Karlheinz Schreiber still has friends in Bavaria, but no longer among the highest circles. Nowadays, the senior members of Bavaria’s conservative Christian Social Union party, agents with the German foreign intelligence agency BND and defense industry executives he once counted among his friends barely give Schreiber the time of day.
But Schreiber, a jovial 75-year-old from the small Bavarian town of Kaufering, is very popular among the employees at the correctional facility in the southern German city of Augsburg. While in detention awaiting trial, Schreiber made himself popular, telling the guards exciting stories from the world of international business. He knows the names of their children and even remembers their birthdays, and is on a first-name basis with some of the staff.
Schreiber’s engaging manner even helped to convince the prison administration to refurbish the shabby latrine in his cell. His new facilities, according to prison gossip, are everything but standard issue. Schreiber knows how to inspire people, and he’s an excellent negotiator. “I’m one of the best salesman in the world,” he once said.
In the coming weeks, Schreiber’s powers of persuasion could become very important for him — and very uncomfortable for some of his former associates. On Monday, his trial on charges of tax evasion, bribery and accessory to fraud began in Augsburg District Court in Bavaria. Schreiber’s attorney Jan Olaf Leisner read out a written statement by his client in which Schreiber categorically rejected the charges against him.
It’s 15 years since the Augsburg public prosecutor’s office first initiated an investigation against Schreiber and a number of his associates in the business and political worlds who were suspected of taking bribes from the lobbyist. It’s also 10 years since Schreiber, who holds dual Canadian and German citizenship, fled to Canada because of the investigation against him, marking the beginning of a seemingly endless extradition battle. That ended in August 2009, when Schreiber was extradited to Germany.
Back in 1999, the investigation triggered one of the biggest scandals in postwar German political history. It involved political contributions to the conservative Christian Democratic Union (CDU) and led to the resignation of the then-party head Wolfgang Schäuble, who is now Germany’s finance minister, as well as tarnishing the reputation of former Chancellor Helmut Kohl and helping Angela Merkel in her rise to power. The trial could now be the source of further explosive revelations involving party funding.
Schreiber, a former arms lobbyist, has threatened several times to expose the sources of millions of German marks he received in commissions, some of which point to the CSU, the CDU’s Bavarian sister party and a partner in Angela Merkel’s coalition government. Schreiber resents the leaders of his former party for not having put a stop to the investigation against him in Bavaria. “If someone challenges me, they shouldn’t be surprised if I shoot back,” he said a few years ago, in a remark clearly directed at the CSU.
Where Did the Cash Go?
The Augsburg court has scheduled 26 days of hearings for the mammoth trial, which will revolve around the sale of helicopters and Airbus aircraft to Canada and 36 Fuchs armored personnel carriers to Saudi Arabia. Between 1988 and 1993, Schreiber is alleged to have received about 46 million German marks (€23.5 million), paid via front companies, in return for his brokering services.
Aircraft manufacturers MBB and Airbus are believed to have paid commissions for the Canada deal to a firm called International Aircraft Leasing (IAL). In the case of the armored vehicles deal, investigators believe that large sums of money were paid to a Panamanian firm called ATG. Schreiber is believed to have owned both companies.
The prosecution alleges that Schreiber never paid taxes on the money. It also alleges that some of the money was used to make contributions to political parties in Germany, via Swiss bank accounts, in the hope of securing political influence — a charge Schreiber denies.
What can’t be denied, however, is the fact that millions were paid into the Swiss accounts by IAL and ATG. To determine how much Schreiber owes in back taxes, the court will have to find out what happened to the rest of the money. Did Schreiber keep it? Or were there others who benefited from the cash?
Over the next few months, the court will hear testimony from witnesses who are well known to the public from other trials involving the Schreiber affair. The familiar faces will include Max Strauss, who was acquitted, and two executives from the German company Thyssen, who were given prison terms. Then there is the convicted former CSU senior official Ludwig-Holger Pfahls and Walther Leisler Kiep who, during his tenure as CDU treasurer, accepted a briefcase filled with 1 million German marks from Schreiber during a clandestine meeting at a shopping center. Other witnesses will include former sales managers at Airbus and MBB, negotiators for Arab consortiums, Swiss bankers and trustees. The illustrious group is hardly likely to offer much in the way of additional information, however.
The defendant’s testimony, on the other hand, could shed new light on the affair. While still in Canada, Schreiber had spoken about a fund for the CSU, a war chest of sorts, which he was supposed to set up on behalf of the then-party chairman Franz Josef Strauss. Schreiber was supposed to pay money from commissions into the fund, which was set up in the 1980s with upcoming election campaigns in mind. After all, as Schreiber pointed out, campaigns “cost a whole lot of money.”
