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German Pols And Business: The End Of The Affair?

International Outlook

German Pols and Business: The End of the Affair?

First, there was the Italian "clean hands" campaign against corruption and the Mafia. Then came the French prosecutors' attack on business and government backroom dealmaking. Now it's the German prosecutors' turn: Hardly a day passes without a new development in the scandal surrounding alleged illegal campaign donations to the Christian Democratic Union through secret bank accounts. And investigators want to know the role Chancellor Helmut Kohl played in the whole affair. "It has become politically correct to go after the big shots," says Wulf H. Doser, a Frankfurt lawyer and university professor.

By going after Kohl--the architect of national unity and thus by German standards the biggest big shot of them all--Germany's prosecutors are displaying new-found aggressiveness. Long dismissed as gray bureaucrats with low profiles, prosecutors such as Dieter Irsfeld, chief of the Bonn state's attorney's office, and Bernd Konig, the Bonn prosecutor managing the Kohl investigation, are suddenly capturing headlines. "No one is immune from scrutiny," declares Reinhard Nemetz, a prosecutor in Augsburg, who is investigating secret payments by a local businessman to Kohl's Christian Democrats.

The crackdown on illegal campaign financing is just the latest phase in Germany's painful trek to a more open society. It's another sign that the old consensus model--in which politicians, businesspeople, and unions struck deals behind closed doors--is breaking down. Like their counterparts in Italy and France, many German voters are fed up with politicians. "The public already believed politics was a dirty business," says Edzard Schmidt-Jortzig, a member of Parliament who served as Justice Minister under Kohl. "Now it's confirmed." In a poll by the Berlin-based Forsa Institute, 60% of Germans find neither the Christian Democrats nor the Socialists qualified to govern. Some 89% of voters think both parties take secret campaign contributions, according to polltakers Institut fur Demoskopie Allensbach.

The implications of the prosecutors' investigations could be far-reaching. Even if criminal charges are never brought against Kohl and other politicians, such as CDU Chairman Wolfgang Schauble, the ongoing revelations are likely to lead to a shakeup in the CDU's upper ranks and the end of Kohl's still-considerable influence on German politics. Pressure is growing on Schauble to resign after he admitted on Jan. 10 that he accepted a bag of $52,500 in cash for the CDU from suspected arms dealer Karlheinz Schreiber. "Schauble must do whatever his conscience tells him," declared Chancellor Gerhard Schroder on Jan. 11, signaling he plans to let the CDU hang itself. The SPD hasn't been spared scandal, either: SPD officials in North Rhine-Westphalia and Lower Saxony are accused of accepting corporate gifts.NO NAMES? For now, the CDU investigation is far more explosive, and the prosecutors are burrowing away. The scandal could even cast a shadow over Germany Inc. A key figure in the scandal is Walther Leisler Kiep, the former CDU treasurer known for his corporate connections.

Kohl, meanwhile, has refused to reveal the identities of those who gave $1 million in illegal donations between 1993 and 1998. But if asked to testify in court, he may have to name names. If the donations came from companies or executives seeking government favors, the revelations could deliver a knockout blow to the cozy relations that exist between German business and the CDU. It could spur calls for far greater transparency in corporate and government accounting. And alternative parties such as the Greens could benefit. Germany may be in for a year of political surprises.By Jack Ewing in Frankfurt; Edited by Rose BradyReturn to top

India Opening?

Ending a five-year trade dispute with the U.S., India has agreed to lift import restrictions on some 1,500 agricultural and consumer products from candy to cars. The easing of restrictions, some of them 50 years old, came after the World Trade Organization rejected India's argument that they were necessary because of its balance of payments problems. But the impact of India's move may be muted. More than U.S. goods, India is worried about a flood of imports like textiles and toys from China, Taiwan, and Indonesia. Most affected will be India's uncompetitive but politically protected small-scale producers. As a result, a source in the commerce ministry says there is already talk about adopting high tariffs as a "legitimate weapon" against imported goods, perhaps as soon as next month.Edited by Rose BradyReturn to top

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