Olaf Scholz’s latest problem: Has he waived the bank’s €47m tax bill? – POLITICS

Andrea admAugust 18, 2022

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BERLIN – What did Olaf Scholz know and when did he know it?

The answers could well determine the future of the German chancellor, who will face an official investigation into a 2017 decision when he was mayor of Hamburg not to collect 47 million euros in back taxes from her. a local private bank accused of defrauding the government.

Friday’s grilling of Scholz by a parliamentary committee in Hamburg promised to be a routine affair until German media reported new evidence on Wednesday that his entourage knew more about the plan to give the bank – MM Warburg – a free pass.

The renewed interest in his Hamburg days couldn’t come at a worse time for the Chancellor. Less than a year after its formation, Scholz’s three-way alliance with the Greens and Free Democratic Liberals has been plagued with infighting as it struggles to deal with a host of crises unleashed by the war of Russia versus Ukraine, from a gas shortage to runaway inflation. and a sluggish economy. Almost two-thirds of Germans say they are unhappy with the government, according to a public TV poll published earlier this month.

Scholz, who ran on a promise to maintain the centrist policies of his predecessor, Angela Merkel, governed with the same cautious wait-and-see approach that characterized his tenure. Yet Scholz’s critics say the current geostrategic disruption requires more flexibility, strategic vision and boldness from Europe’s most powerful country.

That Scholz is not a politician comfortable reacting on the fly became clear this week during a visit to Berlin by Palestinian leader Mahmoud Abbas, who accused Israel of inflicting “50 holocausts” on its people. Scholz, standing next to Abbas during a joint press conference at the German chancellery, said nothing to challenge his guest, sparking a storm of protest.

Although a clear majority of Germans say they are generally satisfied with Scholz’s work as chancellor, his personal approval ratings have stagnated and he ranks far behind leading green politicians. The re-examination of his Hamburg skeletons is unlikely to reverse this trend.

The scandal, known as the ‘Cum Ex Affair’, involved a massive scam by international banks, traders and hedge funds to defraud European governments of billions by claiming back taxes they did not have never paid. MM Warburg was a small, though important, player in the project.

The case dogged Scholz, who served as mayor of Hamburg until he became German finance minister in 2018, for years. In the absence of hard evidence, Scholz’s insistence that he was not involved in the decision to let the bank off the hook and that he had no recollection of meeting the the bank’s top executives at the time helped him dodge a calculation. So far.

The latest revelations surround Scholz’s claim that the 2017 decision not to collect money from Warburg was made by the city’s financial administration without political influence. However, a cache of emails and confidential testimonies detailed on Wednesday by a consortium of German investigative media outlets (including public broadcaster NDR, business monthly Manager Magazin and news weekly Stern) suggest that Scholz and his closest associates were more involved in the decision than they let on. on.

The biggest revelation is an email from Scholz chief secretary Jeanette Schwamberger to her chief of staff in the spring of 2021 regarding a parliamentary committee request for details of Scholz meetings related to Cum Ex and Warburg. In the email, Schwamberger says that Scholz, then German finance minister and candidate for chancellor, had to “sort out” (those are his quotes) how to characterize a series of meetings he had as mayor of Hamburg. with SPD party colleagues lobbying for Warburg. This process ended up taking several weeks. Ultimately, Scholz sent a vague response a day before the hearing.

Authorities then discovered more than €200,000 in cash in the safe of one of the officials Scholz met, Johannes Kahrs, a prominent Hamburg SPD politician. Kahrs, who refused to disclose the source of the money, is under criminal investigation, as are several other Scholz associates in Hamburg.

When Palestinian leader Mahmoud Abbas accused Israel of visiting ’50 Holocausts’ on his people, Scholz said nothing to challenge his guest, sparking a storm of protests | Jens Schlueter/AFP via Getty Images

Scholz has so far avoided a criminal investigation, and prosecutors this week defended their decision not to prosecute him.

Still, the political fallout from what a senior Hamburg tax official under investigation called a ‘diabolical plan’ to help Warburg in a private text exchange will continue to hang over the Chancellor as multiple inquiries on the case, both parliamentary and criminal, are continuing.

Since questions first arose about his role in the Warburg affair, Scholz has provided often contradictory, sometimes false, information about the frequency and nature of his meetings with bankers and others connected to the case.

During last year’s election campaign, he claimed to have “no detailed and active recollection” of his meetings with Warburg chief executive Christian Olearius. Still, in a confidential, closed-door meeting with lawmakers investigating the case in 2020, Scholz was more forthcoming, outlining the general nature of his contacts, according to Wednesday’s reports.

Scholz’s main defense was that the bank ended up refunding the taxes anyway. But that only happened because Federal Finance Ministry officials reversed Hamburg’s decision and forced Warburg to pay.

In light of the latest revelations, Scholz’s persistent insistence, which he repeated last week, that there was “no political influence” seems untenable. The only real question is whether he knew.