Extradited arms dealer returns to unsettle Merkel

Karlheinz Schreiber was key figure in 1990s Christian Democrat funding scandal

(REUTERS)

Karlheinz Schreiber, a fugitive arms dealer whose shady dealings inadvertently propelled Angela Merkel to power, has made a surprise return to Germany where he is threatening her conservatives with potentially embarrassing disclosures ahead of next month's general election.

The 75-year-old who was a key figure in the party slush fund scandal that rocked Mrs Merkel's Christian Democrats in the late 1990s, resurfaced in Germany this week after fighting extradition from Canada for a decade. Yesterday the former arms lobbyist, who started out as a spy for West German intelligence, was charged on several counts for bribery, tax evasion and fraud. State prosecutors allege that he made some €15m (£13m) from tax evasion on weapons deals alone.

During his time overseas, Mr Schreiber threatened repeatedly to damage Germany's conservatives with fresh disclosures about illicit party funding. It was not immediately clear whether he would stand trial for his offences before the September election but the political ructions caused by his untimely reappearance were already being felt yesterday.

Mr Schreiber himself was the first to claim there was a political dimension to his extradition only weeks before the poll. "The Social Democrats won three elections with my case in the past," he told reporters, adding that his presence in Germany would start "a huge circus and investigation".

"With that, the Social Democrats will think they can win the election."

Mrs Merkel's party insisted yesterday that the trial would have no impact because Mr Schreiber belonged to a former generation of conservatives. However, leading Green Party politicians suggested that his presence could lead to a reopening of a parliamentary inquiry on the slush fund scandal.

Mr Schreiber stands accused of using a network of secret Swiss bank accounts to transfer millions to various German and Canadian politicians and business leaders during the 1980s and 90s. His alleged hand over of a million Deutschmarks (€500,000) to the former treasurer of the German conservative party in a supermarket parking lot in 1991 sparked the Christian Democrat party funding scandal. Helmut Kohl, Germany's former "unification Chancellor" was obliged to concede in 1999 that he had accepted illicit donations from party supporters and was forced to resign as honourary party president. Wolfgang Schäuble, was also forced to resign as conservative party chairman, paving the way for Mrs Merkel's election as party leader in 2000.

The disgrace heaped on the conservatives by the scandal is widely held to be one of the reasons why Chancellor Gerhard Schröder's Social Democrats were elected for a second term in 2002. But Mrs Merkel was subsequently able to triumph by portraying herself as the leader of a new generation of conservatives untainted by the corrupt practices of the past. Mr Schäuble has been rehabilitated and is now Interior Minister.

Whether Mr Schreiber will have a chance to blow the whistle on further illicit party funding deals before the elections, remains an open question. He has little to lose. He is now in custody pending trial and faces a maximum 15-year sentence if convicted.

The German media was full of speculation yesterday about Schreiber's role in setting up slush funds for the Bavarian conservative party. Several analysts say that angle had so far received scant attention, although Mr Schreiber had been a member for decades. Mrs Merkel's Christian Democrats rely heavily on the support of their Bavarian sister party to stay in power.

The Social Democrats, who are well behind in opinion polls, refused to react to Mr Schreiber's claims. Frank Walter Steinmeier, the Foreign Minister and the party's candidate for Chancellor instead talked about his campaign to create a million new jobs through Green investments.