Olaf Scholz and Cum-Ex: The allegations against the Chancellor at a glance

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For Olaf Scholz, the place on the far right of the Senate bench in the plenary hall of the Hamburg Parliament is a familiar one. Only he will no longer be there on Friday as mayor, but as Chancellor and witness before the Parliamentary Committee of Inquiry (Pua) on the “Cum-Ex” scandal. The committee is to clarify whether leading SPD politicians have influenced the tax treatment of the Warburg Bank involved in the scandal.

What is the Hamburg tax affair about?

The focus is on so-called cum-ex transactions, in which financial players move blocks of shares around the dividend date with (“cum”) and without (“ex”) dividend entitlement in a complicated system and then have taxes refunded that were never paid . Scholz – then mayor – had met in 2016 and 2017 with the shareholders of the Warburg Bank involved in the scandal, Christian Olearius and Max Warburg. After the first meeting, the Hamburg tax authorities let the statute of limitations expire in 2016 on claims for unjustly refunded taxes amounting to 47 million euros against the bank. A claim for 43 million euros was only raised in 2017 under pressure from the Federal Ministry of Finance shortly before the statute of limitations expired. At the time of the meeting, Olearius was already being investigated for “cum-ex” transactions.

How does Chancellor Olaf Scholz go through the interrogation?

The Federal Chancellor denies any influence on tax decisions regarding the Warburg Bank. Just last week, at his summer press conference in Berlin, he emphasized that the committee had not found any evidence of such influence since it was set up at the end of 2020. “I am sure that this realization will not be changed,” he said.

When he was first questioned by the committee, Scholz referred to gaps in his memory about the meeting. However, recent findings by the Cologne public prosecutor’s office, which is also investigating the former Hamburg Senator for the Interior Alfons Pawelczyk and the former member of the Bundestag Johannes Kahrs (both SPD) in connection with the “Cum-Ex” transactions of the Warburg Bank, raise further questions about the coming about the meeting. The pressure on Scholz had recently increased.

What are the memory gaps about?

Scholz has confirmed that he met Olearius and Warburg in 2016 and 2017. The meetings became known through the publication of entries from Olearius’ diaries, which had been seized by the public prosecutor’s office in the course of the investigation into the banker. However, he could no longer remember the content of the talks, Scholz told the committee in April last year. Nevertheless, he ruled out any influence that would have been “political stupidity,” he said at the time, adding: “I’m not inclined to that.”

What about the criminal investigation?

The Cologne public prosecutor’s office is investigating against the SPD politicians Pawelczyk and Kahrs and the officer responsible for the Warburg Bank at the Hamburg tax office for large companies at the time on suspicion of encouraging tax evasion in connection with “cum-ex” transactions. According to Olearius’s diary entries, which have become known, Kahrs and Pawelczyk campaigned for the bank co-owner Scholz to report on the tax problems at a meeting in the town hall.

The investigations are not directed against Scholz. Hamburg’s public prosecutor’s office also refused just last week to initiate investigations against him on suspicion of aiding and abetting tax evasion. The complaint of a renowned criminal lawyer was dismissed on the grounds that there was no initial suspicion. The same applies to Scholz’s successor in the town hall, Peter Tschentscher, who was Finance Senator at the time.

What have the Cologne investigations revealed so far?

Since the case is ongoing, the public prosecutor’s office declined to provide information. Recently, however, files from Cologne were handed over to the investigative committee in Hamburg. According to media reports, confirmed by committee members, they suspect that documents related to “Cum-Ex” are missing and emails may have been deleted by the authorities. In addition, a Whatsapp chat by the suspected tax officer became known, in which she wrote to a colleague in 2016 that her “diabolical plan” had worked. Shortly before, it had been decided to let the claims against Warburg Bank expire.

Can the “Cum-Ex” scandal become dangerous for the chancellor?

So far, the questioning of more than 50 witnesses in the “Cum-Ex”-Pua has not provided any evidence that Scholz is telling the untruth. However, the fact that he refers to gaps in memory and thus creates little transparency is seen by the opposition as damage to democracy. The fact that Scholz knows how to cover himself up during parliamentary investigations and thus ultimately to keep himself politically harmless was already shown when a special committee of the citizenry dealt with the 2017 G20 summit in Hamburg, which was overshadowed by violent riots.

Is it done with Scholz’s second statement before the Pua?

Probably not. CDU and Linke had tried to postpone the Chancellor’s hearing this Friday because they wanted to study the investigation files from Cologne in detail so that they could then confront Scholz with the knowledge gained from them. SPD and Greens rejected this. The opposition also wants to expand the committee’s investigative mandate to include the “cum-ex” transactions of the former state-owned HSH Nordbank. He is therefore firmly assuming that the chancellor will have to appear before the committee a third time, said Left Chairman Norbert Hackbusch.