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Ulf Johannemann, the once Global Head of Tax at the Biglaw firm Freshfields, has been sentenced to three and a half years in jail by a German court.
At issue was tax advice Johannemann provided to his client Maple Bank. He devised a mechanism for the company to claim a tax credit they hadn’t paid. According to prosecutors, Johannemann’s advice gave the scheme a “supposedly legal appearance.”
Roll on Friday has details on how it all worked:
The ex-tax chief was in court in connection with expert opinions he gave from 2006-09 endorsing the so-called ‘Cum Ex’ trading scheme to a client, Maple Bank (now-defunct). The tax arrangement involved treating a share as having two owners, so that both parties could receive a refund of capital gains tax which only one of them had actually paid.
The Cum Ex tax-dodge, signed off by Johannemann, enabled Maple Bank to reclaim EUR383 million in tax which it never paid. When German authorities decided the scheme was unlawful they closed down the German arm of Maple bank. The bank’s administrators sued the firm, and Freshfields (or its insurers) paid out EUR50 million to settle the claim. Freshfields also paid a voluntary EUR10 million to the German tax authority in 2021, in a deal to avoid any prosecution over its advice to Maple Bank.
The firm has attempt to distance themselves from their former partner — Johannemann left the firm in 2019, shortly before his arrest. A firm spokesperson made the following statement:
“Freshfields was not a party to these proceedings and will not be commenting on the outcome. We continue to work with the authorities, within the boundaries of our professional obligations, in an effort to learn from and draw a line under these matters.”
Johannemann can appeal the sentence.
Kathryn Rubino is a Senior Editor at Above the Law, host of The Jabot podcast, and co-host of Thinking Like A Lawyer. AtL tipsters are the best, so please connect with her. Feel free to email her with any tips, questions, or comments and follow her on Twitter @Kathryn1 or Mastodon @Kathryn1@mastodon.social.
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