German chancellor Scholz testifies over tax fraud scandal

German Chancellor Olaf Scholz has denied allegations of impropriety in his handling of a multibillion-euro tax scam while serving as the mayor of Hamburg at a session before parliamentarians. The case threatens to discredit him even as he deals with other difficulties.

In the "cum-ex" or "dividend stripping" plan, banks and investors would quickly exchange shares of corporations on the day of their dividend release, obscuring stock ownership and enabling several parties to fraudulently claim tax refunds on dividends.

As per Aljazeera, the now-closed loophole gained political significance in Hamburg's northern port because Scholz's administration was slow to demand that the local bank Warburg pay back millions of euros it had earned under the plan.

After the federal finance ministry intervened, Warburg, which has a significant presence in Germany's second-largest city, finally made good on its around 50 million euro ($50.3 million) tax debt.

“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.

Scholz might be asked to testify in front of MPs a third time, according to Richard Seelmaecker, a representative of the opposition conservatives on the committee, as fresh information from the probe was just starting to emerge.

Even as the chancellor struggles to keep his fractured coalition together in the face of popular dissatisfaction with skyrocketing energy prices, the case threatens to destabilise him.

Just 58 percent of Germans believe he is doing a good job, compared to an average of nearly 70 percent for his predecessor Angela Merkel throughout her 16 years in office. His popularity is already lower than that of his economy and foreign ministers.

In the meantime, polls show that his Social Democrat Party (SPD) is now trailing the opposition conservatives and junior