A German School for Scandal

Only a month ago, Helmut Kohl's reputation as a statesman seemed as imposing as his physical girth. A towering former Chancellor with a Zeppelin-like waistline, Kohl stood at Berlin's Brandenburg Gate and humbly received the world's gratitude for having guided the reunification of Germany a decade earlier as communism imploded. But Kohl must now watch as his luster as a world leader is tarnished by the daily revelations of a domestic political scandal.

The public humiliation is not limited to rewriting the history books, either. Kohl's confession that he used secret bank accounts funded by undeclared contributions to bolster his Christian Democratic Union has rocked German politics to its core. "It's an earthquake with respect to our liberal democratic culture," says Hajo Funke, a political scientist at the Free University of Berlin. "This will do lasting damage to the Christian Democratic party."

For Chancellor Gerhard Schrder, the man who ousted Kohl from office in September 1998, the controversy has come as a miraculous political reprieve. Schrder's Social Democratic Party has suffered from a devastating fall in popularity since the government announced a package of economic reforms earlier this year. Boosted by Schrder's controversial intervention to save a bankrupt construction firm two weeks ago, his popularity had already begun to turn when the Kohl scandal broke. An opinion poll published in Die Woche newspaper last week showed Schrder's standing with voters was up 7% while Wolfgang Schuble, Kohl's successor as leader of the CDU, had fallen by 3%.

The scandal broke as part of an income tax investigation of Walther Leisler Kiep, a former treasurer for the CDU, over a $500,000 cash donation he received from a German arms dealer. When the CDU denied that it had ever received the money, Kiep revealed that he had deposited the cash in a secret bank account known only to himself and Kohl. The donation followed a deal to sell 36 German tanks to Saudi Arabia, prompting questions about whether it constituted a kickback to the party, allegations Kohl vehemently denied.

Bizarrely, Kohl went out of his way to inject himself into the affair. He angrily interrupted a speech by an SPD deputy and demanded that a parliamentary inquiry be established to clear his name. Four days later, Kohl appeared sullenly before television cameras and announced that he now accepted "political responsibility" for his mistakes. He defended his actions by insisting that no one had enriched themselves personally. "Running accounts separately from the normal accounts of the party treasury seemed to me to be appropriate," Kohl said. "If the consequence of this action was a lack of transparency and perhaps violations of rules on party financing, then I regret that."

The scandal recalled the notorious Flick affair of the 1980s, when politicians were accused of taking cash contributions in return for granting tax breaks to a German company. The Flick affair prompted the passage of campaign contribution laws meant to prevent political financing abuse.

As CDU leaders scrambled to distance the party from the scandal, each new revelation seemed to implicate more and more of the leadership. Arms dealer Karlheinz Schreiber boasted to the conservative Die Welt newspaper that he had met not only Kiep but also Kohl and Schuble personally and they knew of his interest in securing an arms deal. Among those Schreiber claims to have met was Volker Rhe, CDU general secretary from 1989 to 1992, who is the party's candidate for prime minister of the German state of Schleswig-Holstein in elections next February, the next big showdown with the SPD.

The SPD has been touched by scandals of its own this year, most recently when Gerhard Glogowski, a Schrder protege and the prime minister of Lower Saxony, resigned amid allegations he accepted free travel and other perks from companies. But the SPD's woes pale in comparison to the allegations surrounding Kohl. If parliament finds that the secret accounts broke campaign laws, the CDU could face massive fines that could cripple the party.

Germans reacted with righteous indignation when Italy's government was convulsed by the "Clean Hands" scandal of the early 1990s, which showed that political parties routinely took kickbacks from industry. They tut-tutted when French Finance Minister Dominique Strauss-Kahn resigned last month over allegations involving misuse of funds. Not only is a national icon tainted by the affair, but Germans can no longer cling to the belief that public finance scandals are an affliction of distant, Latin lands.