German CDU hit by new funding allegations

BERLIN, (Reuters) -- New allegations of illegal funding have hit Germany's opposition Christian Democrats forcing it onto the defensive amid calls for one of its top regional leaders to resign.

Media reports over the weekend said Roland Koch, the CDU premier of the large central state of Hesse, benefited from large corporate donations that were channelled through a local think tank during the late 1990s to avoid being declared.

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However, the national party, which is still reeling from the Helmut Kohl funds scandal, has given its backing to Koch, who insisted that the donations did not benefit party finances.

"Calls for his resignation are absurd," CDU parliamentary leader Friedrich Merz told Welt am Sonntag newspaper. "He enjoys our full confidence."

Chancellor Gerhard Schroeder's Social Democrats demanded on Saturday that Koch resign.

Koch, 41, was seen as a future contender for the post of chancellor until it emerged that some of the worst transgressions in last year's funding scandal happened in Hesse.

Koch has always denied personal knowledge of wrong doings in the affair, centred on Kohl's admission that he accepted $1 million in undeclared donations during the 1990s.

Der Spiegel magazine said Hanover-based insurance company HDI transferred some 450,000 marks ($207,000) to the Hesse Academy for Political Education during 1998 and 1999.

Such transactions are not illegal, but a report in Sueddeutsche Zeitung newspaper cited internal party accounts for the subsequent transfer of 370,000 marks to the local CDU from "the Academy."

Koch denied on Saturday that the transfer had taken place. "The Academy is not involved in money-laundering," he told ZDF television, adding that the accounting note indicating a transfer to the CDU "had nothing to do with the Academy."

SPD Finance Minister Hans Eichel demanded that Koch resign, saying he had lost all credibility as a political leader.

Koch faced resignation calls earlier this year after it emerged that local Hesse CDU officials operated a foreign slush fund during the 16-year reign of Helmut Kohl.

Koch said he was not implicated and has been backed by his junior coalition partners in the state, the liberal Free Democrats.

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