Deutsche Bank Chief Executive Josef Ackermann revealed in a TV talk show that Merkel had asked him to invite 30 friends to celebrate his 60th birthday at the chancellery a month ago.
In doing this, Merkel had wanted to do him "a favour", he explained.
Critics from the Greens, the Left party and some Social Democrats jumped on the incident, arguing Merkel had unduly spent taxpayers' money on organising the celebration and claiming that the event raised questions about the influence of business over politics.
Ackermann is seen by many Germans as a symbol of those bankers who have continued to receive high pay while bearing little responsibility for the financial crisis when it broke out.
'Schnitzel scandal'
Merkel was prompt to react, and in another television appearance explained that part of her job as chancellor was to bring together public personalities. She insisted that the event "was not a birthday party," but a dinner of schnitzel and cold asparagus for people prominent in business, culture, science and education, including Mr. Ackermann.
Merkel said she understood public fears about ties between industry figures and politicians. "But I think I keep a distance, as you can see from the times I have expressed criticism," she claimed.
The 'schnitzel' scandal appears to mirror the public outrage which followed revelations in July that Social Democrat Health Minister Ulla Schmidt had taken her official government limousine and chauffeur on holiday to Spain (EurActiv 31/07/09).
