Today in History
25.10.1984: Barzel Resigns over Flick Affair
Rainer Barzel had been leader of the CDU/CSU congressional faction since 1964 and became CDU party leader in 1971. But he never made it to chancellor, missing out by 2 votes, when a no-confidence vote was tabled against Willy Brandt by FDP parliamentarians. Brandt dissolved parliament and was re-elected in a fresh ballot with a clear majority of 36 votes.

On April 17, 1973, Barzel resigned both his party and congressional offices. It was a move which left the party chairmanship open for Helmut Kohl, who had previously decided (supported by Flick manager, Erberhard von Brauchitsch) to turn the popular dislike of Barzel in parliamentary circles to his own good.

Barzel had written to von Brauchitsch saying he wanted to discuss his future with him and in August 1973, signed a contract with the Frankfurt-based "Paul law firm" (which subsequently signed a contract with Flick), to consult for them on economic policy. By 1980, Barzel had received nearly DM 1.7 million from the Frankfurt based law firm and over the same period had transferred around DM 1.75 million to the law office as fully tax-deductible expenses.

But the biggest scandal in the Flick affair was yet to begin.

In January 1975 Flick sold a block of Daimler-Benz shares valued at DM 1.9 billion. Usually, more than half this sum would have to be paid to the tax office, but there was a loophole in German tax law which Flick could make good use of. Paragraph 6b of Germany’s Income Tax Act states that a company does not have to pay taxes on its profit, if the profit was invested in areas "eligible for promotion on economic grounds. "

By donating large sums to almost every high-ranking politician and decision- maker, and then writing the profits off as "eligibility for promotion on economic grounds", the company had saved itself around DM 840 million. By 1981 Flick had re-invested two-thirds of the tax free profits from the Daimler-Benz shares, and had donated at least DM 25 million to the CDU.

Rainer Barzel became the President of the German Parliament in March 1983. But the tax inspectors were already on his trail. In June 1984 proceedings were instituted against the "Paul law office" as part of the investigation into Flick’s donations to the CDU. Inspectors suspected a bogus transaction between Flick and the law office had been used to cover up the agreement between Flick and Barzel.

By October 1984, the German public viewed Rainer Barzel's activities with heightened suspicion. Many thought that he had bought party and congressional faction leadership with Flick funds and had used the law office to launder the money. Despite his protestations, Barzel was unable to prove his innocence and was forced to resign.

The former FDP Economic Ministers, Count Otto Lambsdorf and Hans Friderichs as well as ex-Flick manager v. Brauchitsch, were later convicted for tax evasion.
Zitat des Tages
Zitat des Tages
Classes began at a famous school of architecture in Germany on 25 October 1919. What is the school’s name?
  The Gropius School of Architecture
  The International School