Germany 'paid billions to sell plant'

Side by side: Mitterrand and Kohl accused over the Elf scandal

The German state lost billions of Deutschmarks when it sold a refinery to the French oil giant Elf in the mid-1990s, the Berliner Zeitung newspaper has revealed.

In a case that has been linked to an international political funding scandal, Elf bought the Leuna oil refinery and Minol petrol station chain, in the former East Germany, for five times less than Germany paid to secure the deal, the paper says.

It cites a confidential report compiled for the parliamentary committee which is investigating the party financing scandal within Helmut Kohl's Christian Democratic Union (CDU) by the Federal Office for Special Reunification Tasks.

In total the government paid a total of DM2.8bn ($1.26bn, 1.43bn euros) to push through the sale, while Elf paid only DM550m ($249m), the report says.

Both Mr Kohl's administration, and that of his French counterpart, Francois Mitterrand, have been accused of using the sale to siphon off funds into their own coffers.

Flourishing landscape

Chancellor Kohl had put the success of the Leuna sale at the heart of his commitment to make a "flourishing landscape" of the former east following reunification.

His priority, the Berliner Zeitung says, was to secure jobs at the plant.

But the cost of those jobs, the paper calculates, came at DM500,000 a head when all the subsidies and one-off payments had been made.

Former French Foreign Minister Roland Dumas: convicted of misuse of funds

Once Mr Kohl had declared the refinery would be the "flagship of development" in the east, Elf had a green light to exploit the situation and demanded special conditions and price reductions, the paper says.

It negotiated the price of the Minol chain from DM850m down to DM301m, despite the fact that the chain's real estate alone was worth DM900m.

Elf was awarded DM360m compensation to keep it sweet when another firm withdrew from the consortium to buy Leuna.

At least another DM630m was paid for investments in areas such as security and environmental protection. And DM600m was doled out to cover losses.

But the total, the Berliner Zeitung says, could rise further still as the cost of lawyers and consultants are not included in the report.

Web of cash

One aspect of the sale not covered in the report is the allegation that some of the many millions which floated between Germany and Elf lined the pockets of leading figures in France and Germany.

Helmut Kohl stopped the release of the Stasi files

Elf has been the focus of a long-running corruption scandal.

Former French Foreign Minister Roland Dumas, was convicted earlier this year for misuse of Elf funds.

And some believe that Elf's murky web of cash extended to Mr Kohl's CDU.

Mr Kohl has admitted that his party received illegal funds but has always refused to say where they came from.

Last month he successfully fought the release of files compiled by the East German secret police, the Stasi, and earlier this year paid a fine in return for charges against him being dropped.

However, a German parliamentary commission continues to investigate the party's finances.