Ulf Johannemann, the head of Freshfields' international tax practice, has been arrested in Germany and jailed as a flight risk.
Johanneman has been cooling his heels in custody since last Friday "due to the risk of absconding", reported Suddeutsche Zeitung.
The lawyer was Freshfields’ top tax partner until he quit the firm within the last few weeks. Freshfields told the German paper his departure was "at his own request".
Johanneman's shock arrest represents a show of force by German authorities as they continue to conduct a widespread investigation into the tax 'minimisation strategy' known as dividend stripping, which involved duplicating tax refunds on certain types of share deals and was declared illegal in Germany. The €12 billion 'Cum Ex’ scandal has caught up dozens of blue chip institutions including Commerzbank, Deutsche Bank, BlackRock and Macquarie.
Freshfields' Frankfurt office has been raided twice by investigators, who focused on the firm's work for Maple Bank, a Canadian lender. Maple’s German arm was shut down shortly after authorities determined it unjustly collected €383 million in tax refunds for share trades.
Johannemann is understood to have advised Maple and a number of other banks involved in the problematic share trades from 2006 to 2010.
Ulf, pictured earlier this week.
The Frankfurt Prosecutor General's Office alleges that Johannemann, in his capacity as a lawyer at Freshfields, wrongly certified that the transactions were permissible.
Freshfields has previously rejected suggestions it was involved in anything illegal. “We remain convinced that our advice was legally sound. It was always in keeping with the current state of the law," said a spokesman. "We look forward to any court case with complete confidence.”
Johannemann's defence attorney Werner Leitner told Suddeutsche Zeitung on Wednesday, "The detention is completely unfounded and we will of course challenge it, and we will not comment on this matter publicly."
The authorities' nervousness that Johannemann might grab a motorbike and leap the border wire is not entirely without foundation. Another tax lawyer charged in the case, Hanno Berger, fled to Switzerland the day after his office was raided in 2012.
Freshfields declined to comment.