TIME EUROPE
JANUARY 31, 2000 VOL. 155 NO. 4
PAGE ONE | TWO
The Harder They Fall
A central figure in the scandal is Karlheinz Schreiber, an arms dealer who has both Canadian and German citizenship. It was Schreiber's gift of a suitcase stuffed with $500,000 in cash to the CDU's then Treasurer Walther Leisler Kiep in a Swiss parking lot that touched off a tax investigation in Germany that eventually forced Kohl to admit keeping secret accounts. While Kohl has adamantly denied that the contributions affected his decision making, Schreiber has said that he gave money to Kiep and other CDU officials only six months after the German government approved the sale of 36 German armored cars to Saudi Arabia in 1991. Schreiber, who was also instrumental in opening the Canadian market to Europe's Airbus aircraft, is currently fighting extradition to Germany, where he is being investigated for tax matters. Schreiber tantalizingly says he can implicate many other German officials but has so far refused to name them.
Another potential source of the secret funds was Elf Aquitaine, the giant French petroleum company recently taken over by its French rival, Total. An 80-year-old Moroccan-born Frenchman, André Guelfi, has appeared on German television and admitted passing nearly $40 million in fees received from Elf Aquitaine to CDU party officials. Guelfi, who is known in France as Dédé the Sardine because of his ownership of a now-defunct Moroccan fishing company, said that both Kohl and French President François Mitterrand were aware of the payments to party officials. He has since backtracked on many of his accusations, which French and Swiss justice officials are investigating.
The payments were allegedly made between 1989 and 1993 when Elf Aquitaine was wholly owned by the French government. It was privatized in 1994 and Elf acknowledges that under its state-run management the company paid $125 million to Guelfi's Liechtenstein-registered shell company called Nobleplac. The huge payment was listed in Elf's accounts simply as "studies and lobbying services" in connection with the company's purchase in 1993 of the Leuna oil refinery and a chain of gasoline stations in eastern Germany that were sold off by a German state organization set up to dispose of failing assets of the collapsed East Germany.
The decision to build a new $2.5 billion refinery at Leuna was the largest ever Franco-German cooperation project, and there were reports at the time suggesting that Kohl and Mitterrand had taken a personal hand in ensuring the project's success. One theory was that Kohl, who was dragging a reluctant Germany into a French-sponsored project to adopt the single European currency, sought in return French help in rebuilding economically devastated eastern Germany. The Kohl-Mitterrand partnership has been widely credited as the defining force behind European unity, a project that helps ensure that the nationalism that existed under Hitler will not return to Germany. The unity was sealed last year when a single currency, the euro, was adopted by 11 member states of the European Union. The daily Berliner Zeitung reported that Liechtenstein had frozen a number of bank accounts, including one controlled by Dieter Holzer, a lobbyist close to the CDU, that contained a balance of almost $25 million. It quoted Holzer as saying that the money represented a "rather poor fee" paid by Elf Aquitaine for his help in winning Kohl government support on the Leuna refinery project. But Holzer denied paying bribes.
For some Germans, it still seems astonishing that a revered father figure like Kohl could have been involved in such controversial deals. With his love of bratwurst and immense frame, Kohl has been a lovable and often humorous figure to the Germans he led for 16 years. A new and starker image has begun to emerge, portraying him as a kind of schizophrenic leader capable of appearing avuncular in public while running the party with an autocratic hand behind the scenes.
Kohl brooked no criticism and quickly dispatched opponents to obscurity. "The system Kohl was a special way of running the country," notes Karl Rudolf Korte, a Kohl biographer at the University of Munich. "He let his friends and his entourage have access to only a small piece of the system. It was the same with policy making and the same with money. There was no transparency. After 25 years as head of the party, you begin to think that you make the rules."
Part of the problem facing the CDU is that most of the current leaders owe their positions to Kohl's largess. Schäuble, for example, was the leader of the Bundestag CDU faction while Kohl was party leader. That helps explain why it took the party so long to come out with public criticism of Kohl. Only after Kohl was forced to drop his honorary chairmanship, which he received after his election loss last year, did younger members come forward to criticize him. "The CDU does not accept that anybody puts himself outside the legal system," said Christian Wulff, CDU leader in Lower Saxony, Schröder's home state. Heiner Geissler, a longtime foe of Kohl, said that Kohl's "silence about the origin of party donations not only damages the CDU, it also damages democracy." Angela Merkel, general secretary of the party and another Kohl protègé, called the decision to oust him an "extremely difficult process."
While Schäuble's offer to resign was rejected by the CDU leadership, a party conference has been scheduled for April when new leaders could be chosen, especially if the party fares poorly in the Schleswig-Holstein election next month. Because of the suddenness of the scandal, there are not a lot of candidates in the wings. Wulff, the 40-year-old leader in Lower Saxony, is part of a group of younger leaders in the party who have been dubbed the Young Wild Ones by their more conservative peers. Also in this group is Peter Müller, the 43-year-old premier of Saarland, who led the CDU to victory in state elections last year. Wulff has been defeated twice by Schröder, so may not offer the party much of an alternative, while Müller lacks a power base at the federal level.
Another possible successor to Schäuble is Kurt Biedenkopf, the party chief in Saxony and one of Kohl's most outspoken critics, who said last week: "I am completely at a loss in regard to Helmut Kohl's behavior." At 69, however, many political observers consider him too old to lead the party.
One potential benefit of the Kohl affair is the likelihood that even if no one goes to jail, stringent reforms will be adopted, such as limiting a Chancellor's maximum period in office to eight years. But the scandal may also provide an impetus for revising Germany's outdated system of encouraging cosy relationships between business leaders and government officials. Politicians often serve on the boards of directors of many large companies, for example, and receive "expense stipends" of up to $50,000 a year for attending a handful of meetings. Not coincidentally, their oversight of management is less stringent than in the private sector. State-owned companies have also been lavish with their gifts to government figures. A scandal involving spd officials, including German President Johannes Rau, has resulted from newspaper revelations that they received free charter flights paid by Westdeutsche Landesbank, a state-owned bank in North Rhine-Westphalia.
If the Kohl scandal can force the current parliament to consider a serious demarcation between the state and private business, both will probably be better off. Mannesmann, a former rust belt firm that reinvented itself as one of Europe's biggest mobile phone operators, recently rejected an offer of government protection in a takeover battle with the British firm Vodafone AirTouch, saying it prefers to leave its fate to the free market instead. Kohl may have suffered from the flaw of relishing power so much that he used illegal means to keep it. But if the government had not wielded so much power over businesses, it's doubtful that so much money would have been at his disposal in the first place.
History may be kinder to Kohl than the present controversy suggests. Even Richard Nixon is being reevaluated as a statesman and his role in Watergate, though not forgotten, put in a different perspective. The difference is that Germans had long believed that their party system was not subject to the kind of corruption that existed in Italy. There is a distinct danger that the demise of that myth may seriously damage not just the CDU, but the country's entire system of checks and balances, enacted after World War II to ensure that another dictator would not come along to haunt Europe's history. How ironic that old King Kohl now claims he was only helping shore up his country's democratic future.
With reporting by Regine Wosnitza/Berlin and Bruce Crumley/Paris
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