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Scholz summoned before German MPs over money-laundering scandal

German election updates

Olaf Scholz, the frontrunner to succeed Angela Merkel in this month’s German election, is to be questioned by MPs about a money-laundering scandal as rivals sniff an opportunity to chip away at the Social Democrat’s commanding lead in the polls.

Scholz, whose SPD is currently well ahead of the centre-right CDU/CSU with the Greens in third place and the liberal Free Democrats in fourth, will appear before the Bundestag finance committee on September 20, just days before the election a week on Sunday.

In recent days the CDU/CSU has opened up a new front in its campaign to halt the Social Democrats’ rise. Party leaders have focused on three scandals that cast an unflattering light on Scholz, Germany’s finance minister and deputy chancellor — the collapse of disgraced payment company Wirecard, the cum-ex tax fraud and irregularities at the Financial Intelligence Unit, Germany’s main anti-money laundering agency.

“When you see how many financial scandals he’s embroiled in . . . people are beginning to think about whether Olaf Scholz really is the right chancellor for Germany,” said Friedrich Merz, the CDU/CSU’s main spokesman on economic policy.

The SPD has hit back, with Lars Klingbeil, the party’s general secretary, accusing Armin Laschet, the CDU/CSU’s candidate for chancellor, of “deliberately distorting the facts, bending the truth and spreading lies in order to harm Olaf Scholz personally”.

The main focus of the CDU/CSU’s latest campaign are the searches public prosecutors carried out last week at the finance ministry in Berlin as part of an investigation into alleged obstruction of justice at the FIU. They are looking into whether employees of the unit failed to pass on warnings from banks about possible money-laundering to the police.

Scholz criticised the raids, saying the prosecutors could have put their questions to the ministry “in writing”. They had decided to proceed in a different way “and everyone can interpret that for themselves”, he said. Some in the SPD privately saw a political motive behind the raids.

That prompted an angry response from the CDU/CSU. “If he’s accusing the judiciary of dubious motives, he’s deliberately undermining [its] standing as an independent third pillar of our constitutional state,” said Hans Michelbach, a senior CSU MP and member of the Bundestag finance committee.

But the FIU investigation is just one of several affairs that the CDU/CSU are hoping could tarnish Scholz’s reputation in the eyes of voters. Another is the cum-ex tax fraud, a set of share trades that robbed the German exchequer of billions of euros in revenue. In 2016, while Scholz was mayor of Hamburg, the tax authority there chose not to demand repayment of €47m in back taxes from Warburg Bank, which had been involved in some of the cum-ex trades.

The opposition in Hamburg accuses Scholz of influencing the tax authority into letting the bill lapse, and point to three meetings he held with one of Warburg’s owners, Christian Olearius. Scholz, who has dismissed the charge of political interference as a “baseless scare story”, says he can no longer remember what he and Olearius talked about.

The third line of attack concerns Wirecard. Germany’s financial watchdog BaFin has been heavily criticised for failing to spot irregularities at the payments company and for pursuing journalists who exposed the fraud. Opposition MPs say Scholz bears political responsibility for the failings at BaFin’, which is overseen by his ministry.

Scholz said he responded to the scandal by reforming and strengthening Germany’s system of financial oversight, introducing tough new rules for auditors and changing BaFin’s leadership.

But the CDU/CSU still sees Wirecard as a useful weapon in its campaign against Scholz. “Millions of small investors lost a lot of money because of your failure to organise adequate supervision,” Laschet said during last Sunday’s TV debate between the candidates. “You bear responsibility for that.”

It is unclear if the tactic is working, however. A snap poll of viewers after the TV debate said Scholz had won it, with 32 per cent considering he had performed best, 26 per cent plumping for the Green candidate Annalena Baerbock and only 20 per cent for Laschet.

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