A former global head of tax for Freshfields Bruckhaus Deringer has been sentenced to jail for three and a half years in connection with a tax fraud.
Ulf Johannemann was sentenced by the Frankfurt Regional Court over his involvement in the notorious “cum-ex” tax evasion scandal, which implicated a multitude of financial institutions and numerous individuals, severely impacting Germany’s fiscal integrity.
The court concluded that Johannemann played a crucial role in aiding Maple Bank, now defunct, in executing fraudulent cum-ex transactions. These practices, prevalent over a decade ago, are believed to have caused a staggering loss of approximately 10 billion euros to the German state treasury.
The presiding remarked during sentencing that Johannemann’s expressed remorse seemed to stem more from the fact of his apprehension rather than a genuine recognition of wrongdoing.
Throughout the trial, it was alleged by prosecutors that Johannemann’s advisory role for Maple Bank was instrumental in tax losses amounting to 390 million euros.
The schemes employed in this fraud involved rapid trading of company shares around dividend payout dates, deliberately obscuring ownership details to illegitimately claim multiple tax rebates on dividends.
The legal loophole that facilitated such trading between 2005 and 2012 has since been sealed, but extensive investigations continue as authorities strive to bring perpetrators to justice and recover funds from government reserves.
Neil Swift, Partner at Peters & Peters, London, underscored the significance of this case, highlighting the severe legal repercussions for those whose faulty counsel supports grave criminal activity.
Prosecutors, who had advocated for a sentence of five and a half years, accused Johannemann of authoring expert opinions for Maple Bank to lend an ostensibly lawful facade to these transactions. Another former Maple Bank executive received a two-year suspended sentence on the same day.
Freshfields Bruckhaus Deringer, headquartered in London and not a party to the case, issued no comment over the case. The firm emphasized its ongoing cooperation with authorities, within professional limits, to address and conclude these issues.
Freshfields voluntarily remitted 10 million euros to the German tax authority in 2021, circumventing prosecution related to its advisement of Maple Bank. Additionally, a settlement of 50 million euros was paid to Maple Bank’s administrators in 2019.
