Deutsche Bank agrees to $553.6 million settlement in US tax shelter

Germany's largest bank, Deutsche Bank AG, while admitting to criminal wrongdoing has agreed to pay $553.6 million in a bid to avoid prosecution in the US. The bank's fraudulent tax shelters generated $29 billion in ''bogus'' tax losses.

The bank signed an agreement with the US Justice Department, under which the Frankfurt-based bank would not be proceeded against for tax evasion and fraud, that allowed wealthy US citizens to avoid $5.9 billion in taxes.

The settlement covers a civil penalty of $149 million, the fees that Deutsche Bank generated from the shelters, in addition to the loss by way of taxes and penalties the Internal Revenue Service had to suffer due to the misconduct, according to the agreement.

From 1996 to 2002, ''Deutsche Bank assisted high net worth United States citizens, who, through 2005, reported approximately $29.3 billion in bogus tax benefits on their tax returns,'' according to the agreement. ''DB acknowledges that it was wrong and unlawful to have engaged in these transactions and regrets having done so.''

The settlement comes in the course of an investigation by US authorities into illegal tax shelters offered by accounting firm KPMG LLP. The US has previously framed criminal charges against former KPMG executives but the charges against the New York-based firm, were dropped in January 2007 following a payment of $456 million in fines.

Deutsche Bank also agreed to have an independent overseer appointed to ensure that its transactions would not defraud the Internal Revenue Service again.