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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French court hands Amazon €90,000-per-day fine over contracts

French authorities on Wednesday slapped a €90,000-per-day fine on e-commerce giant Amazon until it removes abusive clauses in its contracts with businesses using its platform to sell their goods.

French court hands Amazon €90,000-per-day fine over contracts

The anti-fraud Direction générale de la concurrence, de la consommation et de la répression des fraudes (DGCCRF) service said the online sales giant’s contracts with third-party sellers who use its website contain “unbalanced” clauses.

“The company Amazon Services Europe did not comply completely with an injunction it was served and it is now subject to a fine of €90,000 per day of delay” in applying the changes, the DGCCRF said in a statement.

It also urged the platform to conform with European rules on equity and transparency for firms using online platforms.

Amazon said the order would harm consumers.

“The changes imposed by the DGCCRF will stop us from effectively protecting consumers and permit bad actors to set excessive prices or spam our clients with commercial offers,” the e-commerce giant said in a statement.

“We will comply with the DGCCRF’s decision but we absolutely do not understand it and we are challenging it in court,” responded the e-commerce giant in a statement.

Amazon said the clauses that the DGCCRF has ordered removed had, for example “prevented the appearance of exorbitant prices for mask and hydroalcoholic gel during the pandemic”.

In 2019, Amazon was fined €4 million for “manifestly unbalanced” contract clauses with third-party sellers on its site in a case brought by the DGCCRF.