Dusseldorf The commercial law firm Norton Rose Fulbright has a visit from the district attorney’s office. According to information from the Handelsblatt, officials have been searching the offices of the British law firm and another company since Tuesday. The focus is on a long-standing German partner of Norton Rose Fulbright. While working at the firm, he is said to have advised various financial institutions on cum-ex deals.
The term stands for a method of stock trading in which those involved recovered more taxes than they paid. The highest German courts classify Cum-Ex as serious tax evasion, only in December was the former star lawyer Hanno Berger sentenced to eight years in prison. He appealed, the verdict is not yet final.
The public prosecutor’s office confirmed that “as of today, they are executing a search warrant against a law firm in Frankfurt am Main”. In addition, the private apartment of a former employee of the law firm as a suspect and his new workplace will also be searched. The authorities did not name names.
“The measures are related to cum-ex transactions that are the subject of the proceedings and related tax evasion models,” said the spokesman for the public prosecutor’s office. 45 officers are involved in the action.
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The accused lawyer did not respond at short notice to a query about the allegations made against him. A spokesman for Norton Rose Fulbright stressed that no active employee of the firm has been charged. “We accompanied the measures cooperatively. Norton Rose Fulbright will continue to work constructively with the authorities to further the investigation of the matter,” he said. The lawyer’s new employer confirmed the search, but did not comment further.
Observers of the Cum-Ex scandal have long accused some lawyers and tax consultants of having been part of the “tax evasion industry”, as former North Rhine-Westphalia Justice Minister Peter Biesenbach calls it. The number of accused consultants is clearly in double digits.
“Commercial provision of expert opinions”
From February 2016 to July 2017, an investigative committee of the German Bundestag dealt with the cum-ex scandal. The final report said: “Without the commercial provision of tax reports, in particular by the large commercial law firms such as Freshfields or auditing firms such as KPMG, these transactions would not have been possible.” Both Freshfields and KPMG have already been searched.
The long-awaited judgment against Hanno Berger was a confirmation of this assessment, even if Berger acted as an expert and mediator. The former star lawyer among tax lawyers repeatedly justified his involvement in cum-ex deals by pointing to other prominent law firms and auditors who were also involved. Norton Rose Fulbright’s name came up several times in his briefs and testimonies in court.
“How can an intention regarding an unjustified tax advantage be accepted, which a number of large law firms (e.g. Norton Rose), accounting firms, legal and tax departments of large banks have described as being in accordance with the law?” Berger asked the public prosecutor’s office. He also specifically named the lawyer for which Norton Rose is now being searched.
Leading advocate for cum-ex issues
An employee of Macquarie, the Australian investment bank involved in the deal, told prosecutors that Norton Rose Fulbright’s partner was one of the top three specialists for cum-ex issues. The other two were Hanno Berger and a partner in the law firm Freshfields Bruckhaus Deringer.
>> Podcast Handelsblatt Crime: Freshfields’ top attorney in the dock
If this expertise was lucrative for a long time, it is now a disaster. Berger is 72 years old and will most likely have to go to prison for a long time.
Two former partners of Freshfields have been charged and are soon to answer before the Frankfurt Regional Court. One of them is Ulf Johannemann, whom Freshfields promoted to global tax manager in 2016.
The law firm has advised around 25 financial institutions on Cum-Ex. In the case of Maple Bank, which collapsed as a result of the business, Freshfields paid 50 million euros to the bank’s insolvency administrator and 10 million euros to the judiciary.
A number of banks and financial firms swore by his advice
Norton Rose Fulbright’s suspected ex-partner did not have that many mandates. However, the investigation files show that he was extremely busy. For example, the British fund company Duet had him write an expert opinion.
The public prosecutor’s office brought charges against four Duet managers a few months ago. The Hypovereinsbank, BNP Paribas and the financial companies Ballance, ZFP were also connected to the lawyer because of the cum-ex deals.
Before joining Norton Rose, the tax expert worked at Linklaters. However, the law firm decided against accepting cum-ex clients. For years, the firm had to watch as well-known clients followed their former attorney to Norton Rose Fulbright and paid big bucks for his advice.
Today, Linklaters can be happy to have given up the deal. Unlike some of its competitors, the law firm does not have to fear visits from public prosecutors.
More: How Europe’s most influential law firm Freshfields fell into obscurity