Lawyers who reviewed Investec after tax scandal worked with implicated company

Documents show law firm Macfarlanes previously worked for a company under investigation over cum-ex trades

A law firm hired by investment bank Investec to review its governance, after it was caught up in a controversy around a fraudulent financial trading scheme, previously worked for a company heavily involved in the trades.

The scheme, known as cum-ex, saw a network of traders, hedge funds, asset managers and banks claiming multiple refunds on dividend withholding tax that was only paid once, or not at all, through a complex series of trades.

Prosecutors in several European countries are pursuing extensive inquiries into the trades, which have been deemed illegal by Germany’s Federal Court of Justice.

An investigation in recent months by The Irish Times, in partnership with German newsroom Correctiv and 15 other media organisations, examined a large leak of documents related to the trading scheme, the Cum-ex Files.


The scheme worked by buying and selling huge volumes of shares in a co-ordinated circuit, at key times around the date companies paid out dividends.

This resulted in confusion over who was entitled to a refund on dividend withholding tax, allowing it to be claimed multiple times, costing European tax authorities billions of euro over two decades.

Documents show a number of Irish financial institutions, including a former Bank of Ireland subsidiary and the Dublin offices of two international banks, Investec and BNP Paribas, were used by those carrying out the trades.

German prosecutors

Investec provided leverage to a hedge fund called Duet in 2010, which carried out cum-ex trades resulting in profits of €92 million, now under investigation by German prosecutors.

Following recent media coverage, Investec issued a statement confirming it had been notified by prosecutors in Cologne that the bank, as well as current and former staff, “may be involved in possible charges” over the trades.

The statement said disciplinary action would be taken “against those who may be found to have acted illegally or unethically when this matter is finally concluded”.

The bank said it conducted an internal review into the matter in 2019, as well as hiring UK law firm Macfarlanes "to review the governance processes around the cum-ex matter".

Macfarlanes is a corporate law firm based in London that specialises in advising multinationals, businesses and asset fund managers.

‘Robust review’

Documents seen by The Irish Times show Macfarlanes previously acted as the solicitors of the UK arm of Ballance, an asset management company heavily involved in cum-ex trades.

The legal firm helped the company set up in Britain in 2009, company filings show. For a number of years from 2010 onwards the company’s financial accounts list Macfarlanes as its solicitors.

A former Ballance executive who co-operated with prosecutors described the firm as “our lawyers in London”, according to transcripts of his interrogations.

Internal emails released in the Cum-ex Files leak show discussions between Macfarlanes and Ballance date back to at least mid-2008.

In a statement Investec said it had discussed the matter with Macfarlanes and both the legal firm and the bank “are comfortable that there is no conflict of interest in this matter and that a robust review was carried out”.

The bank said it “will not be commenting further on the review, which was and remains confidential”.

A spokeswoman for Macfarlanes said it had “robust conflict of interest processes, and are satisfied that we have fully complied with all our professional obligations” in relation to its work for Investec.

Jack Power

Jack Power

Jack Power is a reporter with The Irish Times