Who Let The Dogs Out – Why Denmark’s Tax Fraud Story Is Fishy and Sanjay Shah is a Scapegoat?

racism a factor in sanjay shah case

Denmark, the small Scandinavian country known for its happy people and one of the best welfare systems in the world was in the news in 2015 when the Danish tax authority – SKAT – alleged that it has lost almost 12 billion Krone in tax fraud. There is no doubt that Denmark indeed lost money. However, the country’s claims that the main suspect is an individual named Sanjay Shah who was the CEO of Solo Capital and his involvement in single handedly looting the system of 7 billion Krone sounds like a part from a cheesy script for a 1990s Steven Seagal movie.

In Denmark, You Can Add or Subtract Billions to Cases – If the Story Is Good, Numbers Don’t Matter

In fact, the script is not that good either. However, cheesy scripts are tolerated in Denmark it seems. Keep your logic away and everything makes sense. Start applying logic and things start falling apart. Before going any further, let’s be very clear that we don’t intend any disrespect to Denmark or its citizens. These are our independent observations. We can’t help but notice the elephant in the room that no one want to talk about.

Billion Dollar Tax Fraud – What Denmark Says

The Danish version of the story changed over time. It is understandable that in a case of this size, you can’t give exact figures. However, a decent level of accuracy is required because the Danish tax system is functional in the way we know it for several decades. And we are not talking about a third world country like Somalia were infrastructure is inadequate and the system is too corrupt, or a country like India which accommodates 15% of the world population, where the sheer size of the system and corruption can get in your way.

We are talking about the No. 1 country in the world. The country that has the best welfare system and practically no corruption. If any version of the Danish story turns out to be true, the corruption claims need to be rechecked. The only feasible conclusion in this case is suggesting that Denmark’s system is too incompetent to detect and deter any corruption.

sanjay shah is framed in Danish tax case

Danish authorities first told that over 200,000 fake companies are used and 600 Danes are involved. 2000 bills, each above 3 million Krone went through the Ministry of Finance before the final approval. But in the end, Sanjay Shah is the only accused. Surprise!!
Image (c) Shutter Stock

Keep these points in mind before reading the stories.

  1. In Denmark, a business need not pay tax if it is paying the tax in its home country.
  2. Any government will have a system in place to foresee its annual revenue and losses. For example, countries will have an estimate on expected GDP, debt, tax on personal income, revenue through VAT, tax on businesses and expenses like tax exempts, purchase of goods and various imports, expenses on national relief efforts etc.
  3. In this computerized world, it is very easy to manage accurate figures. In fact many external sources like IMF – International Monetary Fund – collect and compile such data to assess a country’s credit worthiness and other factors.
  4. If the estimates are staggeringly wrong, the system will CEASE TO FUNCTION. No exceptions! What happens if your boss come and tell you that you are going to get only half a month’s salary? What if your employer’s bank inform them that the bank can only release 70% of the funds for payouts? As you can see, the system will be in deep trouble. You can argue it is different for countries, but I am sure it is not different enough to ignore a fraud for 10 YEARS.

Story V 0.1 

  • Danish authorities says it lost almost  7 billion Krone in a tax fraud.
  • They claim the fraud was committed between 2012 and 2015.

Story V 1.0

  • Jesper Rønnow Simonsen, the top official of SKAT is fired.
  • The tax fraud claim raises from 7 billion to 12.3 billion Krone.
  • No reasons were given why the estimate was only half in the first press meet or how the government reached the new figure.

Updates 

  • It was shocking for the Danish public to hear that the tax fraud was brought to light by British banks and a lawyer.
  • Yes, you guessed it right: SKAT, the authority that has a single job of finding tax related crimes failed to notice something a random bank in London noticed.
Denmark apple tax fraud tim cook truth

Image Courtesy – Shutter Stock

What We Think – Why Is Solo Capital Being Targeted?

