Anne Brorhilker, Germany’s leading investigator in the Cum-Ex tax scandal, is known for her clear words. And so the Cologne chief public prosecutor has now also expressed herself in the Hamburg investigative committee, which wants to clarify whether there was political influence in the Hanseatic city in favor of the local private bank Warburg. Brorhilker said on Friday as a witness in the U-Committee you could not understand that the Hamburg tax authorities had waived a tax claim from Warburg. She is amazed “that such a hesitant attitude was displayed”. Brorhilker’s lack of understanding of the Hamburg tax authorities increases the political explosiveness of the case considerably.
The U-Committee is about the question of why Hamburg’s tax authority Warburg in 2016 initially waived alleged tax debts in the amount of 47 million euros and in 2017 had to be instructed by the Federal Ministry of Finance to demand a further 43 million euros. And it’s about Olaf Scholz, who is to be elected Chancellor next week. The SPD politician was Hamburg’s mayor at the time. His successor as mayor, Peter Tschentscher, also SPD, was Senator for Finance at the time.
The total damage caused by the cum-ex trade is said to amount to more than ten billion euros
Scholz and Tschentscher deny political influence in the Warburg case. Scholz had met several times in 2016 and 2017 with Warburg co-owner Christian Olearius, a great Hanseatic figure, and apparently spoke to him once on the phone. According to the findings of the U Committee, Scholz advised Olearius in November 2016 to forward a letter from the bank to Tschentscher to the responsible tax office.
A few days later, the Hamburg tax authorities decided to waive claims for the time being. In the meantime, Warburg has paid 155 million euros to the tax authorities according to court rulings. The private bank rejects the accusation that they wanted to cheat the tax authorities. Warburg wants to get the 155 million euros back through legal action from the “initiators, liquidators and profiteers” of the transactions concerned.
Brorhilker knows many of these profiteers. The Cologne public prosecutor’s office is investigating nationally and internationally against more than 1000 accused from banks, other financial firms and law firms. Numerous banks and their business partners have had a tax paid only once when trading shares with (cum) and without (ex) dividends reimbursed several times by cleverly deceived tax offices. That was tax theft, so to speak; the legal charge is tax evasion in particularly serious cases. The total damage to the German state is said to amount to more than ten billion euros.
“This is not rocket science”
One of the many preliminary investigations in Cologne concerns the private bank Warburg, which is why the U-Committee now heard Brorhilker as a witness. The Cologne Public Prosecutor has never seen anything like the Hamburg tax authorities. Warburg had initially successfully objected to the Hamburg tax authorities that the case had not yet been fully investigated. In addition, according to Warburg at the time, the future of the bank would be endangered in the event of a repayment. Brorhilker, on the other hand, was convinced early on after a search at Warburg and further investigations that it was illegal business.
“I can’t understand that you can have doubts,” she said. “This is not rocket science.” Huge profits were postponed via bogus invoices, tens of millions. She only knows something like this from construction, “scaffolding”. According to Brorhilker, the Hamburg tax authorities could have reclaimed money from Warburg as early as 2016. In 2017 the “evidence was even better”.
The Cologne investigators had another surprise ready for the U-Committee. Brorhilker reported that Hamburg’s tax investigators refused to work with the North Rhine-Westphalian investigators. Brorhilker was also surprised that the Federal Ministry of Finance had to ask Hamburg in 2017 to collect money from Warburg. “Close the sack,” the Federal Ministry of Finance had instructed the people of Hamburg. Brorhilker had previously explained the state of the investigation to the Federal Ministry of Finance.
With her appearance as a witness in Hamburg, the topic is picking up speed again. The U Committee goes back to reports in the Süddeutsche Zeitung and other media (NDR, Time) from September 2020 about several meetings between Warburg co-owner Olearius and Scholz. According to the findings of the committee, Olearius visited the then mayor Scholz on September 7, 2016 and asked about the Cum-Ex tax audit at Warburg, allegedly referring to the allegedly poor financial situation of his bank. Scholz later testified before the U Committee that he had made no promises. But he is said to have said that Olearius could report back.
Scholz said he couldn’t remember a phone call
On October 26, 2016, Olearius was again at Scholz. According to the findings of the investigative committee, the private banker informed the mayor of the course of the tax case and Warburg’s position. According to his statement, Scholz does not want to have taken a position on this. Two weeks later, on November 9, 2016, Scholz called Olearius on his cell phone. According to his calendar, the conversation came about at the mayor’s request.
Scholz later reported this to the U-Committee in Hamburg and said that he himself had no memory of the phone call. Obviously, as the Warburg banker noted, Olearius received a hint from Scholz that he should send a letter from Warburg to the tax office for large companies to Finance Senator Tschentscher without further comments. Scholz said in the U Committee that he had no reason to doubt the portrayal of Olearius. He assumed that he had referred Olearius to the competent authority and wanted to ensure that nowhere would it appear “that I adopt his opinion”.
On the same day, Olearius sent Tschentscher a copy of a letter to the tax office for large companies. Tschentscher is said to have provided the letter with a request for the state of affairs. According to Manager magazine and mirrors he is said to have phoned Scholz the day before, November 8, 2016, and two days after receipt of the letter, November 11, had an appointment with the head of the tax authorities. A good week later, the Hamburg tax authorities decided not to take action against Warburg at the moment, as this was only based on circumstantial evidence and assumptions and the matter had not yet been clarified. That was largely Warburg’s point of view. The tax authorities later explained that everything was received correctly.
The fact that Brorhilker can investigate so intensively, including at Warburg, can also be traced back to the former red-green state government in North Rhine-Westphalia. The then finance minister and later SPD federal chairman Norbert Walter-Borjans, together with Interior Minister Ralf Jäger (also SPD), ensured closer cooperation between the tax investigation department and the State Criminal Police Office (LKA) in North Rhine-Westphalia. At the beginning of 2015, a new investigation group “Organized crime and tax evasion” was created. Finance Minister Walter-Borjans said at the time, “our tax investigation investigates every suspicion – regardless of the person or financial institution.” Banks should not rely on the “systematic plundering of the treasury going undetected.” Walter-Borjans did not comment on individual cases.
The Cologne Chief Public Prosecutor Brorhilker has meanwhile obtained first judgments against Cum-Ex accused at the Bonn Regional Court, including against the former general representative of Warburg. He was sentenced to five and a half years in prison at the beginning of June 2021, the sentence is not yet final. In another case brought to court by Brorhilker, which involved two former Hypo-Vereinsbank stock traders, the Federal Court of Justice has now classified cum-ex deals at the expense of the state treasury as criminal.
The Cologne chief public prosecutor considers the concern of the Hamburg tax authorities at the time about the economic difficulties of the Warburg Bank to be a strange argument to refrain from a tax claim. Brorhilker said in the U-Committee, “It would be new to me if a tax office would take into account that someone cannot pay his income tax because he was on vacation.”