Germany’s Chancellor Scholz Testifies Over Tax Fraud Scandal

German Chancellor Olaf Scholz has rejected accusations of impropriety in his handling of a multibillion-euro tax fraud while Hamburg mayor at a hearing before lawmakers in a case that threatens to tarnish him even as he battles multiple crises.

In the scheme of “cum-ex” or dividend stripping, banks and investors would swiftly trade shares of companies around their dividend payout day, blurring stock ownership and allowing multiple parties to falsely reclaim tax rebates on dividends.

The loophole, now closed, took on a political dimension in the northern port of Hamburg due to authorities’ sluggishness in 2016 under the mayorship of Scholz at demanding repayment of millions of euros gained under the scheme by local bank Warburg.

Warburg, which plays a big role in Germany’s second largest city, eventually paid its tax bill of around 50 million euros ($50.3m) after the federal finance ministry intervened.

“I did not exert any influence on the Warburg tax case,” Scholz said on Friday during his second appearance in front of a Hamburg parliamentary committee of inquiry into the cum-ex affair, one of Germany’s biggest post-war corporate scandals.

“There is nowhere even the tiniest suggestion that I agreed anything,” he said, referring to other testimonies before the committee.

However, Richard Seelmaecker, representative of the opposition conservatives on the committee, said that Scholz could be called to testify before lawmakers for a third time as new findings from the investigation were just emerging.

The case threatens to undermine the chancellor even as he is trying to hold his fractious coalition together in the face of public discontent over soaring energy costs.

His popularity is already lagging that of his economy and foreign ministers, while just 58 percent of Germans think he is doing a good job compared to an average of about 70 percent for his predecessor Angela Merkel during her 16 years in office.

Meanwhile, his Social Democrat Party (SPD) has slipped into third place in polls behind the opposition conservatives and junior coalition partners the Greens.