Prosecutor Targets Commerzbank for Deals That Dodge German Taxes

German prosecutors have expanded an ongoing investigation of international tax-avoidance deals to cover questionable trades exposed last week by ProPublica and other media partners.

Handelsblatt, which collaborated on the report along with German public broadcaster ARD, reported that Commerzbank is the target of the new inquiry for its involvement in the trades, which cost German taxpayers $1 billion a year in forgone revenues.

The Frankfurt general prosecutor's office confirmed that it had opened a new investigation but declined to name the target. A Bloomberg report also named Commerzbank as the target.

Commerzbank declined to comment. In an interview with Germany's Bild newspaper, however, board member Michael Reuther said on Wednesday the trades were "no longer socially accepted" and that the bank will exit the business in Germany and elsewhere ahead of a government move to extinguish them.

Alexander Badle, a spokesman for the Frankfurt prosecutor's office, declined to provide further details, saying that individuals, rather than corporations, may end up becoming the focus of any of its investigations.

The center of Germany's finance industry is in Frankfurt, where state prosecutors had previously set up a special unit to pursue criminal investigations into an earlier scandal involving duplicate claims for dividend tax refunds. With the newest probe, Frankfurt now has five open investigations, the spokesman said. Other states also have begun inquiries.

The investigations all center on complex transactions engineered by banks to help international investors avoid paying taxes on dividends they receive from German companies.

In the deals, known broadly as "dividend arbitrage," foreign investors briefly lend their shares of German stocks to German banks or funds that can claim a refund of dividend taxes that are withheld. The loans bracket the stock's dividend record date; participants split the tax savings. (See how it works and the annual spikes in borrowing DAX 30 shares.)

One variety of dividend arbitrage 2013 known as "cum/ex" trades 2013 was engineered to help investors and banks reclaim more tax money than was actually withheld by the government. These deals were outlawed by Germany in 2012, and more than 100 banks are under investigation by German tax authorities, Handelsblatt has previously reported.

But confidential documents obtained by ProPublica showed that bankers have continued to book other dividend arbitrage deals, known as "cum/cum." In these trades, only one tax refund is claimed for each share receiving dividend payments. Those transactions are now also the focus of the Frankfurt prosecutor's expanded investigation, the spokesman confirmed.

ProPublica estimated the loss from these trades at $1 billion a year to the German treasury. Documents indicate that at least 20 other countries are active markets for this type of dividend arbitrage.

Commerzbank played a key role in enabling the tax-avoidance by signing on as borrower of the shares. That struck a raw nerve in Germany, where taxpayers rescued the bank from failure during the 2008 financial crisis with a $21 billion bailout.

Leaders of the opposition in Germany's Parliament invited Finance Minister Wolfgang Schäuble and Commerzbank Chairman Martin Zielke to discuss the deals today. Neither accepted the invitation, however, because leaders of the ruling party voted against the discussion and moved it to a special committee where any meetings will be held in secrecy.

Schäuble's Finance Ministry has proposed legislation to eliminate dividend arbitrage transactions, but lawmakers have yet to vote on the measure. A hearing on the proposed reform was held on Monday; another hearing is scheduled in July.

This article was written by Cezary Podkul, with reporting contributed by Arne Meyer-Fünffinger of Bayerischer Rundfunk in Berlin and staff of the Handelsblatt newspaper. Translation contributed by Jennifer Stahl.

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Yoga can improve memory, reduce Alzheimer's risk
If you are trying to improve memory or offset the risk for developing memory loss or Alzheimer's disease, regular practice of yoga and meditation could be a simple, safe and low-cost solution to improving brain fitness, new research suggests.
The team found that a three-month course of Kundalini yoga and Kirtan Kriya meditation practice helped minimise the cognitive and emotional problems that often precede Alzheimer's disease and other forms of dementia.
Kirtan Kriya, which involves chanting, hand movements and visualisation of light, has been practiced for hundreds of years in India as a way to prevent cognitive decline in older adults.
Yoga and meditation was even more effective than the memory enhancement exercises that have been considered the gold standard for managing mild cognitive impairment, the findings showed.
"Memory training was comparable to yoga with meditation in terms of improving memory, but yoga provided a broader benefit than memory training because it also helped with mood, anxiety and coping skills," said the study's senior author Helen Lavretsky, professor at University of California, Los Angeles, US.
The study was published in the Journal of Alzheimer's Disease.
The study of 25 participants, all over the age of 55, measured changes not just in behaviour but also in brain activity.
Eleven participants received one hour a week of memory enhancement training and spent 20 minutes a day performing memory exercises -- verbal and visual association and other practical strategies for improving memory, based on research-backed techniques.
The other 14 participants took a one-hour class once a week in Kundalini yoga and practiced 20 Kirtan Kriya meditation at home for 20 minutes each day. 
After 12 weeks, the researchers saw similar improvements among participants in both groups in verbal memory skills -- which come into play for remembering names and lists of words.
But those who had practiced yoga and meditation had better improvements than the other participants in visual-spatial memory skills, which come into play for recalling locations and navigating while walking or driving.
"Historically and anecdotally, yoga has been thought to be beneficial in ageing well, but this is the scientific demonstration of that benefit," lead author of the study Harris Eyre, doctoral candidate at University of Adelaide in Australia, said.
"We're converting historical wisdom into the high level of evidence required for doctors to recommend therapy to their patients," Eyre noted.
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.



Telling ripeness of mango without having to taste it
There is good news for mango lovers! You may soon be able to tell how ripe a mango is without having to taste it as researchers have identified a way to “sniff” the ripeness of the fruit.
They have identified the unique chemical signature of ripening for mangoes, a development that could lead to small hand-held electronic noses to detect the ripeness of not just mangoes but other fruits as well.
Mangoes are one of the most important and popular tropical fruits with India producing approximately 40% of the world's supply. 
"It is really important for people to be able to tell how ripe fruit is without having to taste it. This is important for fruit producers and supermarkets,” said lead researcher Paul Monks, professor at the University of Leicester in Britain.
The new research, published in the journal Metabolomics, has shown that is possible to 'sniff' the ripeness of mangoes.
"We used a novel fast-sensitive "electronic-nose" for sniffing volatile compounds from the ripening fruit. Popular supermarket species of mango were used. In particular, the work showed an increase in ester compounds -- the smell of pear drops -- was a particular marker of over ripe fruit," Monks noted.
The work has, for the first time, followed in real-time and detail the chemical signatures of ripening for mangoes, Monks said.
"There are some real potential applications of this research for making devices to be able to assess ripeness non-destructively. The information gained from the work could be used to develop small, hand-held electronic noses that could be deployed to assess fruit maturity prior to picking and thus determine the optimum point to harvest mature green mangoes,” he added.
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.



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