Ex-Freshfields Lawyer Can Be Released From Jail in Tax Scandal Probe

(Bloomberg) --

The former partner at Freshfields Bruckhaus Deringer LLP who was arrested as part of a German probe into controversial Cum-Ex deals can been released from pre-trial detention if he posts bail of 4 million euros ($4.5 million).

A court ruled that the lawyer could be released if he also surrenders his passport, a spokesman for Frankfurt’s General Prosecutor’s Office said without identifying him or the law firm. This will most likely be on Thursday, he added.

People familiar with the probe have previously identified the lawyer as Ulf Johannemann, former head of global tax at Freshfields, who left the firm a few weeks ago.

Werner Leitner, Johannemann’s defense attorney, didn’t immediately reply to an email seeking comment. Leitner has called the arrest “totally unfounded.” The detention was the first in the country’s Cum-Ex investigation.

Last week, two former Maple Financial Group Inc. bankers were arrested as part of the same case while prosecutors filed charges against them, other bankers and Johannemann, a person familiar with the issue has said.

The Cum-Ex scandal has roiled several financial institutions as prosecutors allege bankers helped investors reap billions of euros in improper tax refunds from a loophole on dividend payments. In Bonn, two former bankers are on trial for helping to organize deals that led to more than 400 million euros in lost taxes. Investment banks relied on the clearance of attorneys to participate in Cum-Ex, and now the banks are using the lawyers’ legal advice as a central defense argument.

Johannemann and another lawyer at Freshfields have been under investigation for at least a year. The probe concerns the firm’s work for the German unit of Canadian bank Maple Financial Group Inc., according to the people. The unit was later closed by German financial regulator Bafin as a result of the Cum-Ex investigation. Johannemann is among the group of people whom Frankfurt prosecutors are going to charge within weeks, the people have said.

A Freshfields spokesman declined to comment.

Freshfields advised many banks and other participants in the financial markets on Cum-Ex transactions. The law firm’s role was mentioned on several occasions in the Bonn trial. Martin Shields, one of the two accused, cited opinions authorized by Johannemann that certified the transactions were legal.

Two other attorneys are being investigated in Frankfurt in two separate probes. One of the lawyers is still working at Freshfields, the other has retired. The Frankfurt offices of the law firm were raided three times over the last two years. Freshfields previously expressed confidence that the advice it provided “was legally sound.”

©2019 Bloomberg L.P.

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