German finance and justice ministries searched in fraud investigation

Police on Thursday searched the German finance and justice ministries in connection with an investigation into hushed-up reports of money laundering, in a potentially damaging case ahead of this month's election.

German finance and justice ministries searched in fraud investigation
Finance Minister and SPD chancellor candidate Olaf Scholz at a talk on Thursday. Photo: picture alliance/dpa/dpa-Zentralbild | Soeren Stache

The raids were part of a probe into the Financial Intelligence Unit (FIU), the anti-money laundering section of Germany’s customs authority, prosecutors in the city of Osnabrück  said in a statement.

The finance ministry is headed by Olaf Scholz, the centre-left Social Democrat (SPD) candidate to succeed Angela Merkel after the September 26th vote and the current frontrunner in the race.

Authorities in Osnabrück have been investigating the Cologne-based FIU since February 2020 over claims it failed to forward reports of potential money laundering from banks to the police and judiciary.

“An evaluation of documents secured during previous searches of the FIU has revealed that there was extensive communication between the FIU and the ministries now being searched,” the prosecutors said.

They now wish to establish whether a criminal offence was committed and, if so, who was responsible, they said.

The FIU used to be a police unit but was transferred in 2017 to Germany’s customs authorities, under the auspices of the finance ministry.

Politicians from other parties seized on the searches to criticise Scholz.

“The chaos at the FIU has existed since the finance ministry took over responsibility,” said Green party politicians Lisa Paus and Irene Mihalic in a joint statement.

Suspicious payments

Eckhardt Rehberg of Angela Merkel’s CDU told the t-online news website that Scholz and Christine Lambrecht, the SPD justice minister, “bear the political
responsibility for these events”.

The finance ministry said in a statement that it “fully supports the authorities” in their investigation and stressed that it was not directed against employees of the ministry.

Scholz himself, on the campaign trail in Potsdam, expressed displeasure at the searches and said that if the prosecutors had questions they “could have been put in writing”, according to Die Welt daily.

Prosecutors in Osnabrück began their investigation after discovering that the FIU failed to follow up on a report from a bank of a suspicious payment of more than one million euros ($1.2 million) to Africa in 2018.

The FIU has also been accused of withholding information about Wirecard, the once booming German fintech company that spectacularly collapsed last year due to a massive fraud scandal.

READ ALSO: Five things to know about Wirecard scandal

The customs body failed to pass on hundreds of reports of suspicious transactions at the company, according to a report in the Handelsblatt business daily in August.

Wirecard filed for bankruptcy last year after admitting that €1.9 billion was missing from its accounts.

German banking regulator Bafin, also based at the finance ministry, was criticised for being too for its lax oversight of Wirecard and has since undergone sweeping reforms.


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Germany’s ‘traffic light’ parties sign coalition agreement in Berlin

Two and a half months after the federal elections on September 26th, the three parties of the incoming 'traffic light' coalition - the SPD, Greens and FDP - have formally signed their coalition agreement at a public ceremony in Berlin.

Traffic light coalition
Germany's next Chancellor Olaf Scholz (front, left) on stage in Berlin with other members of the new coalition government, and their signed agreement. Photo: picture alliance/dpa | Michael Kappeler

The move marks the final stage of a 10-week week process that saw the three unlikely bedfellows forming a first-of-its-kind partnership in German federal government. 

The SPD’s Olaf Scholz is now due to be elected Chancellor of Germany on Wednesday and his newly finalised cabinet will be sworn in on the same day. This will mark the end of the 16-year Angela Merkel era following the veteran leader’s decision to retire from politics this year. 

Speaking at the ceremony in Berlin on Tuesday morning, Scholz declared it “a morning when we set out for a new government.”

He praised the speed at which the three parties had concluded their talks and said the fight against the Covid crisis would first require the full strength of the new coalition.

Green Party co-leader Robert Habeck, who is set to head up a newly formed environment and energy ministry, said the goal was “a government for the people of Germany”.

He stressed that the new government would face the joint challenge of bringing climate neutrality and prosperity together in Europe’s largest industrial nation and the world’s fourth largest economy.

Green Party leader Annalena Baerbock spoke of a coalition agreement “on the level of reality, on the level of social reality”.

FDP leader Christian Lindner, who managed to secure the coveted role of Finance Minister in the talks, declared that now was the “time for action”.

“We are not under any illusions,” he told people gathered at the ceremony. “These are great challenges we face.”

Scholz, Habeck and Lindner are scheduled to hold  a press conference before midday to answer questions on the goals of the new government.

‘New beginnings’

Together with the Greens and the FDP, Scholz’s SPD managed in a far shorter time than expected to forge a coalition that aspires to make Germany greener and fairer.

The Greens became the last of the three parties to agree on the contents of the 177-page coalition agreement an in internal vote on Monday, following approval from the SPD and FDP’s inner ranks over the weekend.

“I want the 20s to be a time of new beginnings,” Scholz told Die Zeit weekly, declaring an ambition to push forward “the biggest industrial modernisation which will be capable of stopping climate change caused by mankind”.

Putting equality rhetoric into practice, he unveiled the country’s first gender-balanced cabinet on Monday, with women in key security portfolios.

“That corresponds to the society we live in – half of the power belongs to women,” said Scholz, who describes himself as a “feminist”.

READ ALSO: Scholz names Germany’s first gender-equal cabinet

The centre-left’s return to power in Europe’s biggest economy could shift the balance on a continent still reeling from Brexit and with the other major player, France, heading into presidential elections in 2022.

But even before it took office, Scholz’s “traffic-light” coalition – named after the three parties’ colours – was already given a baptism of fire in the form of a fierce fourth wave of the coronavirus pandemic.

Balancing act
Dubbed “the discreet” by left-leaning daily TAZ, Scholz, 63, is often described as austere or robotic.
But he also has a reputation for being a meticulous workhorse.
An experienced hand in government, Scholz was labour minister in Merkel’s first coalition from 2007 to 2009 before taking over as vice chancellor and finance minister in 2015.
Yet his three-party-alliance is the first such mix at the federal level, as the FDP is not a natural partner for the SPD or the Greens.

Keeping the trio together will require a delicate balancing act taking into account the FDP’s business-friendly leanings, the SPD’s social equality instincts and the Greens’ demands for sustainability.

Under their coalition deal, the parties have agreed to secure Germany’s path to carbon neutrality, including through huge investments in sustainable energy.

They also aim to return to a constitutional no-new-debt rule – suspended during the pandemic – by 2023.

FDP cabinets
Volker Wissing (l-r), FDP General Secretary und designated Transport Minister, walks alongside Christian Lindner, FDP leader and designated Finance Minister, Bettina Stark-Watzinger (FDP), the incoming Education Minister, and Marco Buschmann, the incoming Justice Minister. Photo: picture alliance/dpa | Michael Kappeler


Incoming foreign minister Annalena Baerbock of the Greens has vowed to put human rights at the centre of German diplomacy.

She has signalled a more assertive stance towards authoritarian regimes like China and Russia after the commerce-driven pragmatism of Merkel’s 16 years in power.

Critics have accused Merkel of putting Germany’s export-dependent economy first in international dealings.

Nevertheless she is still so popular at home that she would probably have won a fifth term had she sought one.

The veteran politician is also widely admired abroad for her steady hand guiding Germany through a myriad of crises.