Some years ago, a London trader named Sanjay Shah stumbled upon a handy little loophole called Cum-Ex. This cute little maneuver allowed banks such as Shah’s to agree to sell a stock prior to a dividend payout but deliver it after, allowing both sides to claim a tax rebate in spite of it only having been paid once. And when Shah fell victim to Rabobank’s financial-crisis-era layoffs, he took that useful bit of knowledge to his hedge fund, Solo Capital Partners, which used it to wildly successful ends that ultimately cost national tax authorities billions upon billions.
Shah does not feel bad about it, because he did not write the law.
“Prove that any law was broken,” Shah said. “Prove that there was fraud. The legal system allowed it….” To the authorities trying to extract him from his exile, he has a piece of advice: know your tax code.
“It’s very nice to put somebody’s face on a front page of a newspaper and say ‘Look at this guy living in Dubai, sitting on the beach every day sipping a Pina Colada while you’re broke and you don’t have a job’,” he said. “I would say look at your legal system.”
He also doesn’t feel bad about it because it’s not his job to feel things.
“Bankers don’t have morals,” the 50-year-old said on a video call. “Hedge-fund managers, and so on, they don’t have morals….”
Unfortunately for Shah, they—or, rather, he—also don’t have their houses, $550 million of their assets or the ability to leave their gilded cages in Dubai, where they are forced to subsist on a mere $250,000 per year in a $4.5 million home.
Shah appeared at ease and upbeat while outlining how he’d be arrested if he tried to fly home to London.
Shah, 50, said he attempted to settle a Danish criminal investigation into his trading operations in 2018 by offering a payment of 250 million euros ($293.3 million) to the country’s prosecutors…. “The response was: ‘admit all allegations, pay all of the money you received, tell us how the trading was done,’” Shah, who has been based in Dubai since 2009, said via email. “‘And, in return, we will give you a four-day trial in Denmark rather than four months and a really nice cell for your four-year sentence,”’ he said. “I obviously rejected that.”
Still, for all of his good cheer, Shah admits that Dubai’s glittery charms are wearing off.
”It’s been quite nice spending time with the kids and family but now where I am, I’m just getting bored and fed up,” Shah said. “It’s been five years. I don’t know how long it will take for matters to conclude.”