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3 Campaign Funding in Germany 1 2 Particularly notable scandals in Germany 1. The “Flick Scandal”. Firm accused of buying a tax exemption. 2. Party Corruption Scandal. Kohl & CDU accused of keeping large unreported, secret fund. Possibly taking money from companies and foreign agents. 2 Brief History 1800s, Germany fractured among competing nation-states Post WWII West Germany created, US wrote Constitution. Executive NOT SEPARATELY ELECTED. Chancellor == prime minister, the leader of a party that forms the government. 2 House Parliament, one elected in mixed systems of regional PR and individual SMD elections. High minimum % threshold. Strict laws against hate speech, fascism. Strict Party System. Individual MCs have small leeway, party is focus of decision 3 Campaign Funding in Germany 3.1 Prohibition on bribery Donations may not be linked to particular decisions or policies. 3.2 State Funding of Parties No limits on campaign spending or on donations. Nat’l govt sets a total budget (133mill Euro) divided among parties according to 1) votes and 2) matching of small donations. Donations from individuals and corporations allowed, and no limit is enforced. Emphasis on reporting. 1 Averages: gov’t provides 30% party support, 28% from DUES, 12% mandatory contributions of govt officials, 10% individual donations, 3.5% corporation donations. See this website: http://www.parteispenden.unklarheiten.de/?seite=auswertung But nothing from associations or charities that might act as “pass through”. Strict reporting guidelines, parties supposed to report donor names. Individual donations are deductible. BUT since 1994 corporation donations are not de- ductible. Can donate to individual MCs, but they aren’t supposed to keep the $. “the statutory provisions presume that the donation is given to the individual in his role as a representative of the party, by obligating this individual to turn party donations over to the party as soon as possible.” (Library of Congress). Before 2002, enforcement of violations did not aim at individuals 1. “German campaign finance laws provide for harsh penalties against parties in such cases but not against individual party leaders, so the CDU may be fined as much as fifty million marks for these violations, but it does not now appear that Kohl or any of his colleagues are heading to prison. But many party leaders have been com- pelled to resign their party offices, and the whole political atmosphere in Germany changed dramatically with a revival of the political fortunes of the SPD and Ger- many’s small liberal party, the Free Democrats.” Bill Patch, Grinnell newsletter http: //web.grinnell.edu/history/Newsletters/newsltrF00/nltr9-00_pg2.html After 2002 Reform, individuals became responsible as well. “Enforcement of the accounting and disclosure rules appears to have been lax until 2002, when the accounting provisions were tightened in a reform[51] that was the response to a major party financing scandals of the 1990s.”(Library of Congress) 3.3 Strict Media Limits in Campaign The state governments regulate the media, they agreed among themselves that candidates may not buy time for commercials. Neither may parties. A few minutes of air time are granted to parties in the campaign period. “For instance, for the federal election of 1990, the Christian Democratic Union, one of the largest parties in the country, was only granted eight advertisement spots in each of the public television broadcasting networks.[25] In 2005, the state supervisory agencies for the private broadcasters published guidelines indicating that a total allocation of twelve minutes per campaign period per broadcaster was appropriate for each of the two largest political parties, while smaller parties should get six or three minutes, depending on their size.” (Library of Congress report) 2 4 Flick Affair The Flick company was exempted from paying taxes on 1.5 German marks from the sale of Daimler-Benz stocks, allegedly after paying politicians from 3 parties. “The Flick manager von Brauchitsch was sentenced to two years in prison for tax evasion, but was released on parole for three years after paying a penalty of 550,000 German Marks. Lambsdorff and Friderichs (FDP politicians) were also sentenced to penalties of 180,000 Marks and 61,500 Marks, respectively, for tax evasion (Leyendecker 1999).” 