Global Policy Forum

Kohl Party Reports More Moving of Money


By Roger Cohen

New York Times
January 28, 2000

The Christian Democratic Union in the state of Hesse said today that it illegally transferred $10 million to overseas accounts, more than double the amount it had previously disclosed.

Earlier this month, Manfred Kanther, a former interior minister and party leader in the state, said $4.2 million had been moved into accounts in Switzerland and Liechtenstein, where investment increased it to more than $7 million. He later resigned from Parliament.

But Roland Koch, the Christian Democratic premier in Hesse, said today that a new audit showed the transferred sum was far larger. "This has got to be the right figure," he insisted.

Almost daily revelations of illicit financial dealings by the opposition Christian Democrats have prompted deep political unease in Germany, worsened by the refusal of former Chancellor Helmut Kohl to heed the law and reveal what he knows about the sources of the money.

Hesse, home to Germany's financial capital in Frankfurt, has emerged as the place where most of the money was secretly put to use by the party. Mr. Koch, who was elected premier last year, painted a picture today of a covert system eventually involving more than $16.3 million.

The seed of this hidden treasure, whose origin remains unknown, was the $10 million disclosed today. Less than $1 million quickly returned to Christian Democratic accounts in Germany. The rest, with capital gains from investment, was used to establish a foundation named Zaunkí¶nig (Wren) in Liechtenstein, secretly controlled by the party.

Christian Schnee, a spokesman for the Hesse Christian Democrats, said that $8.8 million remained on the foundation's accounts. He added that a recent inspection of the foundation's books showed that, through the years, a further $7.5 million had been moved back into Germany, generally disguised as "bequests."

These two figures, totaling $16.3 million, are the result of the initial $10 million transfer from Frankfurt to Switzerland. The party's investigation in Hesse is now focused on discovering where the $10 million came from and ensuring that no more hidden money surfaces.

The party has already been acutely embarrassed, not least by a claim made earlier this month by its longtime treasurer in Hesse that the "bequests" came from "grateful Jews" who wanted to help Frankfurt. Under German law, the party appears to have committed several crimes: misrepresenting the source of party contributions as "bequests," placing undeclared sums in overseas accounts, evading tax on capital gains there, and failing to identify the source of the $10 million in the original account at Metalbank.

An audit last week of the federal accounts of the Christian Democratic Union disclosed about $6.3 million in illicit contributions under former Chancellor Kohl. In all, with the $15.3 million in unexplained money in Hesse, the Christian Democrats are grappling with a system that generated more than $21.5 million that has not been properly accounted for.


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