Christian Olearius, the 81-year-old former chairman and current co-owner of Hamburg’s prestigious private bank MM Warburg, has gone on trial in Germany for his alleged central role in orchestrating a massive €280 million tax fraud scandal through illicit dividend trades.
Olearius stands accused of arranging complex dividend transactions known as “cum-ex” trades from 2006 to 2011 that enabled Warburg bank to wrongly obtain €280 million in tax refunds that it was never entitled to. His controversial links to German Chancellor Olaf Scholz, who previously served as the mayor of Hamburg, have drawn intense scrutiny from prosecutors amid Germany’s sprawling cum-ex scandal that has rocked its financial and political institutions.
The cum-ex trades exploited a loophole in Germany’s tax code, enabling a web of investors, bankers and lawyers to trick tax authorities for years into refunding billions of euros in dividend taxes that were never paid in the first place. Numerous key figures have already received lengthy prison sentences in previous cum-ex criminal cases, but Olearius’ high-profile trial marks a significant escalation as over 1,500 additional suspects remain under investigation across Germany in probes expected to drag on for years.
In their extensive charges against Olearius unveiled during the trial’s opening at the Bonn District Court, prosecutors allege that Olearius knowingly organized and initiated cum-ex style trades in his capacity as a personally liable shareholder and influential owner steering Warburg’s strategies. They claim he single-handedly approved the illicit trades and signed off on the bank’s fraudulent tax returns to facilitate the massive years-long scam.
The prosecution also accuses Olearius of deliberately setting up obscure investment funds purely to exploit the loophole in the tax code. Additionally, they allege he actively misled and obstructed tax inspectors through his statements and responses during audits.
Perhaps most controversially, prosecutors assert that Olearius lobbied Scholz repeatedly on cum-ex related issues during private meetings while Scholz was the mayor of Hamburg. The exact nature of their discussions remains murky, and prosecutors do not allege any specific wrongdoing by Scholz himself. However, the meetings have fueled a political scandal about whether Scholz enabled Hamburg officials’ initial reluctance to reclaim the bogus tax refunds.
Hamburg only agreed to claw back the hundreds of millions in erroneous refunds years later when essentially forced to by a rare intervention from the federal government in Berlin. Olearius has stepped down from his Chairman role and board positions, while also relinquishing his 40% voting stake in Warburg to a trustee amid the ongoing criminal investigations – although he maintains his innocence.
If convicted on all charges, Olearius faces up to 10 years imprisonment for his central role in the staggering tax fraud. The trial marks a significant turn in Germany’s ongoing cum-ex scandal that has raised profound questions about compliance and ethics at the highest levels of German business and government.
