Germany: Charges against Cum-Ex banker dropped over health

Charges against former banker Christian Olearius for his involvement in the sprawling Cum-Ex tax scandal were dropped by a regional court in Bonn, Germany, on Monday due to the defendant's failing health.   

Doctors said the 82-year-old was not healthy enough to complete what was shaping up to be a yearslong trial.

On Monday, Olearius again professed his innocence. He went on to attack prosecutors and investigators in a 20-minute statement, before imploring the presiding judge to, "Stand up for my reputation, my honor and my credibility."

What was Christian Olearius accused of?

Prosecutors claim Olearius knowingly misled German tax authorities during his time as head of Hamburg's MM Warburg, a private bank, by taking part in what is likely the biggest tax-evasion scandal in the history of the Federal Republic of Germany.

In all, the German state is thought to have lost tens of billions of eurosin tax income — mostly between 2006-2011 — due to banks and investors using a legal loophole to rapidly transfer shares back and forth between parties when dividends were paid, in order to receive reimbursements for taxes they had not in fact paid.

In 2021, the German Federal Court found that banks and traders had engaged in criminal activity. 

Prosecutors in Cologne accused Olearius of 15 counts of serious tax evasion resulting in an estimated €280 million ($300 million) in losses for the German state between 2006 and 2019. The Regional Court in Bonn allowed prosecutors to move forward on 14 counts.

Prosecutors recently asked to have proceedings against Olearius, which began in September last year, terminated in favor of a so-called recovery procedure looking into whether €43 million in suspected personal gains could be confiscated. The Bonn court rejected the motion. Prosecutors appealed the decision before the Higher Regional Court in Cologne.

Under Olearius' leadership, MM Warburg was party to the Cum-Ex plan from 2008-2011. During that time, the bank received reimbursement for €169 million in tax payments that it had not actually made. A Warburg investment fund also received reimbursement payments exceeding €100 million.

The tax lawyer behind the plan as well as Olearius' right-hand man at the bank have both been sentenced to long jail terms for their roles in the scandal. Though Olearius has proclaimed his innocence, prosecutors charged that the defendant was "involved in the scheme" by virtue of his dealings with the tax attorney, who was seen as the driving force behind the plan. 

German Chancellor Olaf Scholz and the Cum-Ex scandal

Over the course of the government's investigation into the Cum-Ex scandal, Olearius was also suspected of having used his political connections in Hamburg to advocate for the city-state's leaders to intervene on behalf of the bank to avoid the institution having to pay back its tax reimbursements.

The rumors immediately made waves as they implicated Chancellor Olaf Scholz. Before serving as Germany's finance minister and then chancellor, the Social Democrat (SPD) was mayor of Hamburg.

In 2016, Hamburg's Finance Ministry decided not to force MM Warburg to repay €47 million, however, in 2017, the Federal Finance Ministry overturned the decision, demanding a €43 million repayment.

It was later found that Olearius had given large political donations to high-ranking SPD politicians in Hamburg directly tied to financial oversight. He also met with Scholz personally three times in 2016 and 2017 to plead his case.

Scholz, who was forced to testify before a parliamentary investigative committee in Hamburg, initially said he had no recollection of meetings with Olearius.

After entries from Olearius' diary were published, Scholz confirmed that he had met with the banker but said he could not remember what was discussed during those meetings nor what was said in a phone call between the two at that time. The one thing Chancellor Scholz was sure of, he said, was that he had not made efforts to intervene on behalf of the bank.

On Monday, Judge Marion Slota-Haaf made clear that her decision to drop the case against Olearius was not to be equated with an acquittal.

With that, only two questions remain to be answered, whether German tax authorities can confiscate Olearius' personal profit from the deals, and who will ultimately cover the cost of his high-profile legal representation during the case.  

js/dj (AFP, dpa)