Christian Olearius, the ex-head of M.M. Warburg & Co, appeared in a German court to stand trial over charges he was responsible for Cum-Ex tax deals at the lender that cost the nation €280 million ($298 million).
(Bloomberg) — Christian Olearius, the ex-head of M.M. Warburg & Co, appeared in a German court to stand trial over charges he was responsible for Cum-Ex tax deals at the lender that cost the nation €280 million ($298 million).
He is accused of 14 cases of aggravated tax evasion between 2006 and 2019. Olearius, 81, knew all the details and approved the transactions at the lender, prosecutors claim. Olearius, who still owns 40% of the bank, has vigorously denied any wrongdoing.
The gains from the trades Olearius oversaw “weren’t generated via market opportunities but were based on fraudulently obtaining tax money,” prosecutors said when reading out the indictment in court. “Olearius always knew what happened and took all the main decisions,” according to the prosecutors. He “was personally involved.”
The Hamburg-based lender’s Cum-Ex involvement has been at the center of Germany’s first cases over the controversial trading strategy, leading to the convictions of two former UK traders and, in subsequent trials, two ex-Warburg senior managers. One of them, Olearius’ right-hand man at the bank, was sentenced to 5 1/2 years.
Cum-Ex was a trading strategy that siphoned off at least €10 billion in government revenue. It took advantage of German tax laws that seemed to allow multiple investors to claim refunds of a tax on dividends that was paid only once. The nation moved to abolish the practice in 2012. More than 1,800 people from the financial industry are being probed over the scandal.
As part of the the first Bonn trial in 2020, Warburg was ordered to pay €176 million. Germany’s top criminal court two years ago backed the judgment in a landmark ruling and Olearius lost a case in the country’s constitutional court challenging the findings in that case which had already extensively discussed his role.
The probe has also become a headache for German Chancellor Olaf Scholz after it became public that while mayor of Hamburg, he met twice with Olearius in 2016. At the time, the city’s tax office was mulling rescinding €47 million in tax refunds. In the private meetings with Scholz, Olearius lobbied against it, and a few weeks later the city decided to not claim the money back.
Scholz, a trained lawyer, has always said he has no memory of the conversations with Olearius. He has repeatedly denied playing any role in the decision by local tax authorities to let Warburg off repayment. The Bonn court may call him as a witness in the case.
Two other former Warburg bankers are also standing trial in a separate case at the Bonn court over their role in the transactions.
In the Olearius case, the judges have scheduled hearings well into March next year. The case is: LG Bonn, 63 KLs 1/22.
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