Danish newspapers, well mostly tabloids are excited to portray Sanjay Shah in bad light. Fair enough, it’s expected from the media to report allegations against individuals but these allegations came to light in April 2015. It’s one and a half years and the only development in the story is that SKAT is increasingly silent about Solo Capital’s involvement in any misdeeds. It is becoming clear that SKAT has nothing much to go on, but the media is still interested in painting the picture of an evil mastermind who is hiding at large. Honestly, some of these allegations are hilarious.

For Instance, Some Wonder Why Solo Capital Is Not Cooperating With An Investigation. 

Sources close to Funds Hero said that Solo Capital is cooperating with investigation from the beginning. Here is a direct quote for Sanjay on this matter:

“With pleasure Mr. Shah accepts any possibility to defend himself, wherever in the world, if charges are raised or court cases initiated,”

According to Sanjay Shah, he is being investigated by authorities in Denmark, Germany and Great Britain, but none of the countries have raised charges for anything, and the Danish authorities have not even attempted to question Shah or asked for information. Morten Jakobsen, head of Danish Serious Fraud Office (Bagmandspolitiet) who is investigating the case in Denmark has no comments.

The investigation officer has no comments because he is dumbfounded with the case in his hands. Anyone will; to be honest.

Demystifying ‘Sanjay Shah Don’t Want To Come to Denmark’

It is not very popular, but there are some who argue that Sanjay Shah is not visiting Denmark to prove his innocence. Remember the key points I shared with you in the beginning? If a country has a system in place, it will clearly get to know about its revenues and expenses for the next fiscal. These numbers are by no means quite accurate, but these numbers are good enough to show where the country stands. Despite this SKAT failed to see a scam going on for 10 years. They failed to come up with the correct number. In a very recent report from Bloomberg, the funds are as high as 50 billion Krone. In a shocking claim by the Danish government, the money is lost in a combination of fraud and mismanagement of funds.

It is hard to digest that a country with only 6 million population can lose billions in mismanagement, yet nobody seems to notice. I agree that it says nothing about the country or its people, but it says a lot about the system. When the system is such a colossal failure, who would want to face a trial by such a system?

Sanjay Shah – An Easy Target

Here is a report that reveals – report – a shocking conspiracy involving Maersk, the shipping company giant. Unlike the vague claims raised by SKAT, the report clearly shows how MAERSK’s shares are used to avoid paying several million in taxes. However, there is not a lot of controversy in Denmark. There are many reasons for this. One is that Maersk is the largest shipping company in the world and it is the largest company in Denmark. It will be unthinkable for Denmark to provoke Maersk.

Denmark is a dying economy and its GDP is a joke. Worst thing about Denmark is its scary levels of debt. A Bloomberg report says:

Denmark's per capita debt is very high and this could also result in framing Sanjay Shah

Image Courtesy – ShutterStock

“Danish households owe their creditors 321 percent of disposable incomes, according to the Organization for Economic Cooperation and Development. That’s the highest ratio in the world and a level that’s prompted warnings from both the OECD and the International Monetary Fund to rein in borrowing. Danish authorities have argued that households aren’t at risk thanks to high pension and household equity levels.”

 It don’t come as a surprise to anyone that they don’t want to hurt their only money cow, Maersk. Simply put, Maersk is too powerful and has enough firepower to last many wars. Danish finance minister says it is willing to spend 9million Krone on buying leaked Panama papers with a list of 600 Danes that evaded the Danish tax system. The credibility of Denmark’s tax investigation system is not as good as a bunch of hackers in their basement. At least this is what the finance minister is saying.

Source

 200,000 Companies and 600 individuals

There are 200,000 companies and 600 individuals on the leaked data that Denmark is planning to buy for 6million Krone. However, some tabloids are only curious to target Sanjay Shah who already made it clear that he will cooperate with the investigators at every stage. Time is passing by but there has been no new developments. SKAT, the very authority that should make a statement is reluctant to point a finger at him.

