German prosecutors rule out charges against Scholz

Prosecutors in Germany said on Tuesday they will not continue to investigate Chancellor Olaf Scholz over claims that he had aided and abetted tax evasion in the latest twist in a scandal that has rocked the nation.

The claims against Scholz, which were first made in February by lawyers investigating one of the nation's largest-ever alleged frauds, included a demand that criminal proceedings be opened up against him.

But the evidence does not warrant such action, a spokesman for the general prosecutor confirmed.

The Tagesspiegel daily newspaper and broadcaster n-tv both reported that the spokesman explained that the general prosecutor had rejected claims of wrongdoing and that no legal action would be forthcoming.

"The reports (that there is no evidence) are correct," the spokesman was quoted by Reuters as saying.

Scholz's alleged involvement in the long-running "cum-ex" scandal had revolved around claims he may have been the owner of more than 200,000 euros ($202,500) that was discovered in a safe belonging to a member of his center-left Social Democrats political party during his seven years as mayor of the northern port city of Hamburg, a term that ended in 2018 when he became finance minister to former chancellor Angela Merkel.

Reuters reported that the "cum-ex" scandal if proven, amounts to Germany's biggest postwar fraud, and claims that Scholz had some involvement had galvanized media outlets.

The "cum-ex" scandal allegedly features a share-trading program that led to taxpayers being cheated out of billions of euros.

Reuters reported that investigators believe the fraudsters traded company shares very quickly among participating banks, investors and hedge funds to make it look as if the entities had multiple owners, all of whom then claimed tax rebates. Prosecutors believed the fraud meant that government departments reimbursed taxes that were never paid in the first place.

Scholz had consistently denied having any role in any wrongdoing.

While Scholz has been ruled out of involvement, several prominent banks and investment advisers are still being probed in connection with the alleged fraud, which prosecutors said involved illegal dividend-stripping plans worth about 10 billion euros.

The BBC reported that around 100 banks in Germany and other parts of Europe have come under the scrutiny of prosecutors since the allegations first surfaced five years ago.

And Scholz is still set to face difficult questions from a parliamentary committee in Hamburg on Friday.

Lawmakers said they want to quiz him about the alleged withdrawal of a 47-million-euro tax bill that was initially handed to one of the banks allegedly involved in the "cum-ex" scandal.