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Former German lobbyist and arms dealer Karlheinz Schreiber
Schreiber denies having any involvement in the affairImage: AP

Slush-fund scandal

January 18, 2010

The long-awaited trial of Karlheinz Schreiber, a German lobbyist accused of being involved in a major slush fund scandal in the 1990s, began on Monday. Schreiber faces charges of bribery, tax evasion and fraud.


Karlheinz Schreiber, a German lobbyist and arms dealer allegedly involved in a slush-fund scandal implicating several of the country's high-ranking politicians, went on trial on Monday.

Schreiber is charged with tax evasion and fraud, as well as the bribery of a German official in connection with an arms deal with Saudi Arabia dating back to 1991.

If convicted, he faces up to 15 years in jail. He denies all the charges.

Schreiber fled to Canada in the 1990s as the affair triggered wide-ranging political fallout in Germany. In August of last year, following an extensive legal battle, Schreiber was deported to Germany to face charges.

Slush-fund scandal

In 1995, it came out that Schreiber had made a series of undeclared contributions to then German Chancellor Helmut Kohl's Christian Democratic party, the CDU.

The treasurer of the CDU was charged with tax evasion over the secret payments, which turned out to be an 11-million-euro commission ($15.7 million) paid by the German company Thyssen for the export of armored tanks to Saudi Arabia.

CDU party officials in the 1990s
Many CDU heavyweights were implicated in the scandalImage: AP

The scandal widened in 1999 when the German parliament began an investigation into the CDU slush-fund affair. On the same day a parliamentary commission was launched, Kohl admitted accepting cash donations on behalf of his party but denied allegations of fraud - and refused to name the donors.

"The donors made the contributions under the condition that they remain anonymous. There were Germans who had nothing to do with government decisions," Kohl said at the time.

The former chancellor's refusal to name names, however, plunged the CDU into political crisis. In 2000, the CDU distanced itself from Kohl, who was head of the party, a post he was forced to quit. Many believe the scandal led to the rapid rise of Angela Merkel, current German chancellor, who was seen as a driving force behind the CDU's break with Kohl over the affair.

Questions remain

Many other CDU heavyweights, including former party head and current finance minister, Wolfgang Schaeuble, were suspected of being involved in the affair, but most cases either never made it to court or the charges could not be proved.

Finance Minister Wolfgang Schäuble
Merkel took over for Schäuble as head of the CDUImage: AP

Former deputy defense minister and head of Germany's national intelligence agency, Ludwig-Holger Pfahls, however, was found guilty of accepting bribes from Schreiber. Pfahls testified in 2004 to accepting $2.5 million from Schreiber for putting the stamp of approval on the Saudi arms deal.

Before the proceedings began on Monday in the southern city of Augsburg, Schreiber's lawyers said the 75-year-old was looking to use the trial to explain his alleged involvement in the affair.

Editor: Kyle James

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