German Chancellor Olaf Scholz will testify on Friday before a committee as part of an investigation into a financial scandal that cost the government billions of euros, as the leader battles to dispel suspicions about his possible complicity in the massive tax fraud swindle.

Scholz will go before a parliamentary committee in Hamburg for the second time to testify on whether local politicians helped a bank avoid paying back falsely claimed tax refunds. He served as mayor of Hamburg from 2011 to 2018 when he was appointed Finance Minister in Angela Merkel's government.

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The "cum-ex" scam, first disclosed in 2017, featured numerous players quickly trading company shares amongst themselves around dividend day in order to claim multiple tax rebates on a single payout. In Germany, dozens of persons have been charged in connection with the scam, including bankers, stock traders, attorneys, and financial advisors.

The Hamburg committee is looking into why local finance officials withdrew a bid to recoup 47 million euros ($48 million) in taxes from private bank M.M Warburg over cum-ex deals in 2016. Under pressure from Merkel's federal government, the bank was eventually forced to repay tens of millions of euros.

The bank was eventually obliged to return tens of millions of euros due to pressure from Merkel's federal government.

Rumors are swirling that the decision to let Warburg off the hook was taken shortly after a conversation between Scholz and Christian Olearius, then head of the bank.

'No findings of political influence' 

Scholz is already facing low approval ratings after his first six months in office were marred by criticism over his perceived inadequate response to the war in Ukraine.

Recently, the Chancellor has tried to reassure Germans about potential energy shortages this winter, as well as the very real possibility of a recession in Europe's largest economy.

Scholz's Spokesperson, Steffen Hebestreit, promised journalists on Wednesday that Scholz would answer all of the committee's inquiries and had nothing to conceal.

Read more: 'Olaf Scholz is not sausage' - German lawmaker

Cash stash 

Investigators have obtained emails from Scholz's former office manager Jeanette Schwamberger, according to various German media reports, which could reveal new evidence.

According to the reports, these emails are "potentially relevant to the evidence, as they suggest considerations around deleting data." The Frankfurter Allgemeine Zeitung stated that the emails clearly "incriminate" Scholz.

Other recently obtained records allegedly show that Scholz, contrary to what he has maintained thus far, did discuss reimbursement directly with Olearius.

According to an opposition conservative MP, Matthias Hauer, the latest revelations indicate that Scholz and his team "tried to provide only limited information on certain meetings or telephone conversations."