German Scholz denies irregularities in handling multi-billion euro tax evasion


  • Scholz testifies before Hamburg lawmakers on fraud handling
  • Case risks undermining Scholz as he faces multiple crises
  • Scholz’s popularity trails top ministers, SPD third in polls

BERLIN, Aug 19 (Reuters) – German Chancellor Olaf Scholz has dismissed accusations of irregularities in his handling of a billion-euro tax evasion while the mayor of Hamburg at a hearing before lawmakers on Friday in a case that threatens to tarnish him even as he battles multiple crises.

In the “cum-ex” or dividend stripping scheme, banks and investors would quickly trade shares of companies around their dividend payment day, blurring ownership of shares and allowing multiple parties to wrongly claim dividend tax refunds.

The loophole, now closed, took on a political dimension in the northern port of Hamburg due to the slowness of the authorities in 2016 under the mayor of Scholz to demand the reimbursement of the millions of euros earned under the scheme by the bank. local Warburg.

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Warburg, which plays an important role in Germany’s second-largest city, finally paid its tax bill of around 50 million euros ($50.3 million) after the federal finance ministry intervened.

“I had no influence on the Warburg tax case,” Scholz said on Friday during his second appearance before a Hamburg parliamentary inquiry into the cum-ex case, one of the biggest scandals in history. post-war business in Germany.

“There is nowhere the slightest suggestion that I accepted anything,” he said, referring to other testimony before the committee.

Richard Seelmaecker, representing the opposition Conservatives on the committee, however, said Scholz could be called upon to testify a third time before lawmakers as new findings from the investigation have just emerged.

The case threatens to undermine the Chancellor even as he tries to hold down his fractured coalition in the face of public discontent over soaring energy costs.

His popularity is already below that of his economy and foreign ministers, while only 58% of Germans think he is doing a good job compared to an average of around 70% for his predecessor Angela Merkel during her 16 years of office.

His Social Democratic Party (SPD) meanwhile slipped to third place in the polls behind the opposition Conservatives and the Greens.

200,000 EUROS IN A SAFE

Finance Minister Christian Lindner of the junior coalition party, the business-friendly Free Democrats, which is also trailing in the polls, threw his support behind the chancellor.

“I have always considered Olaf Scholz to be a person of integrity, whether I was in opposition or now in government – and I have no reason to doubt that now,” Lindner told the Rheinische Post newspaper.

Prominent Greens have remained silent on the matter after criticizing Scholz about it while in opposition.

Recent headlines that prosecutors investigating the scheme in Hamburg discovered 200,000 euros in the safe of a local politician from Scholz’s ruling Social Democrats have revived suspicions of political intervention on behalf of the bank. .

Scholz denied any knowledge of the money or where it came from and said he no longer had contact with the lawmaker involved. The lawmaker did not respond to a request for comment.

“I harbor the hope that the guesswork and innuendo can stop,” Scholz said. “They have no basis.”

The chancellor previously clashed with lawmakers in Hamburg last year and admitted to having a series of meetings with Warburg’s then chairman, but said he could not remember the details.

Gerhard Schick, director of the watchdog Finance Watch Germany and a former Greens lawmaker in the lower house of the federal Bundestag, said he doesn’t believe Scholz has been forgotten.

“I think it’s a pretense and hurts his credibility,” he said.

One of prosecutors’ recent discoveries is a discrepancy between Hamburg authorities’ numerous calendar entries mentioning the Warburg bank and “cum-ex” and the few emails on the subject, Der Spiegel magazine wrote, citing the prosecutors’ report.

“This suggests targeted suppression (of emails),” Spiegel said, citing the report.

A representative of the corruption watchdog Transparency International, Stephan Ohme, said it was simply implausible that Scholz did not recall his discussions with the Warburg chairman.

“Scholz should further show what he has actively done to fight Warburg’s involvement in the Cum-Ex deals,” he said. “It is his political responsibility.”

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Reporting by Sarah Marsh and Andreas Rinke; Additional reporting by Hans Seidenstuecker and Jan Schwartz; edited by Andrew Cawthorne and Toby Chopra

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