HAMBURG: German Chancellor Olaf Scholz on Friday denied helping a bank avoid paying back millions in tax rebates claimed under a huge fraud scam as he answered to a committee investigating the scandal.

The parliamentary committee in Hamburg is probing why local finance authorities dropped a bid in 2016 to claw back 47 million euros ($48m) in taxes from private bank M. M. Warburg over so-called cum-ex trades.

Scholz was the mayor of Hamburg from 2011 to 2018 and has lately been repeatedly forced to beat back allegations he was involved in the decision to let the bank off the hook.

Arriving at the hearing, the chancellor eyed the room with a grim expression before swearing that he would tell the truth.

He then reiterated his innocence, declaring: “I had no influence on the Warburg tax proceedings.”

First exposed in 2017, the “cum-ex” scam involved numerous participants swiftly exchanging company shares amongst themselves around dividend day to claim multiple tax rebates on a single payout.

The scam cost the government billions and has seen bankers, stock traders, lawyers and financial consultants indicted.

Warburg eventually had to pay back tens of millions of euros under pressure from the federal government under then chancellor Angela Merkel.

Scholz appeared calm and confident at the Hamburg hearing, standing by statements he made in a previous testimony before the committee in 2021.

He described allegations of political influence in the Warburg case as “false and recognisably not supported by anything or anyone”.

Dismal ratings

The grilling comes as Scholz is already facing dismal popularity ratings after his first six months in office were tarnished by criticism over his perceived weak response to the war in Ukraine.

More recently, the chancellor has struggled to reassure Germans over possible energy shortages this winter and the very real prospect of a recession in Europe’s biggest economy.

During the hearing on Friday, Scholz was asked about conversation he is alleged to have had in 2016 with Christian Olearius, then head of Warburg bank.

Critics have accused Scholz of making contradictory statements on his contacts with Olearius, initially admitting he had met the banker before later appearing to deny it.

The chancellor insisted he had no specific memories of any meetings with Olearius, pointing out that he had held a number of meetings with business figures during his time in Hamburg.

“There is not the slightest hint anywhere” of anything untoward being agreed in such meetings, he said, insisting he always behaved “correctly”.

‘Lapses of memory’

Scholz also denied exerting any influence “before or after the meetings” and said the city of Hamburg had suffered “no financial damage in this matter”.

Friedrich Merz, the leader of the opposition conservatives, told a newspaper he did “not believe a word the chancellor says”.

“There is hardly anyone in Germany who believes Olaf Scholz’s many lapses of memory,” he said.

Johannes Kahrs, a former MP with Scholz’s Social Democrats (SPD), is also under investigation as part of the Hamburg probe.

According to German media, investigators recently found around 200,000 euros in cash in a bank safe deposit box belonging to Kahrs, though it is unclear whether the find has anything to do with the cum-ex scandal.

Published in Dawn, August 20th, 2022