German Chancellor Olaf Scholz is set to testify in front of lawmakers, on Friday, over his role as Hamburg mayor in tackling multibillion-euro tax fraud.
In the scheme of “cum-ex” or dividend stripping, banks and investors would swiftly trade shares of companies around their dividend payout day, blurring stock ownership and allowing multiple parties to falsely reclaim tax rebates on dividends.
The authorities sluggish under the mayorship of Scholz at demanding repayment of millions of euros gained under the scheme by important local bank Warburg.
Warburg, which plays a big role in Germany’s second-largest city, eventually paid its 50 million euro tax bill after the federal finance ministry intervened.
“It all stinks to high heaven and simply cannot have happened without political influence,” Richard Seelmaecker, representative of the opposition conservatives on the committee, told broadcaster NTV.
Scholz has dismissed suggestions of any impropriety in his handling of the affair.
“This has been an issue for two and a half years now,” Scholz recently told reporters. “Countless files have been studied, countless people have been heard. The result is always: There has been no political influence.”
Nonetheless, prosecutors probing the scheme in Hamburg discovered 200,000 euros in the safe of a local politician from Scholz’s ruling Social Democrats have reignited suspicions of political intervention on the bank’s behalf.
The Chancellor has denied any knowledge of this cash or its origin and said he no longer has contact with the lawmaker involved. The lawmaker did not respond to a request for comment.