Olaf Scholz, Germany's vice-chancellor and Social Democratic Party lawmaker. Picture: GETTY IMAGES/BLOOMBERG/ KRISZTIAN BOCSI
Olaf Scholz, Germany's vice-chancellor and Social Democratic Party lawmaker. Picture: GETTY IMAGES/BLOOMBERG/ KRISZTIAN BOCSI

Frankfurt/Berlin — Germany’s vice-chancellor has come under renewed pressure from lawmakers over his handling of two financial scandals, hurting his chances of reviving his Social Democrats in the race to succeed Chancellor Angela Merkel in 2021.

Olaf Scholz, the Social Democrat candidate for chancellor, gambled with the party’s centre-left identity by joining a grand coalition with Merkel’s conservatives after the party’s worst post-war electoral defeat in 2017. He hopes to revive its fortunes in an election in which Merkel has said she will not stand.

But his chance of succeeding her depends on a reputation as a social justice campaigner, which has been undermined by criticism of his handling of two of the biggest corporate fraud scandals in German history: one dating back years to a stint as a mayor, and one on his watch as Merkel’s finance minister.

Lawmakers say Scholz failed to reveal a series of private meetings he had as mayor of the city of Hamburg with the then chair of the bank Warburg, at a time when the city was slow to claw back more than €40m from a tax fraud.

Scholz has denied using his influence as mayor to slow down city officials demanding back the funds, owed after the exposure of the CumEx-Files tax scam, in which fraudsters evaded billions of euros in tax by having two entities claim to own corporate shares simultaneously.

In a meeting with lawmakers, Scholz conceded that he had held meetings with the bank’s chair, though he said he could not recall the details, according to people who attended.

A spokesperson for Scholz said he had nothing to add about the affair beyond his previous public denials of wrongdoing. Warburg said it had since repaid €50m.

Enormous weakness

“It is remarkable that a person of his intellect shows such enormous weakness to remember ... [when] the matter starts to get interesting,” said Florian Toncar, an influential member of the Bundestag from the pro-business Free Democrats.

Fabio De Masi, a lawmaker from the Left party, said he had asked Scholz in March about meetings he may have had with the bank. “He said there was nothing more than what was already known. Now he admitted there were other meetings. Why did he hide this?”

In the other big scandal, Scholz has presided over the finance ministry during the collapse of the payments firm Wirecard, which went bankrupt after acknowledging that nearly €2bn had gone missing.

Parliament has announced an inquiry to force the government to reveal more about inaction by financial regulator BaFin, part of Scholz’s finance ministry, in the run-up to the fraud. The government’s critics say the authorities ignored many red flags.

“Germany tried to portray itself as a country of honesty and efficiency,” said De Masi. “Wirecard and CumEx are changing this perception.” 


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