Something stirring in Germany?

 

 

German Chancellor Olaf Scholz is set to be questioned for a second time by a state parliamentary committee on Friday over whether he helped a major bank avoid paying back millions in taxes while mayor of Hamburg. The interrogation is part of an investigation by the Hamburg committee into the "cum-ex" tax scam, which cost the government billions. The fraud scheme saw European traders rapidly exchanging company shares among themselves around the time dividends were paid out to claim multiple tax rebates on a single payout. Dozens of people have been indicted over the scandal in Germany, including bankers, stock traders, lawyers and financial consultants. 

What questions must Scholz answer? 

The focus of the interrogation is on whether Scholz, who was mayor of Hamburg from 2011 to 2018, or other leading members of his Social Democratic Party (SDP) helped a private Hamburg-based bank, Warburg, avoid paying back millions in taxes. The committee is to pose questions surrounding three meetings between Scholz and Warburg Bank's co-owners in 2016 and 2017. At his first interrogation by the committee, Scholz admitted to the meetings but said he could not remember details about their content. Christian Olearius, one of the Warburg owners, has, however, testified that Scholz advised him on a possible way of avoiding the repayment of the €47 million ($48 million) in wrongly refunded capital gains tax. The claim was then scrapped by the tax authorities under a statute of limitations, but the bank eventually had to pay back tens of millions of euros under pressure from the federal government under Angela Merkel. Several recent German media reports say investigators have now seized emails from Scholz's former office manager that suggest the then Hamburg mayor had possibly deleted data pertaining to the matter. Other newly seized documents reportedly suggest that Scholz did raise the subject of reimbursement directly with Olearius despite his denials of having done so. Adding to the mystery surrounding the affair are reports that a former SPD parliamentarian, Johannes Kahrs, was found in possession of around €200,000 in a bank safe deposit box. It is, however, unclear whether the find has anything to do with the finance scandal.

Analysis:

Sanctions blowback and the current rapid de-industrialization of Germany is escalating pressure on the current national government run by Scholz. Calls are growing in Berlin to allow the start-up of Nordstream 2 natural gas pipeline from Russia to Germany. The US has been demanding it not be turned on. German industry is increasingly angry and citizens are growing restive due to impacts across Europe from the US-EU sanctions on Russia.