Economy
100 banks, 1,000 suspects: German fraud probe puts Scholz on the spot
German chancellor Olaf Scholz faces lawmakers’ questions this week over his role in tackling a multibillion-euro tax fraud as a sprawling probe into the scheme threatens to undermine him as he grapples with an energy crisis and the fallout of war. In the scheme, known as “cum-ex” or dividend stripping, banks and investors would swiftly trade shares of companies around their dividend payout day, blurring stock ownership and allowing multiple parties to falsely reclaim tax rebates on dividends. The loophole, now closed, has snowballed into a political scandal, reignited by recent headlines that prosecutors probing the scheme in Hamburg, where Scholz was previously mayor, discovered 200,000 euros of cash in the safe of a local politician.
The probe has long taken on vast dimensions. Government officials say it involves some 100 banks on four continents and at least 1,000 suspects. It is dragging in Scholz at a time when his fractious governing coalition struggles with growing public discontent over rocketing energy costs in the wake of Russia’s invasion of Ukraine. On Friday, Scholz is due to face local lawmakers in Hamburg who are investigating why, when Scholz was mayor, it took a finance ministry intervention for local authorities to move and demand repayment of millions of euros gained under the scheme by Warburg, an important local bank. Scholz has dismissed suggestions of political intervention on the bank’s behalf, but local lawmakers say the issue has not yet been put to rest. “The suspicion of political influence must be cleared,” said Goetz Wiese, a Christian Democrat politician who will question Scholz. “Scholz has to put all the facts on the table.”.
During the 2021 election campaign Scholz came under pressure over a fraud at Wirecard, which since collapsed. That did not derail his bid to become chancellor, but Fabio De Masi, a former member of the German parliament who probed this and the Wirecard scandal, said this time, it could be different. “This affair has a lot of potential to endanger Scholz,” De Masi said. The political environment is different now with increasing gas prices.” Some 48% of those asked in a survey by Germany’s Welt TV said the cum-ex scandal would “permanently damage” Scholz. The chancellor already faced Hamburg lawmakers last year and acknowledged then having a series of meetings with the then chairman of Warburg and while he said he couldn’t recall details he denied using his influence as mayor to delay the repayment of the funds.
“This has been an issue for two and a half years now,” Scholz recently told reporters. “Countless files have been studied, countless people have been heard. The result is always: There has been no political influence.” But the case made headlines again in recent weeks. State investigators probing the tax scam found more than 200,000 euros in cash in a safe deposit box belonging to a former Hamburg politician from Scholz’s social democrat party, said one person with direct knowledge of the inquiry. Scholz has denied any knowledge of this cash or its origin and said he no longer has contact with the lawmaker involved. The lawmaker did not respond to a request for comment. But the discovery, which was widely reported in the German media, has rekindled interest in the case and will heighten scrutiny of Scholz when he speaks on Friday.
Authorities seeking to hold individuals and institutions to account in one of Germany’s largest post-war frauds and claw back money for government coffers have raided the local offices of banks including Morgan Stanley, Bank of America and Barclays. The mastermind behind the complex tax ploy was extradited from Switzerland to stand trial in Germany. Warburg said it had paid back required taxes. Morgan Stanley and Barclays declined to comment. Bank of America said it was cooperating with the authorities. Lawmakers and officials say the effort is far from over. “It will still take many years for Germany to work through this enormous tax fraud,” said Milan Pein, a member of a Hamburg parliament committee that will question Scholz. Germany’s finance ministry, told Reuters last week that the nation’s 16 states had identified 3.9 billion euros in damages to taxpayers and that 1.8 billion euros had been or was in the process of being reclaimed.
But that government tally is almost two years old and experts say the actual damage could be far higher. Christoph Spengel, Professor for International Taxation at the University of Mannheim and a member of the Advisory Board of the Finance Ministry, estimated the total damage at up to 10 billion euros and said that the practice of dividend stripping might still continue. The Ministry of Finance in Hesse, home to the country’s financial capital of Frankfurt, says 30 banks owe 527 million euros and so far repaid 285 million euros. The Finance Ministry of Bavaria told Reuters that they assessed a damage of 746 million euros caused by seven banks. Lenders have so far repaid 347 million euros. State-owned banks in Germany were also participating in the dividend-stripping scheme pocketing tax rebates. LBBW, the biggest state-owned bank headquartered in Stuttgart, said it had paid back 166 million euro tax money it wrongfully claimed and received in 2007 and 2008. In general, banks acted either as creditors for investors, brokered deals and cashed in on fees, or claimed back taxes they were not entitled to.
Prosecutors in Cologne have been especially aggressive in pursuing the case. A representative said that it is currently investigating 50 international and domestic financial institutions and brokers. In 2020, two British bankers were handed suspended jail terms and one a 14 million euro penalty in the first criminal conviction in the case. Earlier this year, another banker, a former employee of M.M. Warburg group, was handed a jail sentence. The judge said that as managing director of a Warburg investment company he helped set up two funds to profit from the transactions. Reuters
The Arab Africa Trade Bridges (AATB) Program and the Federal Republic of Nigeria formalized a partnership with the signing of the AATB Membership Agreement, officially welcoming Nigeria as the Program’s newest member country. The signing ceremony took place in Abuja on the sidelines of the 5th AATB Board of Governors Meeting, hosted by the Federal Government of Nigeria.
