Scholz and the Warburg Bank: that’s what the cum-ex scandal is about

What role does the Hamburg private bank Warburg play in the cum-ex scandal? How did Cum-Ex become a political affair – and can it be dangerous for Chancellor Scholz? The most important questions and answers.

What happened at Cum-Ex?

For years, bankers, top lawyers and tax consultants have had taxes reimbursed by the state that they had never paid before – an illegal grab into the state coffers that cost the tax authorities several billion euros.

How do cum-ex trades work?

A comparison helps to understand the cum-ex principle: Anyone who brings a returnable bottle to the vending machine receives a receipt and gets their money back at the supermarket checkout. However, anyone who uses criminal energy to place a real deposit on the copier and uses the counterfeit deposit to collect money that he has never paid before is cheating the cash register.

According to this principle, the cum-ex trades ran off. Except that the actors did not copy deposit receipts, but pretended to own shares at a certain point in time and to have paid taxes on the corresponding share profits with agreed share transactions. This is how they scammed their tax receipts. They used these to get taxes back that they had never paid. The “cash register” was the tax office, which paid out billions.

To what extent is the Warburg Bank involved?

The Hamburg private bank MM Warburg, like many other banks, made millions with the illegal cum-ex transactions. After the Bonn Regional Court ordered the bank to repay the Cum-Ex loot in 2019, the bank refunded the money to the tax authorities. The bank recently announced that its tax assessment of the cum-ex transactions proved to be wrong. “The members of the Supervisory Board and the Board of Directors of MMWarburg & CO disapprove of illegal tax arrangements of any kind.”

Why did the Warburg case become a political affair?

In 2016, the Hamburg tax office got involved and checked whether the Warburg Bank had to pay back the cum-ex booty. For cum-ex transactions from 2009 alone, the bank should reimburse 47 million euros. For a long time it looked as if the financial authorities would take action. But in November 2016, the tax office suddenly waived the million-euro payment – allegedly because of legal risks.

The investigations by the Cologne public prosecutor later brought to light the diaries of Warburg owner Christian Olearius. In it, the banker described that the influential SPD politician Johannes Kahrs and the former SPD Interior Senator Alfons Pawelczyk had promised to help him. In addition, Olearius met three times during the period in question with the then first mayor of the Hanseatic city and today’s Federal Chancellor, Olaf Scholz. According to Olearius, it should have been about Cum-Ex, Scholz stated that he did not remember the content of the conversations.

Since the diaries became known, the question has been whether there was any political influence in the Warburg case. An investigative committee of the Hamburg Parliament is investigating this question. The Cologne public prosecutor’s office is also investigating Kahrs, Pawelczyk and the tax officer responsible for the Warburg Bank on suspicion of favoritism.

There are no investigations against Olaf Scholz and the then finance senator and current mayor Peter Tschentscher. All politicians and tax officials involved deny any political influence. The Warburg-Bank writes in a statement that in its opinion there was no undue influence.

Is there evidence of political interference?

There is no evidence, but some clues are still unclear. The then mayor, Olaf Scholz, called Christian Olearius on November 9, 2016. In the phone call, the Warburg owner recorded it in his diary, Scholz is said to have advised him to forward a letter of defense from the Warburg Bank to Finance Senator Peter Tschentscher without comment.

Scholz explains that he can no longer remember the content of the phone call. In any case, Olearius forwarded the letter to Tschentscher without comment, who – with his green ministerial ink – sent it to the responsible tax officials. Shortly thereafter, the officials decided, contrary to earlier assessments, to forgo the cum-ex money.

What is the status of the investigation?

Two days after the federal election, NRW investigators searched the Hamburg tax authority and the apartments of Johannes Kahrs and the tax officer.

During the raid, the investigators secured, among other things, a suspicious Whatsapp chat by the officer. On the very day that the questionable decision in favor of the Warburg Bank was made, she wrote to a friend that her diabolical plan had worked. She asked back whether one let the statute of limitations expire. The tax officer agreed.

However, when evaluating the seized e-mail inboxes of the Hamburg tax administration, the investigators encountered a suspicious emptiness. The prosecutors are now investigating whether relevant emails were deleted in the Hamburg financial administration. The head of IT at Hamburg’s tax administration also commented in this direction before the Hamburg investigative committee. Accordingly, deletions would have taken place. Upon request, the Hamburg tax authorities stated that they had no knowledge of deletions.

What are the expectations of the Scholz statement before the U-Committee in Hamburg?

Critics accuse Olaf Scholz that the gaps in his memory of the Warburg case are not credible and call on the Chancellor to help clarify the matter. At the federal press conference on August 11, Scholz repeated that there had been no influence “as far as the decision was concerned”. In this respect, it would be a great surprise if the Chancellor presented new memories as a witness during his second interrogation.

Is there a connection between the money found at Kahrs and the Cum-Ex scandal?

The media outcry was great when it became known that as part of the cum-ex raid in a locker belonging to Johannes Kahrs at the Hamburger Sparkasse more than 200,000 euros in cash were found. However, as of this writing, there is no evidence that this money is related to Cum-Ex. For this reason, the Cologne investigators did not confiscate it.

Can the affair still be dangerous for Scholz?

There are currently no actual indications that Olaf Scholz intervened in Warburg-Bank’s tax proceedings. E-mails from his time as Hamburg mayor could hardly be found, and witnesses in the investigative committee exonerated him. That’s obviously how the investigators in Hamburg and Cologne see it.

Since Scholz does not remember the meeting with the Warburg owner, Christian Olearius could at best provide an explanation. The private banker will probably soon have to answer before the Bonn Regional Court. He then faces a long prison sentence. He may remember more details of the meetings with the mayor and can say how Scholz reacted to Olearius’ expectation that the tax reclaim would dissolve into “white clouds”, as a lawyer for the Warburg owners once put it.