FILE PHOTO: A BlackRock Inc sign above its building in New York, United States, July 16, 2018. REUTERS/Lucas Jackson/File Photo

FRANKFURT (Reuters) - German state prosecutors confirmed they searched the Munich offices of investor BlackRock as part of a probe into an illicit tax trading scheme but exonerated the company’s local chairman, who is vying to succeed Chancellor Angela Merkel.

The prosecutors are investigating a fraud known as cum-ex that typically involved trading company shares rapidly around a syndicate of banks, investors and hedge funds to create the impression of numerous owners, each entitled to a tax rebate.

On Tuesday, they searched the Munich offices of BlackRock, prompting the globe’s biggest investor to say that it was fully cooperating with the probe of cum-ex transactions between 2007-2011.

The search has prompted wide national interest in Germany because Friedrich Merz, a potential successor to Merkel, has held the post of BlackRock’s chairman in Germany since 2016.

Merz, who was not there at the time of the trades that are being investigated, said he had ordered the fund’s management board to investigate all incidents involving such cum-ex deals.

“Everything will be investigated and we will actively participate in that,” he said at a political event in the northwestern German city of Duesseldorf on Tuesday.

Confirming the search, Cologne prosecutors said on Wednesday that Merz was not suspected of wrongdoing.

Merz has taken an early lead in the race to succeed Merkel as leader of Germany’s Christian Democrats and secure the chance of running for chancellor, possibly as soon as next year.

Gerhard Schick, a Greens party member of Germany’s parliament, said the case raised the question as to whether Merz had responded promptly enough.