In late 1999, it was discovered that the German Christian Democratic Union (CDU) political party had accepted illegal donations while under the control of Chancellor Helmut Kohl in the 1990s. This issue had been ongoing since 1995, but little progress had been made until the rival SPD initiated its own investigation in October 1999.
On 5 November 1999, the Augsburg prosecutor's office arrested former CDU treasurer Walther Leisler Kiep on charges of tax evasion in connection with a large donation to the CDU by arms dealer Karlheinz Schreiber in 1991.
Although Kohl initially denied knowledge of the donation or Kiep's actions, he was forced to admit by 30 November that the CDU used a network of secret bank accounts to conceal contributions, and in a December television interview Kohl admitted to have illegally accepted several million DM, though he did not name the donors. On 18 January, Kohl resigned his post as honorary chairman of the CDU.
After differing accounts of the whereabouts of Karlheinz Schreiber's DM 100,000 donation from current party chief Wolfgang Schäuble and treasurer Brigitte Baumeister, both were forced to step down. Schäuble's successor as party chief was Angela Merkel, the current chancellor.
In the following investigations it was determined that the CDU possessed numerous "shadow accounts", including among other things a Swiss slush fund code-named "Norfolk". These accounts were not listed in the CDU's reports and were obviously used to mask illegal donations to the party. This practice became known as "System Kohl". Kohl, however, never proved that the funds had been used privately to bribe officials.
Since such "shadow accounts" violated the party spending laws, Bundestag President Wolfgang Thierse stopped disbursement of public campaign-finance money to the CDU.
The affair became even more explosive when it was revealed that Kiep had accepted a donation in excess of 1.3 million marks from Schreiber on 26 August 1991.
As consequences of this affair an investigative commission was established and the campaign finance laws tightened to ensure greater transparency. Even today, however, much is still unknown about the extent of this affair. A destruction of documents at the end of the Kohl government in 1998 is alleged to be responsible for this gap in the record (German Wikipedia: Bundeslöschtage)
