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Freshfields Bruckhaus Deringer’s former global head of tax is “highly likely” to be found guilty of aiding and abetting tax fraud in a landmark trial, a senior judge said on Monday.
Ulf Johannemann, who was the “magic circle” law firm’s most senior tax partner until 2019, has been on trial in Frankfurt since September over his advice to Maple Bank, a defunct German subsidiary of Canada’s Maple Financial.
From 2006 to 2009, Maple Bank conducted complex share-swapping deals that tricked the German tax authorities into refunding more than €388mn in dividend taxes that were never actually paid.
Johannemann could face a multiyear jail term if found guilty by the panel of five judges in Frankfurt. In a previous trial, Maple’s former head of Germany was convicted to four years and four months in prison over the transactions.
On Monday, presiding judge Werner Gröschel gave the court’s interim view of the evidence against the former senior lawyer, saying it was “highly likely” there would be convictions on four out of five charges.
Maple Bank relied on legal opinions issued by Johannemann stating that so-called “cum-ex” transactions were legal under Germany’s tax law. The lender was closed down by Germany’s financial watchdog BaFin in 2016.
According to Maple’s former head of trading, the lawyer’s opinion was crucial for the bank embarking on the trades. “If Johannemann had said that this strategy is fraud, I would like to think I would have said that the strategy will not be executed,” he said.
Freshfields was one of several high-profile law firms that argued cum-ex deals were legal. The law firm avoided direct prosecution over its advice to Maple in a 2021 deal that involved a voluntary payment of €10mn to the German tax authority. Freshfields also paid €50mn to the administrator of Maple Bank.
Frankfurt prosecutors allege that Johannemann deliberately gave improper advice to Maple, as it was evident to him that it was illegal to claim back taxes never paid in the first place.
Johannemann has not yet addressed the allegations in court, aside from a short statement by his lawyer at the start of the trial arguing that the tax question at the time had been more complex than prosecutors allege.
Lawyers for Johannemann declined to comment on the judge’s assessment in court, arguing they needed more time to analyse the arguments. The trial continues.
A statement from Freshfields 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.”