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German police raid BlackRock offices

November 6, 2018

BlackRock controls trillions of dollars of assets and has now been caught up in the monumental cum-ex tax scandal. The investment fund's involvement has particular significance for the German government.

Blackrock logo
Image: picture-alliance/dpa/L. Mirgeler

German investigators raided the offices of finance giant BlackRock on Tuesday, several media outlets reported.

The raid is part of the country's biggest post-war fraud investigation, known as the cum-ex scandal.

BlackRock told DW it is "fully cooperating" with investigators. The chairman for its Germany division, Friedrich Merz, said he had ordered management to "investigate all instances and make documents available to authorities."

What is the cum-ex scandal? The scandal came to light in 2016 when it emerged that several German banks had exploited a legal loophole which allowed two parties simultaneously to claim ownership of the same shares. This contrived "dual ownership" allowed both parties to then claim tax rebates even though both were not entitled to it. The scandal cost taxpayers billions of euros.

Read more: Cum-ex tax scandal cost European treasuries €55 billion

The Day – Tax Scam

What is BlackRock? It is a vast investment management organization that oversees more than $6.4 trillion (€5.6 trillion) in assets — putting it on par with the world's third biggest GDP. BlackRock is also the biggest stockholder on the German DAX blue chip market index. On top of asset management, it also advises central banks, financial ministries, big investors like state funds, pension funds, insurance companies and foundations.

What is the significance for German politics? The raids could make things tricky for chairman Merz. The Christian Democrat politician is a leading candidate to succeed German Chancellor Angela Merkel as party leader when she steps down. The scandal predates Merz's time at the company, however, the Greens have seized upon the raids to question the government's commitment to prosecuting those involved. Investigators later clarified that Merz was not suspected of any wrongdoing.

aw/rt (Reuters, AFP, dpa)

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