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The co-owner of one of Germany’s oldest and most prestigious private banks has been charged with arranging a €280 million tax fraud for his alleged role in a long-running dividend tax scam.
The trial in Bonn of Christian Olearius, the 81-year-old former chairman of Hamburg’s MM Warburg, marks an escalation in the “predecessor” scandal, which pits him against the German chancellor and former Hamburg mayor Olaf Scholz. Olaf Scholz’s relationship is under scrutiny by prosecutors.
In a lean deal, investors defrauded tax authorities over years to refund billions of euros in dividend taxes that were never paid. Several bankers and lawyers have been sentenced to long prison terms in previous cases. Prosecutors in Cologne, Frankfurt and other cities are investigating more than 1,500 additional suspects in an investigation expected to last several years.
The semen trade exploited a flaw in German tax law. Complex stock transactions around stock dividend dates can be used to justify clawing back taxes on dividends that were never paid.
On Monday, a five-judge panel at the Bonn District Court heard allegations that starting in 2006, Olearius collaborated with others between 2007 and 2011 to organize such transactions and that the bank received 280 million euros in illegal payments. Tax refund.
Prosecutors told the court: “As a personally responsible shareholder, principal owner and spokesman for Warburg Partners, (Olearius) personally oversaw in detail all of the bank’s strategies and approved all side transactions he initiated.”
Prosecutors said Aurelius was fully aware that the semen trade was lucrative because of tax fraud and signed the bank’s fraudulent tax returns. If convicted of all charges, Aurelius could be sentenced to up to 10 years in prison.
On Monday morning, Aurelius confirmed his personal details but did not issue a personal statement. He has previously denied any wrongdoing.
Prosecutors also claimed that Warburg deliberately set up investment funds to exploit flaws in tax law and that Aurelius misled tax authorities during inspections. Prosecutors also said Scholz lobbied him while he was mayor of Hamburg and the two met several times. Prosecutors have not accused Scholz of any wrongdoing.
The city of Hamburg only took back the tax refund after Berlin’s finance ministry ordered it back, a rare intervention by the federal government several years later.
The meeting between Scholz and Aurelius was initially not disclosed by the Hamburg government and only became public after the banker’s diary was leaked to the press, sparking a political scandal over whether the mayor was involved in Hamburg’s initial decision to abandon played no role in the claim. . The chancellor denied any illegal interference and said he did not remember details of the meeting with Aurelius.
Olearius resigned as chairman of Warburg Pincus in 2020. A year later, his son left the bank’s management board. Olearius also handed over voting rights related to a 40% stake in the bank to trustees under pressure from financial regulator BaFin.
Founded in 1798, Warburg Bank is one of Germany’s most high-end private banks, managing assets of 4 billion euros. The bank said it had repaid 247 million euros to tax authorities, mainly from Olearius’ personal funds, and declined to comment further on the trial. In a statement on its website, the company acknowledged that “Warburg Pincus’ tax assessment of the Lean deal was incorrect.”
According to the bank, it made an after-tax profit of 46 million euros from lean trading. The company, which is restructuring after the scandal, reported an after-tax loss of 34.6 million euros last year.
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