CL-2018-000297, CL-2018-000404, CL-2018-000590, - [2025] EWHC 2364 (Comm)

It is axiomatic that there cannot be securities overdrafts, i.e. negative ‘holdings’ of shares. A “positive account holding” with a custodian backed by the custodian only by a short seller’s “negative account holding”, whatever else it might constitute, is not a shareholding; and I am confident Mr Shah knows that full well, and knew it at the time.

In any event, Mr Shah also knew throughout that what the USPFs received, and later the LabCos, that was the subject matter of the CANs issued to them, was (in the terminology I have been using) a dividend compensation payment, and not a payment in any sense passed up a custody chain so that its ultimate indirect source had been the Danish company.

Mr Shah advanced a positive case in defence to SKAT’s claims that on reasonable grounds, including his understanding of market practice, and in the light of the legal advice received by Solo from Hannes Snellman, he honestly believed that the Solo Model USPFs and LabCos became entitled to be paid a tax refund by SKAT on the basis of their Solo Model transactions. I reject that case, as will be apparent, below, where I deal with SKAT’s case that Mr Shah had no honest belief in the truth of the tax ownership and dividend entitlement representations.

He also sought originally to deny, and still at trial to water down, the nature and extent of the direction by Solo’s GSS team of all Solo Model trading. This was a lasting hangover, in my judgment, of a strong instinct he had at the time that pervaded everything he did or said about the GSS business, that the tax refund claims it generated would be challenged if SKAT realised they were the product of artificial structured trading, coordinated as to every term of every transaction by Solo and having no purpose except for the generation of those claims. That mindset, I think, has become too ingrained for Mr Shah to be able to jettison it in favour of honesty about how the GSS business operated when, in the event, the tax refund claims were not impugned on that basis (or at all events they were not impugned on that basis in these proceedings, in which it was not relevant to consider, and so I have not attempted to consider, how any case against the validity of the claims may have been articulated in any of the other proceedings around the world). It explains, in my judgment, the dishonesty to which Mr Shah was privy, indeed that he mostly directed, concerning the Solo Model trading, such as:

Mr Shah also showed a willingness to conduct business dishonestly by the elaborate arrangements by which he acquired in clandestine fashion effective control of Varengold Bank and Dero Bank.

All of that, together with my assessment of him when he gave evidence, left me reluctant to trust anything that Mr Shah said for himself about the facts. At the same time, however, in my judgment it is all explicable on grounds other than that he thought that representations were being made to SKAT so as to mislead it into paying claims such as, or anything like, were alleged by SKAT as the basis for all of the claims it pursued. Furthermore, it was not relied on by SKAT in closing as evidence that Mr Shah realised that any of the representations alleged by SKAT was being made (see paragraph 90 below).

With those general findings in mind, I set out below what I would have made of SKAT’s case against Mr Shah if it had established that it was misled into accepting and paying Solo Model tax refund claims, as it alleged. I do so following something like the order in which SKAT addressed matters in its Sanjay Shah Annex for closing, i.e. the written closing submission that focused on the case, on the facts and in law, put against Mr Shah.