12/27/2007 03:34 PM

Radical Bookkeeping

German Neo-Nazi Party Under Investigation for Fraud

By and

While an outright ban of the extreme right-wing NPD party has proven difficult, the neo-Nazis may now face a different kind of legal trouble. The party may have defrauded the state out of federal matching funds for political donations.

The letter, addressed to the "Dear Comrades" of the right-extremist National Democratic Party (NPD) leadership in the northern German state of Schleswig-Holstein, arrived just in time for Christmas and contained its share of holiday surprises. Under the heading "Memorandum about incorrect reporting," the head of the NPD's local organization in the Lauenburg-Stormarn county informed his party leaders in the state capital Kiel about unsavory details of an affair that could prove disastrous for the nationalist party.

The NPD may be guilty of manipulating their books to get more federal money than they should.

The NPD may be guilty of manipulating their books to get more federal money than they should.

"In our opinion," the letter reads, "the former chairman misappropriated contributions and donations for many years," and presumably did so "knowingly and intentionally." The report also discusses an "incorrect and incomplete list of donors" and discrepancies between actual donations and the amounts stated on the donation receipts that were issued.

In "one of the many examples" of the discrepancies the report's author cites, a donation to the NPD of €200 in 2004 turned into €350 on the party's donor list and a receipt was issued to the donor for €400.

The letter from December 2005, which SPIEGEL has obtained, could spell a lot of trouble for the neo-Nazi party. What may look like a discrepancy of a few hundred euros could in fact turn into a controversy over hundreds of thousands of euros in government subsidies.

Auditors Knocking at their Door

For months, the interior ministers of Germany's states have been looking for a way to eliminate subsidies to the NPD. The new information about financial irregularities could supply them with just the ammunition they need. The documents and testimony in the case suggest that party officials may have systematically violated Germany's Parteiengesetz (Political Parties Act), or, at the very least, didn't keep the German parliament, the Bundestag, abreast of irregularities in Kiel. There is reason to believe that NPD officials could soon see government auditors knocking at their door, which would be a first in the history of political parties in postwar Germany.

Officials at the Bundestag are already anxious over recent revelations by the former head of the NPD's state organization in the eastern state of Thuringia, Frank Golkowski. He claimed that several of the party's state organizations deliberately fabricated contribution revenues to fraudulently obtain federal matching funds that provide political parties with tax money based on the contributions they have received. The NPD leadership issued a weakly worded denial, claiming that Golkowski is "on extremely shaky ground" with his allegations and suggesting that it plans to file a criminal complaint against the man.

But the NPD's threat lacks teeth. The documents in SPIEGEL's possession make the NPD's explanations of what it calls regrettable "exceptions" seem more than a little questionable. In a memorandum sent in early 2006, Erwin Kemna, the NPD's national treasurer, informs all party organizations that, "our experiences show that, as a result of the poor accounting" for NPD travel expenses, "many thousands of euros in contributions were lost." The memo goes on to instruct the party's state treasurers to provide additional training when it comes to documenting donations to the party.

The NPD insists that its actions were perfectly legal, and that it was merely making its organizations aware of their legal options. But the view from within the party looks a bit different. One insider says: "We were told to submit an expense report for every car trip, identifying it as travel on party business and further as a donation -- even if all we were doing was visiting a relative. The justification for calling it party business was that we could have put up an NPD poster on the way to the relative's house."

Existed Only on Paper

There was apparently a method to the NPD's madness. The party receives roughly 40 percent of its funding in the form of government matching funds for small donations, membership fees and votes, much of this coming from the maze of 193 NPD county organizations. This is precisely what could prove to be the NPD's Achilles' heel: The party may have fraudulently obtained hundreds of thousands of euros in subsidies for donations that, like those in Thuringia, existed only on paper.

The system there was as simple as it was efficient. Because, under certain conditions, the German government rewards each contribution to a political party with matching funds, "expense donations" were fabricated for activities that never took place, such as travel on party business. These nonexistent donations were fraudulently entered into party accounts, where -- thanks to government subsidies -- they were magically transformed into cash.

A look at the 2005 accounts of Heino Förster, the NPD's former county chairman in the district of Lauenburg-Stormarn just outside of Hamburg, also reveals a number of irregularities. The documents include expense reports for "trips in my own car during the 2005 parliamentary election campaign," for which Förster received receipts as if the money he spent on those trips had been party donations. He then documented the "transactions" by hand in his own account book.

Prosecutors in the northern city of Lübeck are likewise currently investigating the former deputy head of the NPD in Schleswig-Holstein on suspicion of embezzlement. They believe that the right-wing pensioner may have siphoned off about €5,500 from the party coffers between 2000 and 2005. Förster's insistence that the expenses he reported were incurred purely on party business doesn't necessarily improve the NPD's position. His cash-book suggests that the accounts were fudged in various ways. For instance, he recorded a total of €2,962 in contributions from one donor in 2005. On Nov. 16, the supposed contribution magically disappeared. Under record number 227 in his cash-book, Förster writes tersely: "Withdrew his donation because of divorce."

'Complete Disaster'

But this apparently didn't stop the NPD from reporting the full donation to party headquarters and claiming the corresponding government subsidies. Whether it was done by mistake or intentionally, party officials are clearly guilty of manipulation. And it was apparently not an isolated case. According to an insider, the state organization's main goal was to "move at much money as possible through the books" to qualify for the subsidies.

Nevertheless, Uwe Schäfer, the head of the NPD state organization in Schleswig-Holstein, insists: "We abided by the law." What he calls "inconsistencies" in Lauenburg represented "purely an internal matter" that shouldn't have been reported to the parliament in Berlin. Schäfer claims that he "knew nothing" about "inflated donation receipts."

His statements are peculiar, to say the least, especially in light of a June 2006 letter to a fellow party member, in which he wrote: "the donation receipts in the books" could still have "terrible consequences." The entire financial goings-on in Lauenburg, Schäfer continued, are a "complete disaster."

Translated from the German by Christopher Sultan


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