Operation Greed

Operation Greed concerns a group of originally sixteen persons, most of whom are Pakistanis hailing from the Gujranwala area of Punjab. This is the area from which the first wave of migrants reached Denmark from the late 1960s onwards.

These early migrants, and those who followed, could conceivably have used their head-start to become law-abiding and taxpaying citizens in Denmark. Instead, in 2022, the Lower Court fined the accused USD 124 million for tax evasion and invoice tax fraud and sentenced them to a total of 62 years in jail.

The group had helped companies in the cleaning industry, in the construction and renovation sectors, and elsewhere by making false invoices and routing black money through money exchange offices operating in central Copenhagen. Many of the clients came from Eastern European countries for whom the group acted as a sort of white-collar specialist firm offering the new entrants relevant services on the labour market. Other clients were small-scale firms owned by native Danes, who were willing to circumvent the law to minimize costs.

Most of these hundreds of people, who benefitted from the full-service company operated by the enterprising Danish-speaking Punjabis, may escape prosecution altogether.

The police had become aware of the group already in 2012, but the case only started in the Lower Court in Copenhagen in 2018. The 153 court hearings took four years. A crime reporter described it as the longest case she had ever attended.

However, it did not stop there. The case was appealed to the Eastern High Court located in a new building in Copenhagen’s harbour area. Here, in 2024, the prosecution has presented some of the 5,000 invoices already discussed in the Lower Court, in addition to many bank statements, bugged conversations, video surveillance, etc. Each of the accused has a lawyer, often a well-known senior advocate. Thus, on a typical day, upwards of ten accused persons, and ten or twelve defence lawyers (including two stand-by lawyers) attend the court.

The state pays each lawyer around USD 2,200 to attend a full day’s hearing. If the client loses, he is supposed to repay the state.

The new Eastern High Court in Copenhagen. Photo: Author

After having watched the boxing match between Mike Tyson and Jake Paul on Netflix, I cannot help thinking that the judges in a case like this should be able to stop the match after a knockout, or on technical grounds, and declare a winner and a loser. To an outsider like me, the idea of a fair trial seems to have been taken to absurd lengths in this case. It is my impression that many lawyers would agree that this specific case should have been broken up into smaller pieces that could be handled faster and at less cost.

The holistic view that the court attempted is too costly. The accused may end up being convicted, but the state may not recover much money from them. In Denmark as a whole, convicted persons owe the state USD 890 million as of 2024. This debt has almost doubled in ten years.

As the number of cases grows in scale and complexity, the liabilities of the losing parties increase.

Dividend taxes: The biggest economic fraud in Danish history

To avoid double taxation, Denmark has entered into agreements with several countries so that foreigners holding shares in Danish companies may reclaim some of the dividend taxes deducted at the source by the Danish Tax Department.

This department used to be well-staffed, but during the heydays of New Public Management, it was left with hardly any staff to process requests for tax refunds. It had become “lean.” In 2015, the tax authorities belatedly realized that they had paid out around USD 1.8 billion to people and institutions, who claimed refunds on what seemed to be false pretexts.

The kingpin in the case was Sanjay Shah, who had allegedly received around USD 1.2 billion.

Video: How an Unemployed Trader Became a $700 Million Exile

Shah had learnt the ropes in the London finance district. After being laid off, he started his own company, Solo Capital, drawing on contacts in the city. In 2009, Shah moved to Dubai, where he lived in grand style. The Danish police subsequently sought his extradition. For a period, Shah was in prison in Dubai, but in 2023, he was extradited to Denmark. This was a diplomatic feat that very few had thought possible.

The lower court in Glostrup, June 2024. Photo: Author.

In February 2024, the trial of Sanjay Shah and his close collaborator Anthony Mark Patterson started in the Lower Court in Glostrup. Almost immediately, Patterson confessed. Within a matter of days, he received his sentence: eight years in jail. This surprising development meant that the court could reduce the number of hearings from 57 to 23.

The stakes were high for both the prosecution and for Shah. If the court would find Shah not guilty, it would be a colossal defeat for the prosecution. If Shah was found guilty, he stood to receive an extremely high punishment as this was the biggest case of economic fraud in Danish history.

In a parallel move, the Danish prosecution has started interconnected cases in nine countries, principally the UK and the US. This is an extremely costly undertaking. The most expensive British lawyers - the Supersilks – hired by the Danish prosecution charge around USD 1,500 per hour. In total, the Danish state may have to shell out lawyers’ fees to the tune of USD 610 million to recover some of the USD 1.8 billion allegedly lost.

It is remarkable, I think, that a small country like Denmark invests so much in catching the big fish. Maybe the big fish will take note and avoid Denmark the next time around, but with so many smaller fish already feeding in Danish waters, I wonder what difference it will make.

