March 2, 2024

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Germany’s Schulz denies any wrongdoing in dealing with billions of euros in tax fraud

Germany's Schulz denies any wrongdoing in dealing with billions of euros in tax fraud
  • Schulz testifies before lawmakers in Hamburg about dealing with fraud
  • The case risks undermining Schultz as he faces multiple crises
  • Schulz’s popularity lags behind ministers, SPD third in opinion polls

BERLIN (Reuters) – German Chancellor Olaf Schulz dismissed allegations of wrongdoing in his handling of billions of euros in tax fraud while the mayor of Hamburg was at a hearing before lawmakers on Friday in a case that threatens to tarnish his image even as he grapples with multiple crises. .

In a “cum-ex” or dividend-stripping scheme, banks and investors quickly trade corporate stocks around dividend day, obliterating stock ownership and allowing multiple parties to recoup the dividend tax deductions.

The loophole, now closed, has taken on a political dimension in the northern port of Hamburg due to the slowdown in 2016 by authorities under Mayor Schulz to demand repayment of the millions of euros that the local Bank of Warburg obtained under the scheme.

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Warburg, which plays a large role in Germany’s second largest city, eventually paid its tax bill of around 50 million euros ($50.3 million) after the intervention of the Federal Ministry of Finance.

“I exercised no influence on the Warburg tax issue,” Schultz said Friday during his second appearance before a parliamentary inquiry in Hamburg into the former vice-president’s case, one of Germany’s biggest post-war corporate scandals.

“Nowhere is there even the smallest suggestion that I agreed to anything,” he said, referring to other testimony before the commission.

Richard Selmaker, the opposition Conservative representative on the committee, said Schultz could be called to testify before lawmakers for a third time as new findings emerged from the investigation.

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The case threatens to undermine the chancellor even as he tries to unite his fractured coalition in the face of public discontent over rising energy costs.

His popularity is already falling behind that of the economy and foreign ministers, while only 58% of Germans think he is doing well compared to the 70% average of his predecessor, Angela Merkel, during his 16 years in office.

Meanwhile, his Social Democratic Party (SPD) has slipped to third place in opinion polls behind opposition Conservatives and junior coalition partners the Greens.

200,000 euros in a safe place

And Finance Minister Christian Lindner, of the small coalition party, gave the pro-business Liberal Democrats, which is also trailing in opinion polls, his support for the chancellor.

“I have always understood that Olaf Schulz is an honest person, whether I was in the opposition or as now in government – and I have no reason to doubt that now,” Lindner told the Rheinische Post.

The leading Greens remained silent on the issue after criticizing Schultz about it while in opposition.

Recent news headlines that prosecutors investigating the scheme in Hamburg discovered €200,000 in the vault of a local politician from Schulz’s ruling Social Democrats have raised suspicions of political interference in the bank’s favor.

Schultz denied any knowledge of the money or its source and said he was no longer in contact with the attorney in question. The lawmaker did not respond to a request for comment.

“I hope the speculation and insinuations will stop,” Schultz said. “They lack any foundation.”

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The chancellor did confront Hamburg lawmakers last year and acknowledged holding a series of meetings with the then Warburg chief, but said he could not recall the details.

Gerhard Schick, director of Germany’s financial watchdog and a former member of parliament from the Green party in the Bundestag’s lower house of parliament, said he did not believe in forgetting Schulz.

“I think this is an allegation and it damages his credibility,” he said.

Der Spiegel magazine, citing the prosecutors’ report, wrote that one of the prosecutors’ recent findings is the discrepancy between several calendar entries for the Hamburg authorities mentioning Warburg Bank and “ComX” and the few emails about it.

“This indicates a targeted deletion (of emails),” Spiegel quoted the report as saying.

Transparency International representative Stefan Ohm said it was simply inconceivable that Schulze did not remember his discussions with the head of Warburg.

“Schulz should furthermore show what he has actively done to address Warburg’s involvement in the Cum-Ex transactions,” he said. It’s his political responsibility.”

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(Reporting by Sarah Marsh and Andreas Reinke); (Additional reporting by Hans Seidensteiner and Jan Schwartz) Editing by Andrew Cawthorne and Toby Chopra

Our criteria: Thomson Reuters Trust Principles.