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Scholz under pressure over money laundering probe

September 10, 2021

German Finance Minister Olaf Scholz faces tough questions over how his ministry's anti-money laundering agency handled intelligence. The probe comes just weeks before the election that could make him the next chancellor.

Olaf Scholz pictured during a meeting in Slovenia
Olaf Scholz attended an EU finance ministers' meeting in Slovenia on FridayImage: Bernd Riegert/DW

With the race for Germany's next chancellor entering the final stages, political rivals of chancellor candidate Olaf Scholz demanded an explanation about his Finance Ministry's handling of organized crime investigations.

On Thursday, prosecutors raided the finance and justice ministries as part of a probe into the government's FIU anti-money laundering department, which is an agency of Scholz's Finance Ministry.

The raids come at a pivotal moment for Scholz, who opinion polls suggest has a good chance of becoming German chancellor in the country's election on September 26.

Scholz, who is the center-left Social Democrats (SPD) candidate, is also vice-chancellor and finance minister in Chancellor Angela Merkel's ruling "grand coalition" with her conservatives.

A pragmatist – Olaf Scholz of the Social Democrats

Bank flagged suspicious payments

The probe into the FIU is looking at whether the agency was told to ignore warnings of suspicious payments to Africa and whether bank reports about such activity were not forwarded to the police.

Prosecutors say the probe was triggered by a report from a bank to the anti-money laundering agency in June 2018.

The bank cited payments totaling more than €1 million ($1.18 million), which it suspected had to do with weapons and drugs trade and terror financing.

Prosecutors said the agency replied that they had "taken note" of that report but didn't forward it to law enforcement authorities.

On Friday, Der Spiegel news magazine published details of a letter from the Finance Ministry to the German government's audit office. 

In the letter, officials defended their handling of the intelligence they had received from banks. However, Der Spiegel said it showed that Scholz's ministry ignored clear warnings of deficiencies in the FIU's assessment of alleged criminal activity.

The revelations prompted the general secretary of Merkel's center-right conservative bloc to demand that Scholz explain himself.

"There are a great many questions that the SPD candidate for chancellor must answer," Paul Ziemiak of the Christian Democratic Union (CDU) told the magazine.

Scholz was also criticized for his irritated reaction to Thursday's raid. He asked whether investigators "could have put their questions in writing."

Where do German political parties get their money?

No comment on the timing

Scholz was unwilling to comment on the timing of the raid — just over two weeks before the country's election.

"There can be no speculation on this question, so I am not going to do that," he told Reuters news agency on the margins of a meeting of EU finance ministers in Slovenia on Friday.

Meanwhile, the climate-friendly Greens, the socialist Left Party and the business-friendly FDP have called for a special meeting of the German parliament's Finance Committee.

"We would like to invite Finance Minister Olaf Scholz, who bears overall political responsibility for the ongoing abuses at the FIU, to offer a comprehensive explanation of the events," they wrote in a letter to the head of the Bundestag.

A Forschungsgruppe Wahlen poll published Friday put support for the SPD at 25%, ahead of the CDU/CSU bloc on 22% and the Greens on 17%. This puts Scholz ahead of Armin Laschet, the chancellor candidate for Merkel's conservative bloc.

mm/dj (AFP, Reuters)