Frankfurt The Frankfurt trial surrounding cum-ex stock deals continued on Monday with a confession from the accused ex-Maple banker. “In retrospect, the German Pair strategy was too good to be true,” said the former banker during the main hearing in the regional court.
In cum-ex transactions that went under the name “German Pair Strategy” at Maple Bank, banks and investors were reimbursed for capital gains taxes they had never paid and were estimated to have cheated the state of at least twelve billion euros.
“We would not have carried out the transactions without the reports; they gave us a false sense of security,” said the former Maple banker in the trial surrounding the accusation of serious tax evasion or aiding and abetting. The reports came from the law firm Freshfields Bruckhaus Deringer.
The former Freshfields tax partner Ulf Johannemann is charged together with the Maple banker in the proceedings before the 24th Grand Criminal Chamber. The tax lawyer was the central contact in connection with the cum-ex transactions.
The public prosecutor’s office accuses him of having made the multi-billion dollar Maple transactions possible at the expense of the tax authorities through “favorable reports”. According to the investigators’ findings, he is also said to have tried to deceive the tax authorities when they wanted to get to the bottom of the matter.
Lawyer cites “complexity” of deals
Johannemann did not comment on the allegations on the first day of the trial. Only his defender Werner Leitner read out an opening statement. But his strategy remained nebulous. Tax law is “mathematically structured”; Johannemann thought in these categories. Cum-Ex was highly complex back then. “The magic of the horrendous numbers should not measure individual guilt,” said Leitner.
The damage caused to taxpayers is actually immense. The indictment puts the tax loss from Maple Bank’s cum-ex transactions at a good 388 million euros. However, according to law and jurisprudence, the amount of tax damage depends on the amount of tax damage: in a landmark ruling, the Federal Court of Justice has ruled out suspended sentences in principle for tax evasion of more than one million euros.
The cum-ex deals reached their peak between 2006 and 2011: around the dividend record date, shares with (cum) and without (ex) dividend entitlement were moved back and forth between those involved. In the end, tax offices refunded unpaid taxes.
to classify transactions as tax evasion
In 2012, the state made cum-ex transactions impossible. In 2021, the Federal Court of Justice (BGH) decided that cum-ex transactions are to be viewed as tax evasion and that those responsible have committed a criminal offense. The “loophole” complained about by many involved never existed. Various bankers from Maple and MM Warburg have already been sentenced to prison, and some of the sentences are final.
The transactions were “aimed at a refund of unpaid tax,” said the accused former Maple banker. “If I had applied common sense, I should have recognized that double crediting of capital gains tax could not have been desired.”
In 2016, the German institute with Canadian roots was closed by the financial regulator Bafin because it was threatened with over-indebtedness due to a tax provision in connection with cum-ex transactions.
“As a result, I can say that the decision to carry out the cum-ex transactions cost the bank its existence and the employees their jobs and their security,” said the former Maple banker. “I deeply regret my involvement in these transactions and apologize to anyone I may have caused harm as a result.”
He wanted to face his responsibility and therefore paid more than ten million euros, including shares, into the Maple Bank insolvency estate. He also pays back bonuses.
With agency material.
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