Scholz again denies wrongdoing in cum-ex affair

German Chancellor Olaf Scholz once again denied helping a major bank avoid paying back millions in taxes while he was mayor of Hamburg. 

"I had no influence on the tax procedures of Warburg [Bank]," Scholz said while being questioned for the second time by a state parliamentary committee on Friday. "Nor is there the slightest indication anywhere that I made any assurances," he added.

The interrogation is part of an investigation by the Hamburg committee into the "cum-ex" tax scam, which cost the government billions.

The scheme saw EU traders rapidly exchanging company shares among themselves around the time dividends were paid out to claim multiple tax rebates on a single payout.

Dozens of people have been indicted over the scandal in Germany, including bankers, stock traders, lawyers and financial consultants.

Why is Scholz in hot water over the cum-ex scandal?

The focus of the interrogation is on whether Scholz, who was mayor of Hamburg from 2011 to 2018, or other leading members of his Social Democratic Party (SPD) helped a private Hamburg-based bank, Warburg, avoid paying back millions in taxes.

The committee is to pose questions surrounding three meetings between Scholz and Warburg Bank's co-owners in 2016 and 2017.

At his first interrogation by the committee, Scholz admitted to the meetings but said he could not remember details about their content.

Christian Olearius, one of the Warburg owners, has, however, testified that Scholz advised him on a possible way of avoiding the repayment of the €47 million ($48 million) in wrongly refunded capital gains tax.

The claim was then scrapped by the tax authorities under a statute of limitations, but the bank eventually had to pay back tens of millions of euros under pressure from the federal government under Angela Merkel.

Several recent German media reports say investigators have now seized emails from Scholz's former office manager that suggest the then-mayor of Hamburg had possibly deleted data pertaining to the matter.

The conservative-leaning Frankfurter Allgemeine Zeitung said the emails clearly "incriminate" Scholz.

Other newly seized documents reportedly suggest that Scholz did raise the subject of reimbursement directly with Olearius despite his denials of having done so.

Adding to the mystery surrounding the affair are reports that a former SPD parliamentarian, Johannes Kahrs, was found in possession of around €200,000 in a bank safe deposit box. It is, however, unclear whether the find has anything to do with the finance scandal.

When asked about this cash at a recent summer press conference, Scholz said: "I'm as curious as you are, and of course, I'd like to know where it came from."

Embattled chancellor

After his time as Hamburg mayor, Scholz was finance minister in Merkel's coalition government from 2018, before becoming chancellor after elections in 2021.

His approval ratings are currently very low, partly over what some perceive as his sluggish response to Russia's invasion of Ukraine, though his supporters have praised what they see as appropriate caution in a highly delicate situation.

Scholz is also facing the challenge of having to reassure residents in Germany over possible energy shortages and spiraling heating costs this winter, as well as the economic fallout from both the war and the pandemic.

His communication skills throughout all of this are also facing ever sharper scrutiny — whether it's being unable to answer difficult questions at a parliamentary committee, being unwilling to criticize a fellow speaker (such as Mahmoud Abbas' comments about the Holocaust this week), or being perceived to be impolite when facing questions.

tj/sms (Reuters, AFP, dpa)

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