The Membership Agreement was signed by Eng. Adeeb Y. Al Aama, the CEO of the International Islamic Trade Finance Corporation (ITFC) and AATB Program Secretary General, and H.E. Mr. Wale Edun, Minister of Finance and Coordinating Minister of the Economy, Federal Republic of Nigeria. The Agreement will provide a strategic and operational framework to support Nigeria’s efforts in trade competitiveness, promote export diversification, strengthen priority value chains, and advance capacity-building efforts in line with national development priorities. Areas of collaboration will include trade promotion, agribusiness modernization, SME development, businessmen missions, trade facilitation, logistics efficiency, and digital trade readiness.
The Honourable Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, called for deeper trade collaboration between African and Arab nations, stressing the importance of value-added Agribusiness and industrial partnerships for regional growth. Speaking in Abuja at the Agribusiness Matchmaking Forum ahead of the AATB Board of Governors Meeting, the Minister said the shifting global economy makes it essential for African and Arab nations to rely more on regional cooperation, investment and shared markets.
He highlighted projections showing Arab-Africa trade could grow by more than US$37 billion in the next three years and urged partners to prioritize value addition rather than raw commodity exports. He noted that Nigeria’s growing industrial base and upcoming National Single Window reforms will support efficiency, investment and private-sector expansion.
“This is a moment to turn opportunity into action”, he said. “By working together, we can build stronger value chains, create jobs and support prosperity across our regions”, Edun emphasized. “As African and Arab nations embark on this journey of deeper trade collaboration, the potential for growth and development is vast. With a shared vision and commitment to value-added partnerships, we can unlock new opportunities, drive economic growth, and create a brighter future for our people.”
Speaking during the event, Eng. Adeeb Y. Al Aama, Chief Executive Officer of ITFC and Secretary General of the AATB Program, stated: “We are pleased to welcome Nigeria to be part of the AATB Program. Nigeria stands as one of Africa’s most dynamic and resilient economies in Africa, with a rapidly expanding private sector and strong potential across agribusiness, energy, manufacturing, and digital industries. Through this Membership Agreement, we look forward to collaborating closely with Nigerian institutions to strengthen value chains, expand regional market access, enhance trade finance and investment opportunities, and support the country’s development priorities.”
The signing of this Agreement underscores AATB’s continued engagement with African countries and its evolving portfolio of programs supporting trade and investment. In recent years, AATB has worked on initiatives across agribusiness, textiles, logistics, digital trade, export readiness under the AfCFTA framework, and other regional initiatives such as the Common African Agro-Parks (CAAPs) Programme.
With Nigeria’s accession, the AATB Program extends it’s presence in the region and adds a key partner working toward advancing trade-led development and fostering inclusive economic growth.
Federal Executive Council (FEC) has approved the 2026–2028 Medium-Term Expenditure Framework (MTEF), a key fiscal document that outlines Nigeria’s revenue expectations, macroeconomic assumptions, and spending priorities for the next three years. The approval followed Wednesday’s FEC meeting presided over by President Bola Tinubu at the State House, Abuja. The Minister of Budget and Economic Planning, Senator Atiku Bagudu made this known after the meeting.
The Minister said the Federal Government is projecting a total revenue inflow of N34.33 trillion in 2026, including N4.98 trillion expected from government-owned enterprises. Bagudu said that the projected revenue is N6.55 trillion lower than earlier estimates, adding that federal allocations are expected to drop by about N9.4 trillion, representing a 16% decline compared to the 2025 budget.
He said that statutory transfers are expected to amount to about N3 trillion within the same fiscal year. On macroeconomic assumptions, FEC adopted an oil production benchmark of 2.6 million barrels per day (mbpd) for 2026, although a more conservative 1.8 mbpd will be used for budgeting purposes. An oil price benchmark of $64 per barrel and an exchange rate of N1,512 per dollar were also approved.
Bagudu said the exchange rate assumption reflects projections tied to economic and political developments ahead of the 2027 general elections. He said the exchange rate assumption took into account the fiscal outlook ahead of the 2027 general elections.
The minister said that all the parameters were based on macroeconomic analysis by the Budget Office and other relevant agencies. Bagudu said FEC also reviewed comments from cabinet members before approving the Medium-Term Fiscal Expenditure Ceiling (MFTEC), which sets expenditure limits. Earlier, the Senate approved the external borrowing plan of $21.5 billion presented by President Tinubu for consideration The loans, according to the Senate, were part of the MTEF and Fiscal Strategy Paper (FSP) for the 2025 budget.
The spot rate on Nigerian Treasury bills has been increased by 146 basis points by the Central Bank of Nigeria (CBN) following tight subscription levels at the main auction on Wednesday. The spot rate on Treasury bills with one-year maturity has now surpassed Nigeria’s 16.05% inflation by 145 basis points following a recent decision to keep the policy rate at 27%.
The Apex Bank came to the primary market with N700 billion Treasury bills offer size across standard tenors, including 91-day, 182-day and 364 day maturities. Details from the auction results showed that demand settled slightly above the total offers as investors began to seek higher returns on naira assets despite disinflation.
Total subscription came in at about N775 billion versus N700 billion offers floated at the main auction. The results showed rising appetite for duration as investors parked about 90% of their bids on Nigerian Treasury bills with 364 days maturity. The CBN opened N100 billion worth of 91 days bills for subscription, but the offer received underwhelming bids totalling N44.17 billion.
The CBN allotted N42.80 billion for the short-term instrument at the spot rate of 15.30%, the same as the previous auction. Total demand for 182 days Nigerian Treasury bills settled at N33.38 billion as against N150 billion that the authority pushed out for subscription. The CBN raised N30.36 billion from 182 days bills allotted to investors at the spot rate of 15.50%, the same as the previous auction.
Investors staked N697.29 billion on N450 billion in 364-day Treasury bills that was offered for subscription. The CBN raised N636.46 billion from the longest tenor at the spot rate of 17.50%, up from 16.04% at the previous auction.
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