German Chancellor to be questioned in tax fraud inquiry

The "Cum-Ex" scandal saw traders in Europe use a legal loophole to shift shares back and forth at high speed between parties around the time dividends were paid out, in order to receive tax repayments for taxes they had not paid, reports dpa news agency.
German Chancellor Olaf Scholz
German Chancellor Olaf Scholz

BERLIN: German Chancellor Olaf Scholz on Friday will be questioned for a second time by a state parliamentary committee in Hamburg investigating the sprawling "Cum-Ex" trading scheme to defraud tax authorities.

The "Cum-Ex" scandal saw traders in Europe use a legal loophole to shift shares back and forth at high speed between parties around the time dividends were paid out, in order to receive tax repayments for taxes they had not paid, reports dpa news agency.

In Hamburg, the focus is on whether Scholz or other leading Social Democrats used their influence to help spare Warburg Bank from paying back 47 million euros in taxes.

Scholz, who denies using his office to help the private Hamburg-based lender that participated in the Cum-Ex scheme, has been shadowed by the affair that dates back to his time as mayor of the northern city.

A Parliamentary Investigation Committee of the Hamburg Parliament wants to know more about three meetings between Scholz and the Warburg Bank's co-owners, Max Warburg and Christian Olearius, in 2016 and 2017.

Scholz admitted to the meetings during his first grilling, but stated that he could no longer remember the content of his talks.

According to Olearius' testimony, after the first meetings Scholz had recommended sending a letter of defence to Hamburg's then state minister of finance Peter Tschentscher, in which the recovery of 47 million euros in wrongly refunded capital gains tax was presented as unjustified.

Tschentscher, who is now Hamburg's mayor, then forwarded the letter with the "request for information on the state of affairs" to the tax authorities, where it was decided a short time later, contrary to original plans, to allow the 47-million euro claim to be scrapped due to a statute of limitations.

Tschentscher, also a member of the centre-left Social Democrats, has confirmed the forwarding of the letter.

However, he described the accusation of influence as "baseless".

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