The processing of the tax scandal surrounding cum-ex stock deals is entering a new round with a new process. For the first time, a tax lawyer is sitting in the dock before the Frankfurt Regional Court, who, as an advisor to the Maple Bank, which later collapsed into bankruptcy, is said to have made possible the billion-dollar deception of the tax authorities with “courtesy reports” over the years.
In addition, a former Maple Bank employee has to answer to the 24th Great Economic Crimes Chamber for allegations of serious tax evasion or aiding and abetting. The chamber has separated the proceedings against another ex-Maple banker because of his state of health.
The former high-ranking tax lawyer at the major law firm Freshfields Bruckhaus Deringer was “leading in the development and subsequent concealment” of the stock transactions around the dividend record date, argues the Frankfurt Public Prosecutor’s Office in its indictment read out at the start of the trial. The now 52-year-old tried to dispel initial concerns from the circle of Maple bankers “with clearly flimsy arguments and with reference to a report that has yet to be prepared.” The lawyer and tax advisor also gave incorrect statements to the tax authorities.
Damage of at least ten billion euros from Cum Ex
In the case of cum-ex deals, which peaked between 2006 and 2011, banks and investors never had capital gains taxes refunded and cheated the state by an estimated total of at least ten billion euros. In doing so, they used a loophole in the law at the time: Around the dividend record date, shares with (cum) and without (ex) dividend rights were pushed back and forth between those involved. In the end, tax offices reimbursed unpaid taxes. In 2012 the loophole was closed. For a long time it was unclear whether cum-ex deals were also illegal. In 2021, the Federal Court of Justice decided that the transactions were to be classified as tax evasion.
According to the investigation, Maple Bank turned a big wheel at Cum Ex and caused tax damage of a good 388 million euros. The German institute with Canadian roots was closed by the financial regulator Bafin in 2016 because it was threatened with over-indebtedness due to a tax provision in connection with cum-ex transactions.
“It’s about money, a lot of money, horrendous sums of money, tax money on top of that. Three-digit million amounts are involved in this procedure alone, and individual criminal law is reaching its limits,” said the defense of the ex-Freshfields lawyer, criminal tax lawyer Werner Leitner, on Thursday. He pointed out that the allegations against his mandate go back to 2006. “We are in September 2023. There are not many criminal proceedings that start that late.”
“Highly complex back then”
“What looks so simple today and is supposedly clear to everyone was highly complex back then,” said Leitner, when his client began consulting on Cum Ex matters as a 35-year-old. “The magic of the horrendous numbers must not determine individual guilt.”
In November 2022, four former Maple bankers, including the ex-German boss, were sentenced by the Frankfurt regional court to prison sentences, some of them lasting several years. The case against the former Freshfields tax lawyer, who was in custody for almost a month at the end of 2019, and two Maple bankers was separated.
The main hearing in the current proceedings is scheduled to continue on Monday. The ex-Maple banker’s defense attorneys have announced a plea deal. According to his defense lawyers, the ex-Freshfields lawyer does not want to comment on the matter.
