Tax scheme star witness clams up at his own €428M trial

Kai-Uwe Steck, a star witness who spilled the beans to German prosecutors and TV viewers about the Cum-Ex scandal, turned silent at a trial into his own alleged role in a €428 million ($446 million) tax scheme.

The tax lawyer, who for years has testified in countless Cum-Ex cases where he also extensively described his own role, “for now” won’t comment at his trial, a spokeswoman for the Bonn court said on Friday. He’s free to change his mind about that in the future, she added.

The 53-year old lawyer once was a key figure in what became a Cum-Ex industry, involving some of the world’s top banks. Steck was a law partner of Hanno Berger, the attorney dubbed “Mastermind” of the strategy that exploited how dividend tax was once collected. Their firm was instrumental in selling the business model to rich private investors. For years, they made millions from their work. After German prosecutors started to investigate, Steck flipped sides and became the first person to cooperate with the authorities in the probe.

Steck, who lives in Switzerland, traveled numerous times to police headquarters in Düsseldorf to testify and later was key to recruiting traders to follow his example. Under the fake name “Benjamin Frey” and wearing disguising make-up and a wig, he also appeared in German TV documentaries about the scandal.

In an opening statement on Thursday, his defense lawyer Gerhard Strate asked the court to drop the case because of human rights violations. His client had confessed to the crimes as early as 2017 but was charged only seven years later, in violation of the right to a speedy trial. Instead, Cologne prosecutors “used” him as a witness, degrading him to a mere “object,” according to the attorney.  

A ‘pawn’

“He became a pawn in the tactical considerations of the prosecution and had to testify as a witness at each of the trials held in Bonn from the fall of 2019 until this year,” Strate said, according to a verbatim of the statement published on his website. “Now he is being thrown under the bus by the beneficiaries of his risktaking and courage.”

Strate said Cologne prosecutors promised to drop his case before trial because of his extensive collaboration but failed to put that deal into writing and now it can’t be found in their files. This bad example will stop others from cooperating, he warned.  

Steck, who for years hoped he could dodge trial, had fired his long-time defense team after he was indicted in April. He hired a new pair of attorneys, including Strate. 

Just a month earlier, Steck had testified in the case of the former head of M.M. Warburg & Co. At the time, he said Cologne prosecutors “at no time” promised him anything. His attorney Strate didn’t immediately reply to a request for comment on the March testimony.

Steck is also scheduled to testify next week in the Munich Cum-Ex trial of the two founders of Avana Invest GmbH. 

Steck’s case is: LG Bonn, 62 KLS 1/24.