Freshfields Bruckhaus Deringer’s ex-global head of tax is “highly likely” to be found guilty of aiding and abetting tax fraud, according to a senior judge in Germany.
Presiding judge Werner Gröschel made the claim yesterday, December 4, as he gave the court’s interim view of the evidence against Ulf Johannemann.
Johannemann has been on trial since September over his advice to Maple Bank, a defunct German subsidiary of Canada’s Maple Financial.
The case concerns Maple Bank conducting share-swapping deals between 2006 and 2009 that tricked the German tax authorities into refunding more than €388 million ($419.8 million) in dividend taxes that were never paid.
Johannemann could face a multiyear jail term if found guilty by a panel of five judges.
Presiding judge Gröschel said it was “highly likely” there would be convictions on four out of five charges.
Freshfields is reported to have said: “Freshfields is not a party to these proceedings, which relate to events more than a decade ago, and will not be commenting on the outcome.”
Former Maple Bank chief Wolfgang Schuck was sentenced in a previous trial to four years and four months in prison over the transactions.
Maple Bank, which was closed down by Germany’s financial watchdog BaFin in 2016, relied on legal opinions issued by Johannemann.
These opinions made the case that so-called ‘cum-ex’ transactions were legal under Germany’s tax law.
Johannemann’s opinion was crucial when it came to the bank embarking on the trades, Maple Bank’s former head of trading reportedly confirmed.
Frankfurt prosecutors argued Johannemann deliberately gave improper advice to Maple, as it must have been evident to him that it was illegal to claim back taxes never paid to begin with, it is understood.
Johannemann has reportedly, aside from his lawyer delivering a short statement at the start of the trial, not yet addressed the allegations in court.
The statement reportedly argued that the tax question at the time had been more complex than prosecutors allege.
Freshfields was able to avoid direct prosecution over its advice to Maple Bank because of a 2021 deal.
The deal involved a voluntary payment of €10 million to the German tax authority. Freshfields also previously paid €50 million to the administrator of Maple Bank.
ITR has previously reported that ‘cum-ex’ and ‘cum-cum’ dividend tax scandals cost EU governments an estimated €150 billion in tax losses between 2000 and 2020.
There has been evidence of cum-ex tax fraud found in Belgium, Spain, Italy, the Netherlands, Denmark, Austria, Finland, Poland, Czech Republic, Norway, and Switzerland – ITR has reported.
In a recent example, British hedge fund trader Sanjay Shah was accused of running a tax scheme that defrauded the Danish Treasury of more than DKK 9 billion ($1.3 billion).
