Wall Street Bank Raider Quits Job as Top Tax Scandal Prosecutor

(Bloomberg) -- The German prosecutor who led tax raids on some of Wall Street’s biggest banks quit her role probing the €10 billion ($10.7 billion) Cum-Ex tax scandal — citing a lack of political backing for the fight against financial crimes.

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Anne Brorhilker told public broadcaster WDR that Germany makes it too easy for the most powerful players to escape punishment.

“This is often perpetrators with a lot of money and good contacts, and they come up against a weak law enforcement system,” Brorhilker said. “Defendants can often simply buy their way out of prosecution. We execute the small fry and let the big fish go.”

Brorhilker has become the face of efforts to bring to justice those responsible for the tax scandal. Her team has targeted several international investment banks including Merrill Lynch, Morgan Stanley and Barclays Plc. However, she was also criticized from within and last year had to struggle against her own state justice minister. While she won, that fight didn’t leave her unscathed.

“Brorhilker’s decision to leave came as a complete surprise to us,“ the Cologne Prosecutors’ Office said in a statement. “We deeply regret her departure, as she is not only a prosecutor with heart and soul, but has been key in the Cum-Ex investigations in Germany.”

Cum-Ex crimes will continue to be the focus of the agency’s work, the Cologne Prosecutors Office said. Brorhilker led the Cologne Cum-Ex unit. She will leave the office at the end of May.

Since an individual public prosecutor can do little to change the system, Brorhilker said she decided to join the leadership of Finanzwende, a political action group monitoring the financial industry. She likened her move to a doctor who decides to stop treating patients and instead do research into how to treat the root of the problem.

The North Rhine-Westphalia Justice Ministry, which oversees the Cologne office, said in a statement that Brorhilker rendered outstanding services to the investigation of Cum-Ex, and it’s regrettable that she wishes to leave.

Efforts to probe these crimes and staff have recently been beefed up, also due to Brorhilker’s input, it said.

Cum-Ex was a controversial tax-driven trading strategy in use for more than a decade. The tactic, which originated with traders in London, exploited the way dividend tax was collected so that multiple investors could claim refunds on a tax that was only paid once.

Brorhilker will refocus her successful fight against financial crimes, said Gerhard Schick, the founder of Finanzwende. Instead of investigating individual offenders, she will now use her knowledge and experience in the political campaign for justice, he added.

“The big difference to others who leave public service: Brorhilker doesn’t turn her knowledge into money by joining a law firm or a consultancy and thus our adversaries,” said Schick. “Anne Brorhilker is concerned with the cause, the rule of law and justice.”

(Updates with Cologne Prosecutors’ Office statement in fifth paragraph.)

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