Global Policy Forum

By Tony Paterson & Paul Webster

The Germany slush fund scandal deepened dramatically yesterday amid reports that the late French president, Franí§ois Mitterrand, personally sanctioned a covert £10m payment to former chancellor Helmut Kohl's Christian Democrats to help them win the 1994 general election.

The cash was said to be part of a £28m payment made in 1992 by the French oil consortium Elf Aquitaine to the Kohl government for the giant east German Leuna refinery and a chain of petrol stations in the region in the same year.

The allegations, the most serious yet in the Kohl scandal, were made by Germany's ARD television and the French France Deux channel after a joint investigation into the roles played by Mitterrand and Elf Aquitaine in the affair.

German and French television quoted what they said was a high-ranking informant from Mr Mitterrand's immediate circle who denied that the £10m payment to Mr Kohl's CDU was illicit. "It was not a bribe: the money was for an election campaign. The payment was in the interests of the state - for Europe," the informant was quoted as saying.

The cash handover was said to have been overseen by German intelligence officers and to have taken place at the Richmond hotel in Geneva. From there it was secretly transferred to banks in Switzerland and Liechtenstein, the TV channels said.

In France justice officials said that a French businessman, Pierre Guélfi, who handled the transfer of some £10m to Germany in 1993, would be questioned about whether Mr Mitterrand ordered the payment to the CDU. They said Mr Guélfi was already under investigation about the transaction, which he has said was a "commission" paid in the Leuna deal.

Although from different ends of the political spectrum, Mr Kohl and Mr Mitterrand enjoyed a long-standing and close personal friendship. Both leaders viewed the Franco-German axis as a cornerstone of European integration and as a foundation for the successful reunification of Germany. They frequently stood together against Margaret Thatcher and John Major, underlining their personal friendship by holding hands during a commemoration of the first world war battle of Verdun, where France and German lost nearly 1 million men.

They both also publicly supported Elf Aquitaine's involvement in Leuna and saw it as a transaction which set the seal on their much-vaunted Franco-German alliance. The deal is also said to have persuaded Mr Mitterrand to become more than merely lukewarm in his support for German unification.

Mr Kohl has refuted the allegations of an illegal Mitterrand connection. Through a spokesman he described them as "the continuation of a smear campaign against me". But Volker Neumann, the Social Democrat MP chairman of a parliamentary committee which is investigating the scandal, said that the reports pointed to "barely conceivable" goings on at inter-government level during the former chancellor's tenure.

He said the allegations would prompt his committee to start an intensive search for German chancellery files relating to the Leuna deal. The chancellery disclosed last month that although it had a list of the documents, most of the actual files on Leuna had mysteriously gone missing. So far no one in the former Kohl government has provided any evidence as to the whereabouts of the papers.

In France there was no immediate high-level denial of the allegations. Observers said it would be difficult to convince public opinion that Mitterrand, who died in 1996, did not do everything possible to help Mr Kohl win the 1994 German general election.

Leuna has been the subject of investigations by judges in France and Switzerland since the mid 1990s. If substantiated, the new allegations would answer many of the questions surrounding the Kohl scandal. Most significantly, they would destroy his repeated claims that neither he nor his government was "bribeable" on major political and economic policy decisions.

Mr Kohl has admitted accepting DM 2m in undeclared campaign donations, but has refused to name the donors who paid into the secret party accounts he set up during his 25 years as Christian Democrat party chairman. He has insisted that to name them publicly would be a breach of confidence. Christian Democratic Union officials said last night that an internal party audit by accountants Ernst & Young had been unable to explain the origin of the DM 2m received between 1993 and 1998.

Mr Kohl has refused to name the donors who paid into the secret party accounts the former chancellor set up during his 25 years as Christian Democrat party chairman. He has insisted that to publicly name them would be a breach of confidence.

In a further development, German parliamentary investigators confirmed yesterday that they wanted to question a British aircraft industry executive, Stuart Iddes, who is alleged to have been offered at least £1.75m in backhanders by a German arms dealer at the centre of the affair, Karlheinz Schreiber.

Mr Iddes was said to have been offered the payment during his time as vice-president of Europe's Airbus consortium which he left in 1994. Mr Iddes, who now lives in Mexico was quoted at the weekend as saying: "I have never done anything I should not have done."