Context
In August 2018, Investec Bank plc (Investec) was notified by the Office of the Public Prosecutor in Cologne (CPO), Germany, that it and certain of its current and former employees may be involved in possible charges relating to historical involvement in German dividend tax arbitrage transactions (known as Cum-Ex transactions); specifically the aspect relating to alleged multiple reclaims of tax withheld on a single dividend payment (“double dipping”). This investigation was focused on certain funding transactions concluded by Investec’s Irish branch.
In addition, Investec received certain enquiries in respect of client tax reclaims for the periods 2010-2011 relating to the historical German dividend arbitrage transactions from the German Federal Tax Office (FTO) in Bonn. The FTO has provided more information in relation to their claims and Investec has sought further information and clarification.
Investec understands that more than 1,000 people across 100 institutions worldwide are being investigated on this matter.
To date neither Investec nor any of its staff, past or present, have been charged, indicted, or subpoenaed in relation to this matter.
In relation to potential civil claims; whilst Investec is not a claimant nor a defendant to any civil claims in respect of cum-ex transactions, Investec has received third party notices in relation to two civil proceedings in Germany and may elect to join the proceedings as a third party participant. Investec has itself served third party notices on various participants to these historic transactions in order to preserve the statute of limitations on any potential future claims that Investec may seek to bring against those parties, should Investec incur any liability in the future. Investec has also entered into standstill agreements with some third parties in order to suspend the limitation period in respect of the potential civil claims. While Investec is not a claimant nor a defendant to any civil claims at this stage, it cannot rule out the possibility of civil claims by or against Investec in future in relation to the relevant transactions.
Investec’s response
On being informed in August 2018 of the investigation by the CPO, the Investec board immediately formed a sub-committee to oversee all aspects of this matter. The board sub-committee meets regularly to monitor any developments around the matter. It reports to the relevant boards and, where appropriate, makes recommendations to board committees.
The Investec board is satisfied that all its disclosures, including within the audited financial statements, have been timeous and are appropriate and accurate.
Investec’s governance and risk management structures and processes are regularly reviewed in line with banking practices and its regulatory obligations.
Communications
Our regulators in both the UK, Ireland and SA have been kept informed, in a timely manner, of any developments in this matter.
This matter was first disclosed in our 2019 Annual Report and has been reported in each Annual Report since then, in accordance with relevant accounting standards and signed off by independent auditors. The disclosure is also included in any other public documents where required, such as debt raising prospectuses.
Investec’s position
Investec continues to engage constructively with the German authorities whose investigations remain ongoing. Given that Investec is dealing with ongoing investigations, Investec cannot comment further on the detail of the allegations surrounding this matter. Once the external investigations and its internal processes have been concluded, Investec will communicate with relevant parties as appropriate.
Investec has always believed that the alleged “double dipping” is wrong, and it had and has a clearly defined policy against aiding and facilitating this practice. This practice was and is inconsistent with its stated values that include cast-iron integrity. Appropriate action, if any is required, will be taken against those who may be found to have acted illegally or unethically when this matter is finally concluded.