While The Black Swan and Operation Greed revealed the seamy side of smaller businesses, the complex cases around Shah took place at a more elevated level. In Shah’s opinion, he simply exploited a loophole in Danish law, making it possible for him to claim tax refunds, even if he had never bought any shares on the Danish market. 

Video: Mændene der plyndrede Europa (The Men Who Robbed Europe): Produced by the Danish Broadcasting Corporation. This YouTube version refers mainly to Germany, but it also covers Denmark.

Had he, or the circle of companies he orchestrated, really owned shares corresponding to the amount of refund they claimed, they would have owned a sizable chunk of the shares of major Danish companies.

If Shah did not need to buy Danish shares, he also did not need a local network, or local members of his caste or clan, to assist him. Shah hired his staff, whether British or Indian or otherwise, mainly from his circles in London, and he made his surgical strikes on Denmark from London and Dubai.

As far as I can see, he made no attempts to hedge his bets by corrupting Danish politicians or police. Basically, no Danes benefitted from his operations.

The only person, who acted as a questionable facilitator to Shah and others, was a clerk in the Tax Department, who processed the applications for refunds. This person processed around 10,000 applications per year without finding anything suspicious. He even helped the occasional emissary from London fill out the forms correctly, and in at least one instance even took a visitor out for a beer or two!

One of his superiors apparently tried to alert the higher-ups in the Tax Department to the possibility of fraud, but nothing effectively was done.

Sanjay Shah being interviewed by TV2 in prison in November 2024: “Manipulation sounds negative, but for me it is a strength”. Sanjay Shah: Jeg er et grådigt svin was broadcast on December 12, 2024.  Photo from screen: Author.

The entire tax dividend refund staff in the whole country consisted of five persons. Thus, for years (2012-15), Shah and others could exploit the fact that Danes would generally play by the business-friendly rules, trusting others to do the same, with no questions asked. Today, there are around 130 employees in the Tax Department forming a bulwark against fraudulent dividend refunds. Control has replaced trust.

One may argue that money only exists because people put trust in the idea of money. In that sense, the financial system is a grand illusion that is collectively conjured into existence, thereby making it real and legitimate. In court, Shah professed a belief in the financial system, and the system that he had created looked almost identical to the system that the prosecutor deemed legal.

When the prosecution argued that Solo Capital operated a “circular” system with no real shares involved, Shah argued that he and his affiliates could legally claim tax refunds as “netting” took place simultaneously across various accounts in the digital realm. Shah was disappointed that the prosecution refused to see things as he did. At one point during the hearings, he presented the court with a series of overheads showing why he was entitled to receive the refunds. He gave the court a few days to digest his lesson and jokingly promised that he would examine the court at the next hearing to make sure it had properly assimilated his lesson.

Solo Capital had a large compliance section to make it evident that the company played by the rules. However, seen from the prosecution side, this set-up was part of the illusion. At the end of the hearings, Shah spent 36 minutes haranguing the prosecution in an uncharacteristically aggressive manner. Among other things, he sarcastically said that he was surprised that the prosecution had not accused him of eating cats and dogs as if the prosecution had generally made far-fetched accusations.Before the verdict was passed, the TV2 station was granted permission to interview Shah in jail. In this interview, which was broadcast after he received his sentence, Shah described himself as a “greedy bastard.” He was not proud of it and would have preferred it to be otherwise, but he found himself “wired.” 

Karsten Lauritzen, who was Minister of Taxation when the case broke in 2015, being interviewed after the verdict. Lauritzen has left politics, but he still remembers the traumatic day when, as a newly appointed minister, he was informed by a senior civil servant that the Tax Department had apparently been deceived. Photo: Author.

When asked why he did not stop after having earned one or two billion Danish crowns, he answered that making money was a sport for him, akin to playing Space Invaders. He found himself to be “socially intelligent” and capable of manipulating other people. He mentioned that other prisoners gave him a big round of applause when he made his first walk in the prison yard.

One may get an impression of the kind of conspicuous consumption that the beneficiaries of CumEx (literally With and Without) schemes could enjoy in a video that a journalist located during the hearings. The 40-miniute video celebrates the 40-year birthday of Mankesh Jain held over four days in Dubai in 2016. Jain was part of Solo Capital from 2011-15 operating e.g. from Labuan in Malaysia. In 2024, he was questioned over a video link from Dubai by the Danish court.

Video: 40th birthday celebration of Mankash Jain in Dubai

On December 12, the day when the verdict was passed, a smiling Shah entered the courtroom wearing a red Christmas hat. The court, consisting of two juridical judges and three lay judges, found him guilty on all counts and sentenced him to twelve years of jail. This was the first time that the maximum possible sentence for economic crimes was used.

Shah immediately appealed. His lawyers wanted him to be released, but the judges ruled that he should remain in prison. It may take two years before the case will come up in the Eastern High Court.