Germany's ruling CDU rejects U.N. corruption pact

A group of more than 30 captains of German industry had written a letter to Volker Kauder, head of the ruling conservatives in parliament, urging him to put the agreement, already ratified by about 160 countries, into effect.

But lawmakers of the conservative CDU said they had unresolved problems with the U.N. deal, which Germany signed nine years ago but has not yet implemented.

The U.N. Convention against Corruption requires nations to increase transparency in election campaign financing and ensure public servants are subject to codes of conduct, especially in matters of public finance.

Conservative lawmakers said one of their main objections to the pact was that it did not differentiate between elected members of parliament and civil servants.

They are worried that lawmakers could, for example, be punished for also holding positions in companies, on the ground that there was a conflict of interest.

"Every member of parliament will be made into a civil servant - with all the resulting consequences and absurdities," senior Christian Democrat Joachim Pfeiffer told the daily Handelsblatt.

Business leaders in Europe's biggest - and export dependent - economy had argued that their reputation was at stake.

"The failure to ratify the (U.N. Convention) is damaging the image of German companies in their activities abroad," wrote the group of chief executives from bluechip companies ranging from Siemens and Daimler to Allianz and Commerzbank.

"A democratic country like Germany must be credible and may not lay itself open to criticism," said the letter, made available to Reuters on Thursday.

Critics say Berlin's refusal to implement the treaty looks hypocritical at a time when Germany is insisting that struggling euro zone states such as Greece clamp down on graft, tax evasion and public sector benefits as a way of reducing debt.

The opposition Social Democrats (SPD) also called on the government to implement the agreement.

"It can hardly get more embarrassing... in short, German industry is ashamed of the German government," said Frank-Walter Steinmeier, head of the SPD's parliamentary party.

(Additional reporting by Matthias Sobolewski; Writing by Madeline Chambers; editing by Tim Pearce)