Thruth is the better option: The German president’s ‘loan affair’

German Federal President Christian Wulff in his office – © Jesco Denzel, Presse- und Informationsamt der Bundesregierung

Germany is usually neither part of my research nor covered by this blog; however, as it is my home country I thought I might write an article on the ‘loan affair’ currently surrounding German Federal President Christian Wulff and its – yet unfinished – aftermath.

Everything began in 2007 when Christian Wulff was prime minister (“Ministerpräsident”) of the state of Lower Saxony. During his electoral campaign he published a book which – although not officially connected to the electoral campaign of his Christian Democratic Union (CDU) – described him, his worldview and plans for the country. As has now emerged, the add campaign for said book (€ 42,700) was paid for by German businessman Carsten Maschmeyer – apparently without Wulff’s knowledge. The question whether this was a violation of the regulations on party financing is still disputed but this episode is only a sidenote to the main criticism Wulff is facing at the moment. For the time being and oddly enough, the title of the book entitled ‘Truth is the better option’ (“Besser die Wahrheit“) is probably most important here.

The ‘loan affair’

The real ‘affair’ concerns Wulff’s relations to another businessman, Egon Geerkens, and his wife, Edith Geerkens. In 2009 – still as prime minister of Lower Saxony – Wulff spent his holiday at the Geerkens’ house in Florida. After it emerged that he and his wife had received a free upgrade from business to economy class by AirBerlin airline – a violation of the law on members of the state government (cabinet members must not accept gifts above the value of € 10) – the Greens asked Wulff whether he maintained business contacts with Egon Geerkens. Wulff answered that there had been no business relations.

As current press reports suggest, this was not exactly true. In 2008, Wulff and his second wife Bettina received a private loan of € 500,000 from Edith Geerkens to buy a new house  (here is a photo) worth € 415,000. By declaring that there were no business relations between him and Egon Geerkens Wulff lied to parliament. President Wulff’s lawyers (see also below) initially argued that Wulff had answered truthfully as the question only concerned business relations with Mr Geerkens and not Mrs Geerkens. However, Mr Geerkens told the ‘SPIEGEL’ that he, in fact, was involved in arranging the private loan and media reported that Mrs Geerkens entered marriage without a ‘significant amount of financial resources’ and had agreed on a separation of property within the marriage. Even though the loan was arranged using her bank account, it is therefore questionable whether it was actually her who loaned president Wulff the money. Faced with the facts, president Wulff’s lawyers admitted yesterday that Mr Geerkens was involved in choosing the property in question and arranging the details of the loan.

Two interesting facts:
1) Only a few days after questioning in parliament, president Wulff took out a loan with the BW-Bank in Stuttgart and replaced the private loan. Asked later how he paid for his new house president Wulff replied that it was paid for by a loan from the BW-Bank without mentioning the earlier arrangement.

2) As the ‘SPIEGEL’ and ‘BILD’ report the private loan was considerably more profitable for president Wulff than any loan from a normal bank. President Wulff and the Geerkens agreed on an interest rate of only 4 per cent – given that the Wulffs borrowed more money than the house itself costed and did not invest any of their own capital they would have had to pay at least 6.5 per cent when taking out the loan from a bank. Had they not replaced the private loan with a normal one, president Wulff would have saved between €50,000 and € 60,000.

Salami tactics?! How the president (and others) handled the affair so far

Until now, there has been no personal statement by president Wulff; all communication on the topic was mediated by either the presidential office or his lawyers. Details were only given (or rather admitted) after press reports had already revealed them – this is except for a list with holidays president Wulff spent with wealthy friends in their houses abroad including his time as prime minister of Lower Saxony. The latter was declaredly published to avoid the impression that president had something to hide. Still, the fact that there has been no personal statement can only be termed bad style. Opposition politicians have termed the presidents behaviour ‘salami tactics’, giving only one slice [piece] of information at a time.

Many have also likened the issue to the so-called ‘plagiarism affair’ of (now ex-)defense minister Theodor zu Guttenberg. After he was accused of plagiarism in his PhD thesis, zu Guttenberg first gave no comment, then denied it, then admitted after a weekend of re-reading his dissertation that there might be some errors but had to step down eventually after it emerged that 371 von 393 contained plagiarised elements (his PhD was later taken away by the university; an internal investigation committee concluded that zu Guttenberg had intentionally deceived the examiners). Surprisingly (or maybe not), the reaction of other politicians is nearly the same. Angela Merkel and most high-ranking members of the Christian Democrats and Free Democrats (i.e. the parties in government) try to make the affair a ‘non-issue’ and declare their support for the president (however, the declared support by vice-Chancellor Philipp Rösler whose own support among the Free Democrats is currently in question was heavily ridiculed). The Social Democrats, Greens and Left Party on the other hand now compete in unnecessary president-bashing after their initial criticism was still based on a more factual argumentation (of course, this is not helped by the fact that the governing parties and Wulff are more than reluctant to discuss the issue in detail).

The affair and the ‘dignity’ of the presidency

Much of the affair boils down to how it affects the office of the presidency rather than the president himself; he has most probably lied to parliament but as the private loan was apparently not connected to any return-favour it will not cost him his office. Both government and opposition have already pulled out their favourite argument: The ‘dignity’ of the presidential office. Politicians of the governing coalition argue that criticising the president in such a way as they do would damage said dignity. President Wulff’s predecessor, Horst Köhler, also used this argumentation to justify his resignation from office when faced with (considerably less heavy) criticism regarding a remarks about German troups safeguarding German economic interests. Unfortunately for the government, the fact that this was received very negatively by the German press and public does not really help their case now. Nevertheless, the opposition is also playing a risky game by accusing president Wulff of damaging the ‘dignity’ of the office through his behaviour as – so it seems – all facts are not yet know. The president’ information policy can surely be called questionable but has not yet brought damage to the office. After all, his alleged violation of existing regulations dates back to his time as prime minister of Lower Saxony and has not happened during his time in the presidential palace.

The (re-)discovery of morality – or – The truth is the better option

In conclusion, this issue is certainly not to be swept under the carpet – especially not for the law-loving and -abiding Germans (the belonging to which the author of this article can certainly not deny). While the affair certainly throws light on the dirty side – or maybe better ‘grey areas’ – of politics, it also shows that Germans seem to (re-)discover the value of morality in politics. According to a recent poll, only 26 per cent of Germans want Wulff to resign – opposed to 70 per cent who do not see the need for that. However, 54 per cent believe that it is wrong for the prime minister of a German federal state to spend their holidays with business associates (42 per cent do not see a problem with that).

President Wulff’s past behaviour and current information tactics certainly need to be criticised but the issue may in the end result in a ‘much ado about nothing’-situation. The fact that president Wulff himself was often a fierce critic of other politicians (click here for a less than perfect google translation into English of the most prominent incidences) certainly does not help his position but cannot a basis on which he should be judged now. As simple as it sounds, the president could have avoided most of the ‘buzz’ about the issue and left the affair (probably completely) undamaged by sticking to the title of his book right away: The truth is the better option.

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