Biglaw

Biglaw Firm Raided By Authorities For Second Time In Connection With Financial Scandal

The practice is estimated to have cost taxpayers there €12 billion ($13.7 billion).

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There’s a tax scandal afoot in Germany, and the Frankfort office of Biglaw giant Freshfields Bruckhaus Deringer seems to be caught up in the mess. Freshfields is being looked at for their tax work for the Canadian Maple Bank, which operated a German subsidiary until 2016 when it declared insolvency. According to reporting by German paper Handelsblatt Global, prosecutors are targeting two partners and a tax specialist with their investigation, though they declined to name the individuals.

The issue surrounds the accounting of “cum-ex” transactions, also known as dividend stripping, which German authorities believe were used by multiple banks to claim more than one refund on taxes that were only paid once. German law was amended in 2012 to end the practice, but it is estimated to have cost taxpayers there €12 billion ($13.7 billion).

Last week, the German authorities conducted their second raid on the Biglaw firm in connection with the dividend-stripping investigation. The first was done in October of 2017, and the second raid could spell trouble for the firm:

A lawyer familiar with the Maple Bank case told Handelsblatt that the second raid suggests prosecutors have new prima facie evidence. Raids on major law firms are extremely rare, he said, and this one indicated that prosecutors had lost faith in Freshfields’ position.

A spokesperson for Freshfields made a statement touting the legality of their tax advice:

“We remain convinced that our advice was legally sound. It was always in keeping with the current state of the law. We look forward to any court case with complete confidence.”

Though the specific raid was in connection with Freshfields’s representation of Maple Bank, a number of the firm’s bank clients, including Deutsche Bank, Commerzbank, Dekabank, Barclays, and Macquarie, are also caught in the scandal.

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headshotKathryn Rubino is a Senior Editor at Above the Law, and host of The Jabot podcast. AtL tipsters are the best, so please connect with her. Feel free to email her with any tips, questions, or comments and follow her on Twitter (@Kathryn1).

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