Ulf Johannemann, the former global head of tax at Freshfields Bruckhaus Deringer, is likely to be found guilty of aiding and abetting tax fraud, according to a senior judge in Germany.
The judge, Werner Gröschel, shared this view while providing the court's interim assessment of the evidence against Johannemann, who has been on trial in Frankfurt since September. The trial focuses on Johannemann's advice to Maple Bank, a defunct German subsidiary of Canada's Maple Financial, involving share-swapping deals between 2006 and 2009 that misled German tax authorities into refunding over €388 million ($419.8 million) in unpaid dividend taxes. If convicted, Johannemann could face a multiyear jail term. The judge stated it was "highly likely" there would be convictions on four out of five charges.
Freshfields, Johannemann's former employer, distanced itself from the proceedings, stating, "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." In a previous trial, the former chief of Maple Bank GmbH was sentenced to four years and four months in prison over the transactions.
The tax advice provided by Johannemann, who was the most senior tax partner at Freshfields until 2019, played a crucial role in Maple Bank's share-swapping deals. The bank, closed down by Germany's financial watchdog BaFin in 2016, relied on legal opinions from Johannemann asserting the legality of so-called 'cum-ex' transactions under Germany's tax law.
Frankfurt prosecutors argued that Johannemann deliberately provided improper advice, knowing it was illegal to claim back taxes never paid. Johannemann's lawyer delivered a short statement at the trial's start, arguing that the tax question at the time was more complex than prosecutors allege. Johannemann has yet to address the allegations in court.
Freshfields managed to avoid direct prosecution over its advice to Maple Bank through a 2021 deal involving a voluntary payment of €10 million to the German tax authority. The law firm had also previously paid €50 million to the administrator of Maple Bank.
The 'cum-ex' and 'cum-cum' dividend tax scandals have been associated with an estimated €150 billion in tax losses for EU governments between 2000 and 2020. Cum-ex tax fraud has been discovered in various European countries, including Belgium, Spain, Italy, the Netherlands, Denmark, Austria, Finland, Poland, Czech Republic, Norway, and Switzerland. In a recent case, British hedge fund trader Sanjay Shah was accused of running a tax scheme defrauding the Danish Treasury of over DKK 9 billion ($1.3 billion).
By fLEXI tEAM