A German minister has said that Freshfields should no longer receive German government work because of its involvement in a now-illegal tax avoidance scheme.
Vice Chancellor and Finance Minister Olaf Scholz made the comments as he was quizzed during a parliamentary enquiry into his own links to the Cum Ex scandal.
Under the discredited Cum Ex scheme, a share was treated as having two owners, so that both parties could receive a refund of capital gains tax, while only one of them actually paid it.
Scholz was the Mayor of Hamburg when local tax authorities decided not to pursue the city's Warburg bank after it was found to have been wrongly reimbursed millions of euros via its Cum Ex trades. Pressure on Scholz to explain himself increased when it emerged after an inspection of his diary that he held three undisclosed meetings with Warburg's chairman, two of which he claimed to have forgotten.
After being quizzed in a closed door session, Scholz, who is the SDP's candidate to succeed Angela Merkel as chancellor, faced a public grilling in the Bundestag.
Asked by an MP what there was to fear for companies involved in the “machinations” of Cum Ex, and whether any consideration was being given to exclude “businesses like Freshfields” from receiving further instructions from the government, Scholz replied, “Of course we have to consider the consequences of working with these businesses. For myself, in relation to the law firm you mentioned: I cannot imagine that new contracts will be awarded there".
Scholz and a bag containing no instructions for Freshfields or memories of problematic meetings.
Freshfields declined to comment on becoming Scholz's diversion, while Scholz's office did not respond to a request for comment on whether Freshfields was being blacklisted by Scholz's department, the whole German government, or nowhere at all.
Two former Freshfields partners have been charged by German prosecutors in connection with the Cum Ex advice they provided while at the firm. Ulf Johannemann, Freshfields' former Global Head of Tax, left the firm in November, and then spent four weeks in prison after being denied bail. A second partner, identifiable under German media law only as 'Tobias T', was charged in June, and left Freshfields the same month. Earlier this year an activist shareholder sought unsuccessfully to punish the board of German manufacturing giant Infineon just for using Freshfields.