German State’s Leader, Cabinet Resign : Scandal: The politicians step down amid allegations of padded paychecks. The move is a further embarrassment to Chancellor Kohl.

In an embarrassing setback for the ruling coalition of Chancellor Helmut Kohl, the leader of the east German state of Saxony-Anhalt and his Cabinet resigned Sunday over allegations that top state officials were padding their paychecks.

The government of Minister-President Werner Muench, a Christian Democrat, mirrors Kohl’s coalition of Christian Democrats and Free Democrats that has ruled Germany for 11 years but has been slipping steadily in the polls.

The opposition Social Democrats quickly jumped on the scandal to call for new state elections, saying the tainted coalition was no longer capable of governing. A state vote is not due until next October, the same time federal parliamentary elections are scheduled.

“Greed and avarice of the minister-president and his Cabinet have so shattered the trust of citizens that the crisis can no longer be repaired by the simple changing of the government head and the incriminated ministers,” said Guenter Verheugen, a top Social Democratic official.

The scandal in Saxony-Anhalt’s capital of Magdeburg, 80 miles southwest of Berlin, comes just days after Kohl suffered one of the biggest political defeats of his chancellorship when his handpicked candidate for president withdrew amid growing opposition from within his own party. Kohl had nominated conservative east German Steffen Heitmann in an effort to build bridges--and collect votes--in the formerly Communist east, a region crucial to his election victory in 1990.

To make matters worse for Kohl, the scandal in Saxony-Anhalt involves west German politicians from his party who moved east after reunification three years ago. The westerners were to help rebuild the state’s economy and institutions, but Muench and three ministers are accused by auditors of drawing higher salaries from state coffers than allowed by law.

The Saxony-Anhalt audit office found that the four officials collected $530,000 in excess pay over the last three years, with Muench alone allegedly taking $172,000. Wages in eastern Germany are well below those in the west, with government officials in the east earning 20% less than their western counterparts.

In announcing his resignation and those of his 10 ministers, Muench denied any wrongdoing and accused his critics of character assassination and defamation.

“Neither I nor any minister has received at any time illegal payments,” he said.

Late Sunday, the German Press Agency reported that the scandal had broadened into a coalition crisis, with the Free Democrats in Saxony-Anhalt joining the call for new elections after the Christian Democrats proposed a successor to Muench without consulting their coalition partners.