Schreiber claims that the only people who knew about the fund were Strauss, his son Max and the later CSU Chairman Edmund Stoiber — and, of course, the party’s powerful donations administrator, Munich attorney Franz Josef Dannecker, who died in 1992.
Under Financial Pressure
In addition to being the only person who was fully informed about the flow of funds and donations in and out of the CSU, Dannecker was a close adviser to the Strauss family. Strauss had authorized Dannecker to collect contributions to the party and deposit them in suitable locations.
An account for the “election campaign” fund was allegedly set up in the tiny Alpine principality of Liechtenstein. By Nov. 25, 1994, according to Schreiber, the account had accumulated a balance of the equivalent of 4.82 million German marks. “As I recall, sums were withdrawn from this fund twice,” said Schreiber.
Stoiber, Max Strauss and the CSU consistently dismissed such reports as pure fantasy, but now Schreiber is supposedly able to provide account statements to back up his claims. The Augsburg judges will only reduce the immense sum Schreiber presumably owes in back taxes if he can prove who actually received the money. Besides, things could become so tight financially for Schreiber that his former cronies can not expect to be spared.
New evidence has emerged that reinforces Schreiber’s description of illicit CSU accounts. The trail leads to Liechtenstein, and there is also a connection to Dannecker. For about the past year, the public prosecutor’s office in the western German city of Bochum has been investigating a businessman from Munich, who has ties to the CSU, in connection with suspected tax evasion, as the defendant’s attorney has told SPIEGEL. Information about a foundation ascribed to the businessman was found on DVDs containing data from the Liechtenstein-based private bank LGT Treuhand, which the German foreign intelligence agency, the Bundesnachrichtendienst (BND), purchased in 2007. The man was a close friend of CSU contribution manager Franz Josef Dannecker, as well as the executor of his estate.
The foundation in question also played a role in a fraud trial in Switzerland. The Zurich District Court suspected that it was being used as a depository for funds stemming from questionable investment transactions. During the trial, one of the witnesses testified that he was convinced that the foundation was also used for transactions involving the CSU. Prosecutors have so far been unable to prove the claim. Nevertheless, the Bochum investigators believe that there are parallels between the Swiss case and Schreiber’s claims about the Liechtenstein party fund.
A Memorable Visit
At the beginning of 1996, there was an incident at LGT Treuhand in the Liechtenstein capital Vaduz that employees there remember to this day. On Feb. 7, just after it had been revealed that Bavarian prosecutors were planning to conduct new raids relating to the Schreiber affair, an attorney from Munich appeared in person at the bank.
The man, who had only notified bank officials of his upcoming visit at the last minute, identified himself and demanded the immediate surrender of all documents relating to the foundation in question.
The request seemed odd to the LGT employees, particularly as their customers normally had no interest in removing potentially incriminating documents from the premises. The scope of the documents was also unusual. According to bank employees, the attorney left LGT with six to eight thick, gray files filled with copies relating to a wide range of financial transactions. Other foundations generally limited themselves to a few pages of rudimentary information about assets and beneficiaries.
Were LGT’s Bavarian customers worried about possible searches by the authorities? According to sources at LGT, once the files had been removed, the money in the foundation was also withdrawn and transferred to an institution in Monaco.
The businessman under investigation by the Bochum prosecutors, as well as his attorney, claimed that they were unaware of any of this, and that there had been no ties between the foundation and the CSU or Karlheinz Schreiber. The attorney, for his part, said that he did not recall ever having paid a visit to LGT Treuhand. Officials at CSU party headquarters in Munich said that they had no knowledge of the Liechtenstein foundation.
The Augsburg prosecutors are aware that they will be unable to use all of the evidence from Schreiber’s past to support their case. Much of the information that could emerge in the trial in the coming weeks is likely to be statute-barred and, therefore, will only be of political relevance.
Besides, the prosecutors are not intent on putting Schreiber, who is in poor health, behind bars for the rest of his life. For them, the fact that the trial is taking place at all is a success, because it will send the message that “no one will be able to escape prosecution in the future by fleeing to another country.”
Schreiber’s attorneys have so far remained silent on their trial strategy. It is clear, however, that the defendant has been spending much of his time in his Augsburg prison cell diligently sorting through documents relating to flows of funds, and that he will be well-prepared by the time he enters the courtroom. When it comes to defending his honor as a businessman, Schreiber isn’t the kind of person who is likely to take things lying down.
Full article and photo: http://www.spiegel.de/international/germany/0,1518,672504,00.html