Deutsche Bank pair arrested in tax probe

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Deutsche Bank has confirmed its co-chief executive Juergen Fitschen and its chief finance officer Stefan Krause are under investigation as part of a tax evasion probe linked to the bank’s emissions trading business.

The bank said Fitschen and Krause are being investigated because they signed the company’s 2009 tax declaration.

The bank said the declaration was later amended in a timely way, but added that prosecutors do not agree.

The Frankfurt prosecutors’ office said 25 employees of the bank are suspected of serious tax evasion, money laundering and attempted obstruction of justice.

Prosecutors said 500 police officers swooped on Deutsche Bank AG offices and private properties in Frankfurt, Berlin and Duesseldorf yesterday.

Tax inspectors clutching backpacks and suitcases were seen leaving the bank’s twin-tower headquarters in Frankfurt. About 20 police mini buses and two coaches were parked outside.

The European Union’s spot carbon market was hit by so-called carousel trade in 2009 and 2010, in which buyers imported emissions permits in one EU country without paying value-added tax (VAT) and then sold them to each other, adding tax to the price and pocketing the difference.

The raids mark a setback for Deutsche’s efforts to polish its image. The bank is struggling with lawsuits in the United States and the UK connected to allegations of Libor manipulation and the mis-selling of subprime assets during the 2007-2009 financial crisis.

International inquiries are continuing.