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Tuesday, September 27, 2022

Prosecutor: No suspicion against Scholz in the Warburg case

Status: 08/16/2022 07:26 a.m

In the so-called Cum-Ex affair, the Hamburg Attorney General sees no misconduct on the part of today’s Chancellor Scholz. She dismissed a lawyer’s complaint that she was not investigating.

The Hamburg public prosecutor’s office sees no further indications of possible aid to tax evasion by today’s Federal Chancellor Olaf Scholz in connection with the cum-ex tax scandal involving the Warburg Bank.

The background is a criminal complaint against Scholz and other suspected parties that the Hamburg lawyer Gerhard Strate had filed. He had lodged a complaint against the fact that the Hamburg public prosecutor’s office had not initiated criminal proceedings. The general public prosecutor’s office has now rejected the complaint, senior public prosecutor Mia Sperling-Karstens told the “Tagesspiegel”.

47 million euros in taxes not collected

According to the Tagesspiegel, the statement said that there were no “indications of suspected tax evasion by the Warburg Bank being knowingly or intentionally promoted by those responsible for the Hamburg tax authorities”. So far there has been no evidence of false information from Chancellor Scholz in the Cum-Ex investigative committee.

The background is a case from 2016: after the meeting between the then mayor Scholz and the bank shareholders Christian Olearius and Max Warburg, the Hamburg tax authorities waived a reclaim of 47 million euros from the Warburg Bank in connection with cum-ex transactions – a great loss for the treasury. A year later, 43 million euros were only reclaimed after the Federal Ministry of Finance intervened shortly before the statute of limitations expired.

Cologne public prosecutor determined

The question is whether political influence was exerted on the decision not to reclaim the millions. A Parliamentary Committee of Inquiry is investigating.

Lawyers also have different perspectives on the case: the Cologne public prosecutor’s office is already investigating two former Hamburg SPD politicians and a tax officer on suspicion of facilitating tax evasion. One of them is Johannes Kahrs, who was found in a raid with 200,000 cash.

Banks cheat the state for billions

In cum-ex deals, investors used a loophole in the law to cheat the German state out of money for years. Around the dividend record date, several participants pushed shares with (“cum”) and without (“ex”) dividend rights back and forth. As a result, tax offices reimbursed capital gains taxes that had not been paid at all.

The state suffered billions in damage. In 2012 the tax loophole was closed. Several public prosecutors and courts nationwide have been investigating for years to clear up one of the biggest tax scandals in post-war German history. Last year, the Federal Court of Justice ruled that cum-ex deals were a criminal offence.

Warburg banker sentenced to five and a half years in prison

The former chief representative of the Warburg Bank was sentenced to five and a half years in prison by the Bonn district court last year in Germany’s first criminal proceedings relating to this practice for tax evasion. In May of this year, the Federal Court of Justice (BGH) in Karlsruhe rejected the appeal, which made the judgment final.

What is CumEx?

CumEx trades are so called because large blocks of stocks with (“cum”) and without (“ex”) dividend entitlements were shuffled back and forth in rapid succession around the payout date. The deliberately opaque transactions had only one goal: to create as much confusion as possible with the tax authorities. With this trick, those involved had capital gains tax refunded on a large scale, which was never paid. The profits were shared. This was made possible by a legal loophole that has since been closed. By then, the cum-ex business had been booming – for years.

World Nation News Desk
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