One can argue that SKAT is building a strong case. But it has been already one and a half years. That is 545 days. SKAT still don’t have much to say. The government fired a few top officials from the SKAT because it thinks the officials were irresponsible. Let’s look at some numbers one more time:

  1. The average amount of reclaims filed increased by 1,700% from DKK 37,113 in 2010 to DKK 681,007 in 2015
  2. The DTA’s initial report filed on suspected fraud covers 2,120 repayments at a total amount of DKK 6.1bn, corresponding to an average repayment of DKK 3m in respect of each reclaim.
  3. Despite receiving and approving monthly accounts, the Danish Ministry of Taxation did not find any reason to investigate the increase in dividend withholding tax repayments.

The mess created by Denmark’s system is beyond comprehension. They had a 1700% increase in tax claims in just 5 years, but nobody seem to notice. Is the system too foolish or did they think it is going to the ‘right hands’? Paying DKK 3million in each claim. That too a staggering 2,000 times. Worse, it all went through the office of Danish Ministry of Taxation. The system now claims it is innocent. It didn’t know a thing. It was fooled. If we are talking about a country with a lot of money at its disposal, it is understandable that they failed to take note of such things. Sultan of Brunei for instance can overlook a couple of billions in an international trip yet forget about it.

But Denmark has the largest per capita debt in the world and IMF warned the country about it. The Guardian article also reveals the excessive patriotism prevalent in Denmark. All this only draws one conclusion. Sanjay Shah makes an easy target for anyone who wants to distract investigation.

Here is why Sanjay Shah and Solo Capital is Unjustifiably Being Targeted

There are many corrupt officials in the Danish system and its industries are also corrupt. The Utopia of a peace-loving, corruption-free nation is far from truth. For Instance, Denmark’s former Prime Minister was involved in a tax scandal and millions were spent on an investigation. Some people are beyond Denmark’s investigation powers. Maersk is a good example. Danish authorities will not admit it but this is the bitter truth. Moreover, racist prejudices are rampant in Denmark.

Michael Booth’s article in Guardian says:

“Danish are spectacularly unsophisticated in their race relations (cartoon depictions of black people with big lips and bones through their noses are not uncommon in the national press).”

racism a factor in sanjay shah case

Image Courtesy – Shutter Stock

Sanjay Shah is a successful person. His philanthropist activities are grabbing worldwide attention. Late music artist Prince performed in only one charity event: it was for his charitable organization Autism Rocks. It is easy to vilify a successful figure. People buy that easily. If Sanjay Shah is a bad trader, we can think otherwise. But this article in Sunday Times says otherwise. However, Sanjay does have a weak point. Although born in London, his routes are in the Indian subcontinent. He still looks very Indian. He also got an Indian name. Knowingly or unknowingly, Danish media like to replay its jokes about colored people. This brings down respect to people of other ethnicity. They overlook whether these people receive a fair treatment or not. I don’t see any other reason for the Danish media to get on Sanjay’s back without any concrete evidence. Because, as Michael Booth says,

“And if you think a move across the North Sea would help you escape the pedophiles, racists, crooks and tax-dodging corporations one reads about in the British media on a daily basis, I’m afraid I must disabuse you of that too. Got plenty of them.”

So it’s hard for me to believe that the Danes have nothing else to talk about and their last problem is Sanjay Shah. Moreover, it looks more like a mix of inside job and incompetency of gigantic proportions.

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  • ShadowsofLight

    Being a philanthropist is not an argument. Nor is having dark skin. Nor is a general level of private debt. You don’t have arguments.

    Yes, our tax system is overly-bureaucratic and convoluted. But he abused a loophole and is still a criminal at the end of the day. Lock him the hell up.

    • Kaspar Nybo Andersen

      I hear ya. Shanjay Shah is a criminal and he needs to pay for his crimes to the fullest extend of the law.