German tax official tells Cum-Ex probe that bank should have paid up

An investigative committee for Hamburg’s parliament looking into the Cum-Ex scandal at Warburg bank on Friday questioned witnesses as to whether politicians had exerted undue influence on their work.

Hamburg (dpa) – An investigative committee for Hamburg’s parliament looking into the Cum-Ex scandal at Warburg bank on Friday questioned witnesses as to whether politicians had exerted undue influence on their work.

The Cum-Ex scandal saw traders use a legal loophole to shift shares back and forth at high speed between parties around the time dividends were paid out, in order to receive tax repayments for taxes they had not paid.

Cum-Ex trading is alleged to have cost the German state billions of euros and state treasuries across Europe more than 55 billion euros (63 billion dollars). Germany closed the loophole in 2012.

The scheme’s moniker comes from Latin: It was not clear to the tax authorities who owned the shares with (cum) a claim to dividends and who owned them without (ex).

Two officials working for the tax office and the tax office for large companies told the committee that politicians had not influenced their activities.

However, one said that Warburg Bank had been treated leniently. “I was of the opinion that the money should be reclaimed,” he said. “The champagne corks popped at the bank,” he said.

In 2016, the German tax authorities waived claims against Warburg Bank for 47 million euros when the statute of limitations expired. A further 43 million euros in capital gains tax was only claimed in 2017 after the Finance Ministry intervened.

The Hamburg committee is trying to establish whether any leading Social Democrat (SPD) lawmakers influenced the decisions, as meetings were held between Hamburg’s former mayor, Olaf Scholz, and the Hamburg-based bank’s co-owners, Max Warburg and Christian Olearius, in 2016 and 2017.

At the time, Olearius was under investigation on suspicion of serious tax evasion.

Scholz has said that meetings took place but that he could not remember what was said. He has denied influencing the tax proceedings.

Scholz, now finance minister, has faced repeated criticism over the scandal as the SPD’s chancellor candidate. However, after the party narrowly won the elections, he looks likely to succeed German Chancellor Angela Merkel.

However, the long-running investigations have led lawmakers to question whether the SPD was right to accept donations from the bank.

The SPD said it had accepted 45,500 euros in donations from Warburg Bank and its affiliated companies in 2017, even though the bank was already being investigated for the Cum-Ex tax fraud.

“Knowing what we know today, we should not have accepted those donations,” Hamburg’s finance senator Andreas Dressel told Hamburger Abendblatt newspaper.

Fabio de Masi, a member of the Left Party in Germany’s Bundestag, called on the Hamburg SPD to repay the donation immediately.

Scholz, meanwhile, looks likely to succeed German Chancellor Angela Merkel after the SPD narrowly won the country’s elections.