5 Kohl Scandal Details Helmut Kohl (CDU) was Chancellor of West Germany 1982 -> October 1990 – East and West Germany formally reunify. December 1990 – The first all-German elections since 1933 are held. The Christian Demo- cratic Union (CDU—Christlich Demokratische Union) led by Helmut Kohl sweeps into power, and Kohl is elected chancellor. Simmering Suspicions 1995. Augsburg prosecutors accuse CDU of taking $516,000 from arms dealer in 1991. Investigation dragged on. September 1998 – “Red-Green Coalition” wins. Gerhard Schröder leads the Social Democrat Party (SPD—Sozialdemokratische Partei Deutschlands) to victory with 40.9 percent of the vote. Rumors of document destruction flourish during transition. Sandal Blossoms Allegedly, since 1982 Kohl and the CDU had kept a secret, unreported fund. November 1999 – Augsburg prosecutor charges former CDU party treasurer Walther Leisler Kiep with tax evasion based on a DM1 million (US$516,000) cash donation he accepted from an arms dealer fighting extradition to Germany in 1991. Kohl denied knowledge, but soon admits. During his last five years in office, he accepted more than DM2 million (US$1 million) in donations from unidentified sources in secret bank accounts. "These donors trusted me with this sum of money under the condition that they wouldn’t be named. They were German citizens who had nothing to do with government decisions or policy in any sector. They wanted to help me. And I don’t intend to reveal any names because I gave them my word," Kohl in interview 3 January 2000 – Auditors claim CDU had nearly US$6 million in anonymous & secret party donations. CDU leader, Wolfgang Schäuble, admits that the CDU violated the law. January 2000 – The Hesse branch of the CDU admits to having operated a slush fund containing millions of marks kept in secret bank accounts in Switzerland and Liechtenstein. Funds had been called “bequests” of Holocaust survivors. The party’s leader in Hesse, former interior minister Manfred Kanther, is forced to resign. January 2000 – Kohl resigns as honorary chairman of the CDU. Refuses to name any of the donors who made illegal contributions to his party. February 2000 – Parliament imposes a record fine of €21 million (US$19.7 million) on the CDU. March 2001 – Prosecutors announce they are abandoning their 14-month investigation and dropping charges against Kohl for accepting illegal donations while in office, but Kohl agrees to pay a fine of DM300,000 (US$142,000) for his role in the scandal. Kohl still refuses to identify the illegal donors. August 2001 – A parliamentary committee concludes that there is no evidence that Kohl or the CDU received bribes as part of the 1992 sale of an oil refinery in Leuna to French company Elf Aquitaine. However, the committee investigating the sale finds that the German government lost more than DM2 billion (about US$1 billion) from the transaction. NEW FINANCE LAW April 2002 – Parliament adopts new party financing laws. Under the new regulations, party officials who hide illegal donations face up to three years in prison, cash donations are limited to €1,000, donors who give more than €10,000 must be named, and donations of more than €50,000 must be reported to the president of the federal Parliament. The laws continue to permit the practice of hiring politicians as lobbyists and impose virtually no oversight over local fund raising. July 2002 – A parliamentary panel on the CDU Party financing scandal. In the 941-page final report, the panel concludes that while the CDU raised millions of marks in illegal donations from 1982 to 1998, investigators were unable to trace their source. Note, SPD scandals also cropped up November 2000 – After serving for a year as transport minister, Reinhard Klimmt, of the SPD, resigns from office following his conviction for assisting embezzlement and is fined US$12,000. Klimmt had been accused of illegally diverting DM600,000 (US$250,000) in charity funds to a soccer club he ran in the 1990s while serving as head of a local government. March 4, 2002 – Norbert Rüther, a senior SPD official in Cologne, resigns from his party posts after admitting to "improper behavior" regarding irregular payments to the SPD totaling at least €174,000 (US$172,000) between 1994 and 1999. The contributions are believed to be 4 connected to the construction of a garbage incinerator in Cologne. The SPD launches a parliamentary investigation into the scandal. June 2002 – Former SDP officials Norbert Rüther and Karl Wienand are arrested in con- nection with an alleged DM21.6 million (US$11 million) bribery scheme involving the con- struction of a Cologne garbage incinerator. The Social Democrats have already been forced to forfeit nearly €500,000 (US$470,000) in public funding because of the scandal, which first surfaced earlier in 2002. July 2002 – Chancellor Gerhard Schröder fires Defense Minister Rudolf Scharping after Stern news magazine reports that Scharping accepted €71,600 (US$72,000) from Moritz Hunzinger, a public relations consultant with clients in the arms industry. Scharping admits to accepting the money, claiming that it was given to him prior to his appointment as minister but deposited after he was named to his post. Under German law, cabinet ministers may not earn any money other than their government salaries. September 2002 – Red-Greed Coalition holds on in elections (lead by Schröder) “Mr. Kohl, while admitting that he violated Germany’s code of transparency about political contributions, has denied any personal enrichment or other illegal actions and insisted that his policies were never influenced by the money” (Fitchett, 1999).
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