German Chancellor Olaf Scholz faces new investigation over tax fraud scandal

Germany's center-right opposition is trying to put pressure on Chancellor Olaf Scholz by launching a parliamentary investigation into his suspected role in a massive tax evasion scandal, Politico reported.

The case – which dates back more than five years when Mr Scholz was still mayor of Hamburg – is linked to the larger so-called “Cum Ex” case, where the state was defrauded of more than €30bn by banks, companies or individuals claiming tax refunds for expenses that were deemed non-existent.

The scandal dominated the Social Democrat’s 2021 election campaign but ultimately had little impact as it was unclear whether Mr Scholz was involved. However, the case has now heated up again after new details emerged.

The Hamburg state parliament has planned to summon Mr Scholz this spring to a commission investigating the scandal. And now the centre-right CDU/CSU bloc also wants to set up a national inquiry in the Bundestag (German parliament).

“We will ask a parliamentary committee to investigate the Scholz-Warburg tax case in the Bundestag during the first week of parliament after the Easter break,” said Mathias Middelberg, deputy chairman of the CDU parliamentary group, on April 4.

In response, a German government spokesman said that “in principle” Berlin does not comment on decisions announced by Bundestag members that “disrespect constitutional authority”.

The CDU/CSU group now has enough votes in parliament to set up an investigative committee. Germany's Left Party has also said it would support the request.

The parliamentary committees can call witnesses and experts and request access to documents. Although their findings will be summarized in a non-binding report, the political consequences for Mr Scholz, in the context of upcoming elections, could be significant.

In a letter to the CDU/CSU parliamentary group seen by Politico, the chairmen of the two parties, Friedrich Merz and Alexander Dobrindt, said the case should be investigated due to its “significant” importance to German national politics.

Mr. Scholz has been targeted by opposition parties for his links to a Hamburg bank linked to a tax evasion scheme. Specifically, during his time as mayor, he met privately three times with one of the owners of the bank MM.Warburg & Co., which was then under investigation by the Hamburg tax authorities. State officials were seeking to recover from MM.Warburg & Co. 47 million euros they believed were ill-gotten gains related to the fraud.

Ultimately, however, the Hamburg state financial regulator let the statute of limitations on the claim for payment expire. And years later, after details of Mr Scholz’s meetings with the banker emerged, critics began to question whether the leading Social Democrat might have intervened in the bank’s favour.

Although Chancellor Scholz has repeatedly denied any interference, he has also failed to answer questions about what was discussed in private meetings with the banker under investigation. Instead, Scholz has repeatedly stated over the past two and a half years that he cannot remember the content of the conversations.

That claim has now been called into question by details of a closed-door Bundestag committee hearing with Mr Scholz in July 2020, in which he appeared to easily recall details of his meetings with the banker. Critics say Mr Scholz only began to claim he had no recollection of the meetings when the risk of a political explosion became clear.

Chancellor Scholz and his allies have repeatedly pushed back, calling such criticism politically motivated and insisting that previous investigations had found no wrongdoing. Scholz has also stressed that the bank eventually repaid the €47 million, albeit only after a court order. The Hamburg prosecutor's office said in March that it had no initial suspicions against the chancellor in the case.

That hasn't stopped the opposition from planning to dig deeper, however. "The chancellor wants to see a line drawn on this tax issue. But it's the job of the Bundestag to check the government, to scrutinize it, especially with so many unanswered questions," said CDU lawmaker Matthias Hauer.

According to Tin Tuc Newspaper