Chancellor Olaf Scholz has denied having ever abused political influence when he was mayor of Hamburg in a scandal involving the private Hamburg Warburg bank. The financial top of the municipality of Hamburg may have had a dubious influence on the handling of the fraud case. Scholz will be questioned in a hearing about it next week in Hamburg.
The bank is at the center of a years-long investigation into a massive internationally oriented fraud in which banks, top lawyers and stock traders systematically evaded dividend tax and reclaimed “overpaid” dividend tax that was often never paid. It is considered the biggest tax scandal ever in the Federal Republic, but the tricks were not only used in Hamburg.
With the dividend trick, notorious in Germany as the “cum-ex affair”, pressure was pushed with shares and dividend by European countries to take advantage of the different legislations. According to researchers, efforts were mainly made to reclaim dividend tax that had never been paid here or there. This was done by selling shares around the date the dividend was declared. The seller and buyer both reclaimed dividend tax in their country, which was actually paid only once.
Missed out on 32 billion
The German tax authorities would have lost at least almost €32 billion since the beginning of this century, not to mention the losses suffered by other European countries, notably France, Italy, Denmark and Belgium. In total, this would amount to more than 55 billion euros over the period 2001-2011.
The case has been brought to light in Germany by a whistleblower and is stirring things up. The municipality of Hamburg, where Scholz was mayor at the time, is also discredited. The Warburg bank did these things from 2007 to 2011, according to German media. The tax authorities tracked down the tampering at Warburg and in 2016 demanded 47 million euros back in one tax year alone, starting in 2016. But the demand was quickly withdrawn for mysterious reasons, according to German media. A few hours later, a top finance official from the state and municipality of Hamburg, who had first insisted on the recovery, sent messages to a confidant in the Hamburg finance department that “the diabolical plan had succeeded” and the case would probably be barred.