Dubai Leaks: Property treasure chest owned by City tycoon suspected of massive tax fraud

by Margot Gibbs and Nick Mathiason

A leaked private database of property details in Dubai has revealed the enormous wealth amassed by a flamboyant British financier now under investigation as part of one of the world’s biggest tax evasion scandals.

The leaked real estate information shows that Sanjay Shah — the 47-year-old brains behind the Solo Capital hedge fund – owned six Dubai properties currently worth $56 million in the luxury Crown Fronds development in Palm Jumeirah.

Shah, from north London, is under investigation by Danish state prosecutors in relation to a suspected complex tax fraud that between 2012 and 2015 is believed to have cost the Danish state $1.8 billion. It is an allegation Shah has previously strenuously denied, according to media reports.

The data was leaked to the US non-profit C4ADS and passed to the Organized Crime and Corruption Project. It has been seen by Finance Uncovered and shows Shah’s property ownership details for 2014.

It is not known whether he still owns them.

There is no suggestion of any wrongdoing in relation to the purchase of the properties.

But the discovery may interest Danish authorities investigating what they told us was a “complex case”.

The London offices of Solo Capital were raided in 2016 by the UK’s National Crime Agency. The company closed shortly afterwards.

Shah is still the subject of ongoing Danish investigations. He has not been charged.

Morten Niels Jakobsen, State Prosecutor for Serious Economic and International Crime, told Finance Uncovered: “It is a complex case with professional and international players who seem to have used a very crafty set-up.

“Together with our foreign partners, we do our utmost to investigate whether there is a basis for criminal liability in relation to persons or companies that have been involved in this very intricate scheme. In addition, we try to recover as much money as possible on behalf of the Danish taxpayers.”

Palm Jumeirah, Dubai (Shutterstock)

Varengold Verwaltungs Aktiengesellschaft, a subsidiary of Varengold Bank in Germany, where Shah was previously the Deputy Chairman of the Supervisory Board, has also been investigated for allegedly illegal capital gains rebates in relation to cum/ex trades in 2010.

According to the bank’s 2017 Prospectus, the value of allegedly illegal capital gains tax rebates amount to, “a very high eight-digit figure”. A spokesman for the bank stated that he did not know if the investigations had concluded. She added that Shah was not part of this investigation.

International philanthropist

Despite being a suspect in an investigation into alleged enormous international tax fraud, world famous musicians flock to the Autism Rocks charity events he organises. His reputation as a philanthropist has sky rocketed.

Nile Rogers, Guns ‘N Roses and Gary Barlow are just a few of the musicians who have given concerts for Autism Rocks. Prince performed for 600 people at an intimate London venue organised in the year before he died. Shah started the charity after his young son was diagnosed with the developmental disability.

The son of a surgeon in Marylebone, London, Shah dropped out of medical school, then trained as an accountant and entered the City working for blue chip banks in London. Laid off in the aftermath of the financial crash, he started the Solo Capital hedge fund.

Solo Capital was known as a hedge fund that focused on a little known market known as “cum/ex trades”.

“Cum/ex”, also known as dividend stripping, involves the acquisition of shares in a specific company just as the dividend payout date approaches. Dividend income is taxed at carrying levels in different jurisdictions, and the trade was driven by an exploitation of these differences.

The market is said to cost European treasuries billions of euros.

According to Professor Christoph Spengel, Chair of Business Administration and Taxation at the University of Mannheim- and an expert on the cum-ex market-, traders targeted new jurisdictions after an initial crackdown in countries like Germany. after countries like Germany tackled the weaknesses traders reacted to a crackdown in Germany by targeting new jurisdictions.

He said: “After Germany closed the Cum/Ex-loophole … in 2012, market participants have exploited new opportunities in other countries such as Denmark. The loopholes in Denmark were of similar nature as in Germany: the system of withholding tax on dividends produced multiple tax vouchers; it is unbelievable”.

Many of the traders involved are based in London and some of the world’s biggest banks lending shares for a fee as dividend pay-out day looms.

Studies have shown that the volume of share trades spikes hugely when the corporate dividend season approaches.

Shah was considered one of the major players in the cum/ex trade.

Shah’s Dubai properties, meanwhile, cover an area of 70,000 square feet and five of them are located on the “exclusive” Frond N of the Palm Jumeirah.

He told Emirati newspaper The National that his family keep their $1.3m yacht moored “not far from us” on the Palm Jumeirah.

According to a map of the island development, three of Shah’s Frond N properties are adjacent “signature villas”. These are among the most expensive properties on the Palm Fronds, and come with access to a private beach.

Finance Uncovered has estimated that based on latest market information, the properties in Dubai that he is linked to could be worth around $56m today.

Other owners of property on the Palm Fronds have included David Beckham, Michael Schumacher and Mahmood Karzai, brother of the former President of Afghanistan.

The leak of information that revealed Shah’s Dubai’s Dubai real estate holdings was property and residency data compiled by assorted real estate professionals.

Shah and his spokesman has repeatedly been contacted but has not issued any response to us.

* Editing by Ted Jeory