Hamburg tax affair follows Olaf Scholz to Berlin

A week before he is elected Germany’s next chancellor, Olaf Scholz faces fresh claims he was involved in waiving a multimillion-euro fine against a major Hamburg bank involved in large-scale tax fraud.

On the campaign trail before September’s federal election, which Mr Scholz won for his Social Democratic Party (SPD), he was confronted with claims from a five-year-old scandal involving Hamburg-based private bank M M Warburg.

The accusations against him failed to stick, but now the affair has flared up thanks to new details that appear to link Mr Scholz more closely to discussions over which he claims to have no memory.

In October 2016 Hamburg’s Warburg bank, founded in 1798, was alarmed by a €47 million demand from the city-state’s tax authorities over problematic transactions, part of a worldwide tax fraud known as “cum-ex”.

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Warburg had received credits for taxes that had not been paid on share trading transactions worth an estimated total of €5 billion. When tax audits revealed the trickery, Hamburg’s revenue officials warned the bank to repay what it owed or be barred from trading.

By late 2016, with the clock ticking on the €47 million tax demand from its 2009 accounts, a senior Hamburg revenue commissioner flagged the case with finance senator Peter Tschentscher and presented a lengthy document making the case for full repayment from Warburg.

Alarmed, bank owners Christian Olearius and Max Warburg asked to meet with Mr Scholz late in 2016. They had two meetings, warned him that the payments would break their bank and presented him with a letter presenting arguments against the demand.

On November 9th Mr Scholz called Mr Olearius and instructed him to forward the bank’s letter to the finance ministry.

Eight days later the demand was dropped by the tax official, who outlined her reasons in a short document with arguments reportedly similar to those made by the Warburg owners.

‘No memory’

Mr Scholz moved in 2017 to Berlin, to serve as Angela Merkel’s federal finance minister, but has been unable to shake off the Warburg case.

For years he denied meeting the Warburg owners before the decision, which was revealed to be untrue by two media investigations in 2020. Quizzed about those meetings in parliamentary inquiries, Mr Scholz insisted he had no memory of the details of the meetings.

Since Mr Scholz’s election victory, and talks to form a new coalition with the Greens and the liberal Free Democratic Party (FDP), the complicated Warburg affair had retreated into the background.

Now it has roared back into life thanks to the 2016 office calendar of finance senator Peter Tschentscher. Submitted to a Hamburg parliamentary inquiry, it shows Mr Tschentscher spoke by phone with Mr Scholz on November 8th. The next day the then mayor told Warburg to send send its letter to the finance senator.

Political influence

Until now, Mr Scholz has made no reference to the call and is now likely to be summoned again soon – this time as chancellor – to explain his role in the affair. Throughout state and federal investigations Mr Scholz and Mr Tschentscher have insisted that Hamburg’s tax office operates free of political influence.

That has prompted uproar in Hamburg’s tax office, where responsibility for the Warburg decision has been pinned on the tax investigator – and not her political masters.

“There is no way that a civil servant could waive a massive payment like this without it going right to the top, and back down again,” said one senior Hamburg tax official to The Irish Times.