The German Chancellor has denied helping a bank avoid paying back millions in tax rebates claimed under a huge fraud scam, answering to a committee investigating the scandal.

The grilling comes as Scholz is already facing dismal popularity ratings after his first six months in office were tarnished by criticism over his perceived weak response to the conflict in Ukraine.
The grilling comes as Scholz is already facing dismal popularity ratings after his first six months in office were tarnished by criticism over his perceived weak response to the conflict in Ukraine. (AFP)

German Chancellor Olaf Scholz has appeared before a parliamentary panel in the northern state of Hamburg to answer lawmakers' questions about his handling of a tax evasion scam when he was mayor of the city.

Scholz denied helping a bank avoid paying back millions in tax rebates claimed under a huge fraud as he answered to the committee investigating the scandal on Friday.

The parliamentary committee in Hamburg is probing why local finance authorities in 2016 dropped a bid to claw back 47 million euros ($48 million) in taxes from private bank MM Warburg.

Political opponents have called on Scholz to provide more information about meetings he had in 2016 and 2017 with MM Warburg that faced demands to repay millions of euros in tax refunds it had wrongly claimed for share trades.

Scholz was the mayor of Hamburg from 2011 to 2018 and has lately been repeatedly forced to beat back allegations he was involved in the decision to let the bank off the hook.

Scholz, who became federal finance minister in 2018, has previously stated that he doesn't remember details of the meetings, but denies that he intervened to get Hamburg officials to drop their demand for Warburg to repay 47 million euros.

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Contentious issue

Opposition leader Friedrich Merz of the centre-right Christian Democrats said he didn't believe Scholz's memory lapses.

“When you're talking about a tax demand in the three-figure millions concerning such a big bank in your own city, then you don't forget what was said during the conversation,” Merz told German business daily Handelsblatt in an interview published on Friday.

First exposed in 2017, the scam involved numerous participants swiftly exchanging company shares amongst themselves around dividend day to claim multiple tax rebates on a single payout.

The scam cost the government billions and has seen dozens of people indicted in Germany, including bankers, stock traders, lawyers and financial consult ants.

Warburg eventually had to pay back tens of millions of euros under pressure from the federal government under then chancellor Angela Merkel.

Scholz appeared calm and confident at the Hamburg hearing on Friday, standing by statements he made in a previous testimony before the committee in 2021.

He described allegations of political influence in the Warburg case as "false and recognisably not supported by anything or anyone".

The grilling comes as Scholz is already facing dismal popularity ratings after his first six months in office were tarnished by criticism over his perceived weak response to the conflict in Ukraine.

More recently, the chancellor has struggled to reassure Germans over possible energy shortages this winter and the very real prospect of a recession in the country.

READ MORE: Is Germany intentionally dithering over arms supplies to Ukraine?

Source: TRTWorld and agencies