How things could look for Ulf, for the next three and a half years.
The former Global Head of Tax at Freshfields has been jailed in Germany for three and a half years, after being found guilty of aiding and abetting a tax fraud.
Ulf Johannemann was Freshfields’ top tax partner, but he quit the firm in November 2019, shortly before he was arrested by Frankfurt police.
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.
Multiple major businesses have been swept up in the Cum Ex scandal, and the complicity of law firms and political institutions in what was once regarded as an acceptable wheeze led to widespread media coverage in Germany, with Freshfields' role under the spotlight.
In 2020, an activist shareholder sought unsuccessfully to punish the board of German manufacturing giant Infineon just for using Freshfields. And later that year, a German minister said that the Magic Circle firm should no longer receive German government work because of its involvement in the now-illegal tax avoidance scheme, though it continues to do a range of work for the government in the intervening period.
At the Frankfurt court, prosecutors said Johannemann wrote expert opinions for Maple Bank to give the trades a "supposedly legal appearance", according to a report in The Times. The court found that Johannemann assisted Maple Bank in fraudulent Cum Ex trading and sentenced him to three and half years in jail. It is understood that the decision could be appealed.
A spokesperson for the Magic Circle firm said: “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.”
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Comments
31
1
Great gif.
Quite rare for Krautland, the judge really slapped Johannemann, pointing out that i) any schoolkid understands that you cannot get back what you haven't paid, and ii) that he only admitted to his wrongdoings only when there wasn't any other possible way to mitigate his punishment, gaming that he had a way out.
23
1
Johannemann said in court that "he totally failed as a lawyer". A claim the judge rejected because he believed that J. knew fully well that his actions where illegal and that he issued the opinions in bad faith. Furthermore, the court admonished corporate law firms in general - telling them to stop taking client service too far by pandering to client's immoral demands
17
1
"Multiple major businesses have been swept up in the Cum Ex scandal"
Ban this sick filth.
31
1
Exceptional work on the image there.
15
2
Right. Now let's impose a 50% tax on all of those off-shoring rodents nibbling away at our tax revenue.
19
1
The sentence is way too low - the judge is perfectly correct in saying that anyone should intuitively acknowledge that you cannot get back what you've never paid in the first place.
Given how difficult and long the route to becoming a lawyer in Germany is, one would have expected that something this simple should be obvious to any lawyer after having passed their two Staatsexamen.
16
0
My wife makes me pay a […] Tax.
And I'm the one in the cage.
I love her so much.
37
1
Was he really a lone ulf, or did he have senior management approval?
15
1
11:33 sneaking home to win the most fascinating redaction of the week award in the final minutes there.
15
1
@11:48
kudos for the "lone ulf"
14
2
More prepared for a rainy day than Noah
16
1
Integrity and competence are optional extras for senior leadership positions at Freshfields?
12
1
A filthy tax avoidance scheme bearing a filthy name. RoF should be banned for its moral turpitude in bringing this filth to our screens.
17
0
Governments do get nasty and personal when it turns out their statutory drafting is shite, don’t they
17
1
There is outrage about Freshfields in Germany. Firms have systems to prevent abuse, and Cum Ex was very obvious. The taxpayer lost vast sums because of a scheme that had the support of the Freshfields' name. It is hard to believe that Global Head of Tax was solely responsible. It went on for years and had to be cleared at every stage and every level. Were other lawyers not actively involved in the mandate? Did they not have concerns? What of their obligations to the profession and society? The low settlement is also a source of anger. No explanation, apology or details of what changes have been made also.
14
2
But the reverse is entirely acceptable? When Reginald Hills submitted an opinion to the Court of Appeal with the statement dmittedly it would mean that if the Crown’s contentions were right, the taxpayer would have to pay the tax twice over, but ‘I trust’ he added ‘that the Court of Appeal will pay no attention to a sentimental argument of this sort.’ That’s absolutely fine
11
1
Management pressure to post higher and higher numbers year on year at Freshfields has only increased since Ulf's days. As is clear, this can have unintended consequences.
11
1
To get the full story: German tax authorities und politics knew the scheme for years. Ulf even held a presentation at a conference organised by tax authorities. No one cared.
Clients don’t care.
8
1
watch out Wombles. You done even worse!
10
1
What does the jailing of Freshfield's former Global Head of Tax say about Linklaters' US policy?