knew how to throw a party,” he says.

“One time we were at the Ku De Ta club at the Marina Bay Sands Hotel in Singapore. He had 20 bottles of vintage Dom Perignon champagne and people were spraying it on each other.

“People compare it to Wolf of Wall Street and the like.”

It didn’t end here. “Sanjay organized private concerts with Prince in Dubai. A small room for an evening with him and his friends for three or four million dollars… Private concerts with Snoop Dogg.”

But in mid-2014 Mr Bains fell out with his boss and left the company for a rival. At that time, cum-ex transactions targeting Denmark were increasing dramatically.

“I was hearing from people leaving Solo that Sanjay had made big trades in 2014, but look, I moved on, it didn’t have much to do with me,” he says.

“But then I heard that Sanjay made close to €100 million from Denmark in 2013, close to €250 million in 2014, and was looking for a billion euros in 2015.”

Alarm bells were ringing.

“I thought that couldn’t be right. It’s not that I think swaps are somehow invalid or criminal. Any country that’s just siphoned off a billion euros will be screaming bloody murder.”

Solo Capital was no longer the only company targeting Denmark. Others were getting involved too. Jas believed it was only a matter of time before the house of cards collapsed.

“I was pretty sure I wasn’t doing anything wrong, but I knew if this continued and exploded spectacularly, I would be involved,” he explains.

With this in mind, he decided to blow the whistle in 2015.

He contacted a Danish lawyer, who put him in touch with the Danish police. He spent two and a half years helping people understand how ejaculation scams work.

Danish prosecutors did not target Mr. Bains. Their attention was firmly focused on Mr. Shah. The 54-year-old man was eventually extradited from Dubai to face fraud charges and in December last year sentenced to 12 years in prison.

This was the harshest sentence ever imposed in a fraud case in Denmark. He is currently appealing.

But when the Danish tax authority, Skatteforvaltningen (Skat), launched its massive lawsuit to recover lost money, Mr. Bains, along with Mr. Shah, was one of more than 100 individual and corporate defendants initially targeted.

With the case on his plate, working as a solicitor or taking a position in the City of London was out of the question.

“It’s impossible to find a job if you’re being sued in a two-billion-dollar international tax evasion case,” he says.

But in October High Court judge Mr Justice Andrew Baker rejected Skat’s claims.

Acknowledging that “greed can be a strong motive, and I think there is serious greed here,” he nevertheless concluded that Skat had failed to prove that he was the victim of a deception.

The authority’s “controls for assessing and paying dividend tax refund claims were so weak as to be non-existent,” the official said.

This appeared to recall a statement Mr Shah had previously made in a German TV interview in 2021, which was also quoted in the ruling:

“Why do they pay for years and then after four years of payments they say, ‘Oh, we made a mistake or we were deceived,'” he said.

“If there’s a big sign on the street saying ‘please help yourself’ then I or someone else will go and help themselves.”

However, there may be objections. But for Mr Bains, the decision provided much-needed closure and he says it gave him the chance to move on.