The former Germany chancellor, Dr Helmut Kohl, yesterday denied that his government accepted a DM1 million bribe in return for approving an arms deal to Saudi Arabia.
In an angry interview with the Welt am Sonntag newspaper, Dr Kohl accused Mr Gerhard Schroder's centre-left government of smearing his Christian Democrats (CDU) in an attempt to distract from the present coalition's political troubles.
"These insinuations are false and slanderous," he said.
A parliamentary committee will start an investigation this week into why Dr Kohl's former treasurer, Mr Walther Leisl Kiep, accepted a briefcase containing DM1 million in cash in a Swiss car park in 1991.
A Bavarian arms dealer has admitted giving Mr Kiep the money, which may have been a gift to thank the government for approving the sale of 36 armoured personnel carriers to Saudi Arabia, a deal worth almost DM450 million.
Prosecutors are investigating whether Mr Kiep declared the money, which was not lodged in a CDU bank account, for tax purposes and a member of the CDU in Bonn is taking a civil action against Dr Kohl and his successor as party leader, Mr Wolfgang Schauble.
Dr Kohl insists the decision to approve the arms deal was taken solely on defence and strategic grounds and that, in the aftermath of the Gulf War, it was in Germany's national interest to support its allies in the region.
But the controversy has raised questions about the CDU's fundraising methods and about how the party succeeded in turning a DM90 million deficit in 1988 into a DM9 million surplus four years later.
According to a report in today's edition of the news magazine Der Spiegel, there have been a number of dubious donations to the party even after Mr Kiep stepped down as treasurer in 1992.
The Quelle mail order company is alleged to have given the party DM100,000 in 1993, but paid the sum in five instalments to avoid the obligation to disclose it to parliament.
The pharmaceutical firm Merck is understood to have donated a similar sum in the same year and, once again, it was broken up into five payments.
Mr Franz Hoffmann, a Social Democrat member of the committee investigating the scandal, wants to question Dr Kohl, who led his party for a quarter of a century, despite the former leader's insistence he knew nothing about the payments.
"He was the boss of the CDU firm for many years. It contradicts all experience of life to suggest that he just allowed Mr Kiep to carry on as he pleased," he said.
Reuters adds: The German Green Party leader, Mr Joschka Fischer, yesterday defended his party's opposition to the sale of a single battle tank to Turkey.
"We should have as low a profile as possible when it comes to arms exports. But we are in a coalition where our partner sees things differently," Mr Fischer said.
Mr Fischer told party members at a meeting in Kassel to stop going around like "beaten dogs" and show more unity if they wanted to stay in power beyond the next election.
"Instead of recognising our achievements we go around like beaten dogs. In the next election we will have to really get a grip on things again," he said.
The Greens have been riven by internal squabbling over the party's future direction and a number of highly public rows have hurt the party's credibility with voters. The Greens have lost seats in every election for the last two years.
