Credibility is a crucial factor for the assessment of politicians. Nevertheless, the perception of credibility throughout the population can be influenced by deviating factors, such as the high complexity of an issue. The “Cum-Ex'' affair of the German chancellor Scholz reveals two crucial problems in our democracy. First, the failure of the media to properly “translate” this issue to the people and second, the consequential bias in the assessment of this affair.
What kind of characteristics do people look for in politicians? This question can be answered relatively easily by means of a survey. During a survey that was collected in 2008 in Germany, 2,002 people answered the question “In your opinion, what are the most important qualities of politicians?” Credibility, out of 5 different characteristics, was voted for the most in this survey. But now to the more complex issue: What kind of actions and decisions define the credibility of a politician and how is it evaluated by the people?
To answer this question, we are going to look in more detail at the case of the current German chancellor Olaf Scholz. Since December 2021, Scholz has been politically the most powerful person in Germany. Obviously, during the election campaign before his appointment, his previous career and political decisions were analysed by the media and the German people. When you look closer to Scholz political history, some very problematic issues get unsheathed.
During his time as the mayor of Hamburg, the biggest tax evasion in the history of the Federation of Germany was revealed. Although, €47 million were evaded by the “Warburg-Bank” through the so-called “Cum-Ex deals”, the financial administration, which was subordinated to Scholz, decided to exempt the Warburg-Bank from the repayment of the taxes.
“Cum-Ex deals” are a very complicated but effective financial method to bilk the state of a lot of money. To keep it as simple as possible, “Cum-Ex deals” are a method where someone receives the gains tax back for stocks that no longer belong to that person or institution. It was detected that if you sell a stock at a certain time, both the seller and the buyer receive the repayment for the gains tax. It became a common practice of the Warburg-Bank and other financial institutions to repeat this process with thousands of stocks and thereby erroneously receiving €47 million from the state.
But what role did Scholz play in all of this? After years of legal investigations against loads of political and financial key figures, Scholz gets legally accused of having influenced the financial administration to not investigate against the Warburg-Bank to get the gains tax back from them. The importance of the Warburg-Bank for the economy of Hamburg could have been one of the reasons for such a decision. It becomes very interesting when you look at how Scholz responded to these accusations.
It is clear that there were meetings between Scholz and the CEO of the Warburg-Bank at that time. To questions regarding the content of these meetings, the answers of Scholz are always the same: “I do not remember”. In his position, this is a legally relatively effective but morally highly questionable response, especially, taking into account the importance of this issue for Scholz as a mayor. Furthermore, there is substantive evidence that emails between Scholz and the CEO of the Warburg-Bank were deleted.
Why is there such low interest and understanding regarding the biggest tax evasion in German history? Jan Fleischhauer, a German columnist gives the following answer: “If you can’t explain it in one sentence, it’s not a scandal”. This refers to the high complexity and the necessary economic and political knowledge to properly understand this scandal and Scholzs’ potential entanglement. Hereby, we reach the first problem: The failed “translation” of the issue by the media. One of most read newspapers in Berlin stated that the biggest mishaps of Scholz were that he didn’t know the current gas price during an interview and his participation of often criticised social policies during a former legislation. Here, the “Cum-Ex” deals are not even mentioned and this pattern can be found in various other newspapers as well.
Coming back to the question regarding the definition of credibility by the people, the whole “Cum-Ex deals” should have a major influence on the credibility of Scholz. But is this the case?
Interestingly it is not and this refers to the second problem: the questionable assessment of the credibility of Scholz by the people. A survey in 2021 shows that Scholz was ranked by far the most credible candidate for the position of chancellor with 35% of the people evaluating him as credible, while the second candidate in the ranking received only 12%. Concluding, the “Cum-Ex” deals show how the concept of credibility in the mind of people differs from the actual tools that are used to evaluate credibility and what role the media plays in this process.