Infineon. Credit: Bloomberg Mercury

Freshfields Bruckhaus Deringer is facing fresh criticism for its alleged role in the ongoing cum-ex tax scandal, after a shareholder at long-standing Germany-based client spoke out against the company for using the Magic Circle firm.

Jakob Ziemes, a shareholder at electronics giant Infineon, claimed that the company's decision to mandate Freshfields last year in light of the negative press it has received as a result of the cum-ex scandal contravened the company's code of ethics, according to documents seen by Law.com International.

In a letter written in German, Ziemes said that the company "had to ensure compliance with the ethical standards" and that it is difficult to understand why a firm who "cheated the State, including all shareholders present by multi-millions or even billions" had been selected.

The criticism follows the arrest and charging of former Freshfields tax partner Ulf Johannemann in November following his alleged role in a scandal that involved well-known companies double-claiming on tax rebates.

Ziemes had brought a counter motion to deny the discharge of the board's CEO Reinhard Ploss and chairman Sven Schneider. If a board is discharged at the end of a fiscal year, it signifies that shareholders agree with the decisions made by the board in the year.

Ziemes states that Infineon's code of ethics has clear processes for the selection of service providers that are "based on ethical criteria".

The Freshfields mandate in question relates to Infineon's acquisition of U.S. chipmaker Cypress Semiconductor Corp in July 2019. A Freshfields team made up of finance partner Frank Laudenklos, corporate partners Christoph Seibt and Christoph Gleske and competition partner Aimen Mir advised.

Freshfields has advised Infineon—which has revenues of €8 billion—numerous times, according to the firm's website.

Infineon's management dismissed Ziemes' claims in a public statement, stating that it had no reason not to mandate the firm and that Freshfields confirmed to the company that the lawyers currently working with Infineon are not involved in the cum-ex dealings.

Whether or not the counter motion will be discussed in the AGM later this month remains to be seen, with two people close to the German legal market describing Ziemes as a "critical spirit", thereby questioning the intention behind the counter motion.

Infineon did not immediately respond to a request for comment.

Either way, the criticism by a shareholder of an unrelated client is significant for Freshfields, which is keen to draw a line under the cum-ex saga.

There is disagreement among people in Germany about the extent to which Freshfields' reputation will be affected. One partner at a rival Magic Circle firm in Germany said they "certainly do not expect Freshfields to go down [the rankings]" given that it is a "immensely powerful and leading firm" in Germany.

However, a recruiter suggested that in a worst-case scenario, the reputational damage could see growing reluctance among clients to mandate Freshfields.

Freshfields declined to comment.

Last month, Johannemann had charges brought against him in relation to "serious tax evasion" for developing and advising on the so-called "cum-ex" transactions while "knowing the actual structure of the cum-ex transactions and deliberately issuing a maturity report in order to make the business seem supposedly legal".

Frankfurt-based Johannemann left Freshfields in November and was arrested a week later. He was in custody until just before Christmas when he was released on €4 million bail, according to one person with knowledge of the situation and various press reports.