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Freshfields Bruckhaus Deringer’s former global head of tax should be spared jail time for his alleged role in a multiyear dividend tax fraud, his lawyer told a Frankfurt court on Monday.
Ulf Johannemann, who was the “magic circle” law firm’s most senior tax lawyer until 2019, has been on trial since September over legal advice he gave to Maple Bank, a failed German subsidiary of Canada’s Maple Financial.
Maple reclaimed more than €388mn in dividend taxes it never paid between 2006 and 2009. Johannemann had issued legal opinions stating that the practice, which exploited a design flaw in the German tax code, was legal.
Public prosecutors said last week that Johannemann should face more than five years in jail because the so-called cum-ex transactions would not have taken place without his opinion.
His defence lawyer, Werner Leitner, rejected that on Monday, telling the panel of five judges at Frankfurt district court that “it is beyond dispute that Ulf Johannemann took part in the events that have been the subject of this trial. But framing him as the principal offender misses the point.”
Instead, Leitner argued for a suspended jail term of less than two years for Johannemann for allegedly aiding and abetting tax fraud. Leitner added that senior staff at Maple Bank had begun the transactions before Johannemann gave his first legal opinion and was provided with incomplete information by the bank.
The panel of judges, led by Werner Gröschel, is expected to announce its verdict early next week. Its sentence will be delivered at the same time.
In a personal statement given to the court in December, Johannemann admitted he had “totally failed” as a lawyer and had “glossed over the fact that my legal advice was used for illegal means”, stating that he was willing to “take full responsibility for my mistakes”.
Prosecutors last week rebuked Johannemann for only giving the statement at a late stage in the trial after Gröschel had indicated that a conviction was highly likely.
Leitner rejected that criticism on Monday, saying that under German law the timing of the statement did not matter. His client’s statement had been “without any ifs and buts” and came from an “outstanding legal expert”, he added.
Johannemann started at Freshfields as a junior lawyer in his thirties, Leitner told the court, saying that then senior colleagues at the firm promoted a “service culture” and were keen to “align the legal advice to the clients’ needs”. According to Leitner, “more guidance to young lawyers [by senior Freshfields partners] would have been beneficial”.
Freshfields paid €10mn to settle criminal allegations against it three years ago and is not a defendant in the trial. It also paid €50mn to Maple Bank’s administrator to settle a civil lawsuit.
The lengthy criminal investigation had put a significant burden on Johannemann, Leitner said, while the “inevitable” press coverage of the trial “significantly tarnished his reputation”, which was Johannemann’s most important asset. Johannemann lost his job at Freshfields in 2019 after he was taken into police custody.
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