What became of the riches of East Germany's socialist party? | DW Documentary

Key Concepts

• SED (Socialist Unity Party of Germany): The ruling communist party of East Germany.
• Wolfgang Langka: A key figure in hiding national assets, described as a "financial magician."
• Gregor Gysi: A lawyer who became a prominent figure after the fall of the Berlin Wall and later the leader of the SED's successor party.
• Commercial Coordination Department (Koko): A department within the East German Ministry of Foreign Trade responsible for generating foreign currency through various means.
• Alexander Schalck-Golodkowski: Head of the Commercial Coordination Department, a major procurer of foreign currency for East Germany and the SED.
• "Treasures of the Working Classes": A euphemism for the hidden assets of the SED.
• "Putnik Deal": A complex financial transaction involving the transfer of funds to a non-existent company, aimed at moving SED assets out of Germany.
• "Red Finny" (Rudolfina Steining): A key figure in managing SED assets, particularly through the company "Noam."
• Abdel Younes: A Palestinian arms dealer and central figure for the SED, involved in the distribution and disappearance of party assets.
• Independent Commission of Inquiry (UKPV): A commission established to investigate and recover former SED party assets.
• Treuhandanstalt: An agency responsible for the fiduciary management of former East German state assets, including party assets.
• State Crime: Crimes committed by government officials during the reunification process in former East Germany.

Summary

This video transcript details the complex and often clandestine efforts to hide and then recover the vast assets of the Socialist Unity Party of Germany (SED) following the fall of the Berlin Wall in 1989. The narrative follows journalists and investigators as they uncover a web of financial manipulation, corruption, and secret accounts, revealing the extent of the SED's wealth and the lengths to which its members went to preserve it.

The SED's Hidden Wealth and the Fall of the Wall

Following the collapse of the SED's power and the fall of the Berlin Wall on November 9, 1989, it became apparent that the party possessed billions in assets, hidden from public view. These assets included real estate, gold, and secret foreign accounts. The journalist Peter Wentzke recounts his early investigations into this hidden wealth, noting the sheer scale of money changing hands, with some party functionaries taking home "bags and bags of money." The transcript highlights the stark contrast between the public image of East Germany and the reality of its ruling party's hidden financial empire.

Gregor Gysi, a lawyer who became involved in politics by chance, played a crucial role in the initial attempts to address corruption. He was tasked with forming a commission of inquiry to investigate abuses of office. This commission began by sealing off offices of Politburo members and the finance department, but initially found no evidence of foreign currency mismanagement, as these funds were handled by a separate "clearance department."

The SED's Transformation and Asset Management

As the SED grappled with its impending demise, internal debates raged about its future. Some advocated for dissolution, while others pushed for reform and reinvention. Ultimately, the party decided to rename itself the Socialist Unity Party of Germany, Party of Democratic Socialism (SED/PDS). Gregor Gysi was elected as the new chairman with an overwhelming majority.

Under Gysi's leadership, the SED/PDS began redistributing what were termed "treasures of the working classes." This involved distributing millions and hundreds of thousands of marks in cash, often through personal handovers and loans. Lists of money handovers and payments to "straw men" revealed individuals receiving substantial sums, such as 15 million marks, who claimed to be holding the money in trust for the party. The transcript provides anecdotal examples of how these funds were used, including the establishment of businesses like a "fisherman's paradise" that eventually became a brothel, illustrating the often-unsuccessful or illicit use of these assets.

A significant discovery was "Safe 28" in the Central Committee building, which contained gold coins, silver bars, gold bars, expensive watches, and substantial amounts of Deutsch marks and US dollars. This safe alone yielded a considerable sum for the PDS finance department.

The Race to Disappear Assets

With the first democratic elections approaching on May 6, 1990, the SED/PDS faced immense pressure to disclose its finances. However, they were unable to do so, with a finance official confessing to burning documents. Despite initial resistance, the party eventually presented unverified figures.

The transcript details the systematic efforts to move SED assets abroad. Wolfgang Langka, a key figure, wrote to party treasurer Wolfgang Paul proposing the deposit of 40 million marks into foreign banks via numbered accounts held by middlemen to prevent expropriation. This highlights a clear awareness of criminal activity, with repeated warnings to maintain secrecy and an appearance of legality, suggesting a "money laundering mafia" at work.

