Germany's conservative candidate for chancellor, Edmund Stoiber, will face questioning next month by a parliamentary committee investigating allegations of illegal party funding, officials said Thursday.

In an inquiry that could hurt Stoiber's election chances, the committee will question him on June 4 over claims that a former arms dealer paid at least two million marks (equivalent today to around one million euros, 900,000 dollars) to the Christian Social Union (CSU) in 1991 and 1992.

The former arms dealer, Karlheinz Schreiber, who is wanted in Germany for tax evasion and other charges, made the accusations to a delegation of German lawmakers in Canada, where he is awaiting an extradition hearing on charges including bribery and tax evasion. Schreiber's accusations have important political implications for Stoiber as he campaigns for elections in September in which opinion polls give his CSU and its Christian Democrats (CDU) sister-party a commanding lead.

Schreiber, who has German and Canadian nationality, said on Monday that Stoiber knew about the payments to the CSU, which was led by former finance minister Theo Waigel at the time. During questioning in Toronto, Schreiber handed over statements from two Zurich bank accounts that he claims were secretly controlled by the CSU, sources close to the inquiry said.

The statements appear to show that Schreiber deposited 1.4 million marks in one account and 900,000 marks in another. He did not provide proof that the CSU received the money, the sources said.

On Wednesday, Stoiber rejected the allegations, telling ZDF television they were "completely unbelievable" and asked "whether it is in the interest of the taxpayer" for Germany to spend so much money on an inquiry if it only produces hollow accusations. His CSU says the allegations are contradictory and provide yet more proof that Schreiber cannot be trusted. Members of the delegation also said the claims were confusing.

Appearing with Stoiber at the inquiry hearing to answer similar questions will be Max Strauss, the son of the former leader in the southern state of Bavaria, Franz-Josef Strauss.

On Tuesday, the state legislature in Bavaria, where Stoiber is premier, also decided to question the conservative challenger for chancellor as a witness over Schreiber's claims.

Until Monday, Schreiber's accusations had essentially only centred on alleged illegal donations made to the CDU under former chancellor Helmut Kohl.

German media have reported that he gave the CDU a one-million-mark bribe to ensure that the Kohl government approved the sale of armoured cars to Saudi Arabia in the early 1990s.

Kohl admitted in December 1999 to having received some two million marks in undeclared campaign contributions, tarnishing his reputation as a statesman and leaving the CDU scrambling to restore credibility.

Schreiber was detained in Toronto in August 1999 on a German arrest warrant for corruption, bribery and tax evasion relating to his work for German defence contractors and aerospace firms.

For the last three years, he has been trying to fight extradition to Germany. Last month, a Canadian judge agreed to hear arguments on June 19 on the extradition case.

With acknowledgement to Sapa.