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​Danish pension funds turn backs on Macquarie amid tax scandal [updated]

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Three of Denmark’s largest pension funds have said they might not do business again with Australian investment bank Macquarie after it was named on a list of entities caught up in an international tax scandal.

ATP, PFA and PKA made statements to this effect in the last few days, against the background of a major investment deal they struck earlier this year to buy former national telecoms company TDC in a consortium alongside Macquarie Infrastructure and Real Assets.

Danish public broadcaster DR has named a long list of foreign banks and other investment firms as allegedly being involved in a withholding tax fraud.

According to an investigation by a collaboration of media outlets, those perpetrating the so-called Cum-Ex fraud traded shares rapidly to allow multiple claims to claw back dividend taxes – even though the tax had not been paid.

DR reported that the scam had left a DKK12.7bn (€1.7bn) gap in Denmark’s public finances.

PKA said in a statement: “The information that DR has brought forward is new to us in PKA. We take it very seriously and it will be included in our overall assessment of both Macquarie and other involved banks as future investment partners.”

A spokeswoman for Macquarie said: “We are engaging with our partners and investors on the facts regarding Macquarie’s historical involvement in equity/dividend trading.

“We believe that the media coverage in Denmark has mischaracterised the situation by using materials taken out of context or relating to transactions that did not occur.

“To be clear, Macquarie did not trade Danish equities, did not make withholding tax claims in Denmark, did not lend to funds trading Danish shares and has no knowledge of funds making any withholding tax claims in Denmark.

“We acknowledge that in certain jurisdictions, tax rules have changed and where that is the case we have worked with governments to ensure there has been no lasting impact to their fiscal position.”

PKA said any future cooperation with Macquarie would be on the condition that the bank fully complied with its declarations that this was no longer part of their business, would not be in future and that it co-operated fully with the authorities over the case.

This attitude also applied to other investment banks listed by the investigation.

According to the DR report, other banks involved include Barclays, Merrill Lynch, JP Morgan, Morgan Stanley, BNP Paribas, Banco Santander and Deutsche Bank.

Speaking to DR on behalf of all three pension funds in the TDC deal, ATP chief executive Christian Hyldahl said: “With regard to new investments with Macquarie, there are a number of questions we need to answer.

“It’s difficult to imagine that we can be part of new collaborations with them in the short run.”

He described the scandal as “deeply shocking” if, as appeared to be the case, many major financial institutions had in bad faith systematically emptied European state coffers.

PFA declared itself to have the same attitude to the situation as ATP and PKA.

“We are completely on the same line as ATP and PKA in this case so we have nothing further to add,” a spokesman for the DKK582bn pension provider told IPE.

A spokesman for ATP said: “ATP has together with PFA and PKA initiated a serious dialogue with Macquarie and we have nothing further to add to the comments already given to the Danish media.”

The chief executive of Danish pension fund PenSam recently condemned the alleged wide-scale fraud, and said his pension fund would focus even more on accountability and screening of investments and partners as a result.

This article was updated on 25 October 2018 to add a statement from Macquarie and amend the description of the Cum-Ex investigation.

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