Key Figures and Schemes

• Wolfgang Langka: Described as a loyal party soldier who facilitated the disappearance of SED assets. His death in a car accident in Switzerland, while crossing the street, is presented with a degree of suspicion, though the official explanation was being blinded by the sun. Langka's materials, discovered after his death, provided crucial insights into the "Putnik Deal."
• Alexander Schalck-Golodkowski: The "godfather of western currency," who led the Commercial Coordination Department (Koko). Koko generated billions for East Germany and the SED through various means, including the illegal acquisition of antiques from citizens, the sale of blood reserves to Switzerland, and shady deals with the West German pharmaceutical industry (e.g., using East German hospital patients for drug trials). Schalck-Golodkowski's empire was vast, involving an estimated 150-200 companies, many of which were front operations.
• Rudolfina Steining ("Red Finny"): A central figure in managing SED assets, particularly through the company "Noam." She acted as a trustee for the SED, skillfully moving hundreds of millions of Deutsch marks to Switzerland and then to Austria to conceal their origin. Her actions were described as "white collar crime" and a "breathtaking transaction in international money transfers."
• Abdel Younes: A Palestinian arms dealer with multiple identities who played a significant role in distributing SED assets. He received millions in loans and donations, including 75 million marks for an Islamic religious association that was allegedly never established. His activities were linked to the security ministry and terrorism.

The "Putnik Deal" and Legal Battles

The "Putnik Deal" emerged as a major attempt to move SED assets out of Germany. The PDS claimed it had debts in the Soviet Union and transferred over 107 million Deutsch marks to a fake account belonging to the Russian company "Putnik." Middlemen then transferred these funds to accounts in the Netherlands and Norway. This transaction was executed with extreme secrecy, involving armed police raids on PDS headquarters and searches of its leaders, including Gregor Gysi. Gysi claimed the transaction was "above board" but could not produce the necessary contracts. Moscow, under Gorbachev, disavowed any knowledge of the "Putnik" company, leaving Gysi in a difficult position. Ultimately, Wolfgang Paul and Wolfgang Langka were arrested for their roles in this deal, with Carl Heinz Kaufmann incited them.

Investigations and Asset Recovery

The Independent Commission of Inquiry (UKPV) and the Central Office for Investigating State Crime (ZER) were established to uncover and recover the SED's assets. The UKPV, initially staffed with honorary delegates, worked through vast amounts of documents to trace financial flows. The ZER, with more resources, investigated cases of state crime.

The transcript details the challenges faced by these commissions, including the difficulty in untangling complex financial structures, the lack of transparency, and the resistance from those involved. The "Noam" scandal, involving Rudolfina Steining, led to legal battles with banks like AKB and Bank Austria, resulting in significant damages awarded to Germany. By 2023, approximately €1.5 billion euros of former SED assets had been transferred to the Federal Republic of Germany, with the intention of using them for charitable purposes in the new federal states. However, it is acknowledged that assets may still be hidden in foreign accounts.

The PDS's Financial Struggles and Legal Defenses

Despite the recovery efforts, the PDS faced significant financial challenges. A controversial tax bill of 67 million marks for the first half of 1990 threatened the party's existence. The PDS protested this bill, staging a hunger strike and arguing that they lacked the funds. Gregor Gysi fought the case in court, portraying the party as a victim. However, the court ultimately ruled that the asset question needed to be clarified in its entirety, and the PDS's arguments were deemed not credible.

Conclusion

The video transcript paints a picture of a systematic and sophisticated effort by the SED and its successor party, the PDS, to conceal and move vast sums of money following the collapse of East Germany. It highlights the roles of key individuals like Wolfgang Langka, Alexander Schalck-Golodkowski, Rudolfina Steining, and Abdel Younes in orchestrating these complex financial maneuvers. The subsequent investigations by commissions and law enforcement agencies, while successful in recovering a significant portion of the assets, underscore the enduring challenges of tracing and reclaiming illicitly obtained wealth hidden across international borders. The narrative concludes with the lingering suspicion that not all of the SED's hidden fortunes have been recovered, leaving a legacy of financial intrigue and unresolved questions.