Bank lawyer says he should have spoken up over Cum-Ex tax scandal

A former Freshfields Bruckhaus Deringer lawyer who advised top investment banks on how to navigate the “Cum-Ex” trading strategy at the center of Europe’s biggest tax scandal admitted that he turned a blind eye to clients’ activities, saying he “totally failed” in his role as an attorney.

In a dramatic confession, Ulf Johannemann, the firm’s ex-head of global tax, on Monday told the judges at his Frankfurt trial he wrongfully cleared Cum-Ex deals at Maple Bank GmbH. He said his approach was to make possible whatever clients wanted by pushing aside his own view of the law and not asking any questions.

“In reality, I didn’t want to know the whole truth,” Johannemann said. “I shouldn’t have remained silent for so long, but should have been much more critical. That also belongs to the responsibilities of a lawyer.”

His admission came two weeks after he was told by judges to expect a conviction over advice he gave to now-defunct lender Maple Bank for transactions that allegedly cost Germany €374 million ($408 million). The lawyer is on trial over his legal work on transactions that took place from 2006 to 2009 to obtain illegal tax refunds.

For the London ranks of global investment banks, Freshfields was the go-to for advice on Cum-Ex — a ploy that gamed the system to pass vast sums from Germany’s treasury into the hands of scores of investors and banks. The list of clients ranged from JPMorgan, Merrill Lynch, Barclays Plc, Lehman Brothers and Fortis to Macquarie Group Ltd. and ICAP Plc. Without clearance from a top-notch law firm, none of them would have done the controversial trades.