Deutsche Bank Israel Managing Director Arrested In Tax Probe

The managing director of Deutsche Bank’s operation in Israel has been arrested on Tuesday as part of a probe of suspected tax offences.

Israel’s Tax Authority said that Boaz Schwartz was arrested on suspicion of tax offences, including the misreporting of transactions worth more than Shk550m ($147m) and released on bail without being charged.

The authority said the probe focused on Deutsche Bank’s Israeli unit’s reporting of transactions as foreign business, which are entitled to a zero value added tax rate, for business that was actually done in Israel.

Israeli authorities said that the arrest came after a search of Deutsche Bank’s company offices and the seizure of documents and computers. Mr Schwartz and other executives were questioned as part of the investigation, they said.

A Jerusalem court ordered Mr Schwartz to post bail of Shk1m and deposit Shk450,000 at the court. The executive’s passport was not confiscated, and he is free to travel abroad with 48 hours’ notice.

Mr Schwartz could not be reached for comment.

Israeli police said they had no comment on the executive’s arrest, and Deutsche Bank said it was co-operating with Israeli authorities on the case.

“Deutsche Bank in Israel and abroad acts in accordance with the law and strict legal advice,” the company said. “We are co-operating with the tax authorities on this inquiry and will continue to do so.”

Israeli authorities have been zealous about pursuing suspected tax evasion, and their high-profile targets include the model Bar Refaeli and her mother Tzipi Refaeli who have been questioned by tax authorities. Both have denied wrongdoing and neither have been charged with any crime.

The arrest is the latest headache for Deutsche Bank, which has spent much of the past two years trying to resolve its big outstanding legal cases.

In January, it reached a $7.2bn deal with the US Department of Justice to settle allegations that it mis-sold mortgage-backed securities in the run-up to the 2007 global financial crisis.

And last week, it agreed to pay $630m to settle two US and UK investigations into alleged mirror trades used to launder $10bn out of Russia.

Deutsche Bank apologised for past mistakes in a series of advertisements in German newspapers over the weekend.

Separately on Tuesday, Deutsche Oppenheim, a part of Deutsche Bank’s wealth management business, said that the German lender’s former co-chief executive, Jürgen Fitschen, had joined its advisory board.

Mr Fitschen stepped down from the helm of Deutsche Bank last year, but continued to help the bank in Asia and Germany.

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