German arms lobbyist may spill more beans

Aug. 4, 2009 at 11:07 AM
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BERLIN, Aug. 3 (UPI) -- Escorted by two Canadian Mounties, Karlheinz Schreiber is now in Germany, detained in a Bavarian prison cell in Augsburg. Never before have German media and representatives of civic society awaited the arrival in Germany of a 75-year-old businessman with such eager anticipation.

Arms lobbyist Schreiber is widely acknowledged to be the key figure in a web of financial and political corruption that ruined the reputation of former German Chancellor Helmut Kohl and numerous senior officials in his Christian Democrat party. At stake when he appears in a German court are the good name of major German arms manufacturers, for whom he was acting, and the reputation for probity of top German officialdom in the area of Defense sales.

Most of Germany's major arms manufacturers and many Conservative politicians would have been happier if Karlheinz Schreiber had succeeded in his decadelong legal battle in Canada -- where he has spent most of the last 20 years -- to avoid extradition to his German homeland. His activities reportedly led to numerous breaches of German restrictions on the sales of weaponry to countries in conflict areas. Schreiber has denied making payments directly linked to arms contracts but has described such payments as "watering the political garden."

Depending on what emerges in Schreiber's trial, a further parliamentary inquiry into "who paid what to whom and for what favors" is a real possibility. Some members of the traditionally anti-military Green Party, the left-wing Party of Democratic Socialism and, potentially, the Social Democratic Party are hoping that discussion of past corruption centering on the Christian Democrats of Angela Merkel and their allies -- the Bavarian Christian Social Union -- could politically weaken Merkel's party ahead of the forthcoming general election, due in September.

Merkel's rise to the top of the Christian Democrats -- and later to the chancellorship -- can be traced to her very public demands that the party should distance itself from Kohl, by then its lifetime honorary president. Further disclosures by Schreiber badly tarnished Kohl's successor, Wolfgang Schaeuble -- now German interior minister under Chancellor Merkel.

The public has been promised -- not least by Schreiber himself -- further detailed revelations concerning large-scale financial inducements allegedly paid by Schreiber to Christian Democrat politicians mainly during the 1990s on behalf of some of the biggest names in German industry. These include Airbus Industries, ThyssenKrupp, its former subsidiary, Armored Vehicle maker Blohm & Voss Industries (now sold) as well as Krauss-Maffei Wegmann. The latter is involved in the manufacture of the Leopard 1 and Leopard 2 and Puma Tanks.

Schreiber has not denied that he was the political fixer and financial conduit for German companies to bribe government officials to give an otherwise dubious "nod" to large-scale weapons sales, especially to Saudi Arabia, Thailand and Canada -- and possibly other countries.

Schreiber is charged with several cases of tax evasion, with bribing a former German armaments minister, a state secretary in the Defense Ministry who spent more than a year in hiding before being jailed for corruption, with aiding and abetting breaches of trust by two former executives at Thyssen Group as well as acts of deception against the state of Saudi Arabia. These charges arise out of the sale of NBC Reconnaissance vehicles to Saudi Arabia in 1991 -- partly it was alleged -- at the behest of the U.S. government, which saw them as a shield against the aggressive Iraqi regime of Saddam Hussein.

Schreiber's activities and links to the governing CDU emerged after German tax authorities questioned exceptionally large "commissions" -- totaling more than $150 million -- that Thyssen recorded as deductible expenses on its sale of Fox armored vehicles to Saudi Arabia. Large chunks of these commissions were paid to letterbox companies in Switzerland traced back to Schreiber, who used the funds to make large-scale political donations to the Christian Democratic Party, personal payments to some of its top officials in government and kickbacks to Thyssen executives.

A number of these payments were made in cash-stuffed envelopes, while a former party treasurer later admitted traveling to Switzerland to receive a suitcase from Schreiber containing 1 million deutschmarks -- then worth more than $650,000.

Former Canadian Prime Minister Brian Mulroney is still under investigation after admitting receiving money from Schreiber.

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