Berlin banking scandal

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The Berlin banking scandal is the name given to a serious banking crisis in Berlin in 2001. The events surrounding the state-owned Bankgesellschaft Berlin , the economic collapse of which the State of Berlin continued to indebted to billions, led to the end of the grand coalition after a decade and to the overthrow of the in June 2001 Governing Mayor Eberhard Diepgen .

Beginnings

The Aktiengesellschaft Bankgesellschaft Berlin , majority owned by the State of Berlin, was established in 1994 as a holding company for Landesbank Berlin , Berliner Hypotheken- und Pfandbriefbank (Berlin Hyp) and Berliner Bank . The Landesbank Berlin, which itself was only partially integrated into the Bankgesellschaft, included the Investitionsbank Berlin from 1993 to 2004 as an economically and organizationally independent bank. This state-owned development bank never belonged to the bank company. Nevertheless, the company and its banks used the extensive equity capital (special-purpose reserve) of the competition-neutral Investitionsbank Berlin for their loss-making lending business and, in particular, for expanding the disastrous real estate services business. This construction was already highly controversial at the beginning, as the Landesbank is a public institution , while the other two were private companies. In 1995 the Berlin Regional Labor Court (in a judgment that was only legally binding for formal reasons) even ruled that the Bankgesellschaft Berlin construct was unlawful.

Nevertheless, the 'Bankgesellschaft Berlin' became involved in the following years through newly founded and acquired subsidiaries and through loans in the construction and real estate sector. Just two years after it was founded, the bank had to make the first value adjustments of more than two billion DM. While other banks were already critical of commitments in Berlin, the banking company continued to expand.

In order to achieve growth, real estate funds were set up with very favorable conditions for the market situation. There were high rent guarantees (even if the property was vacant), an extremely long term (25 or 30 years) and, at the end, a repayment guarantee. Due to the legal structure of the holding, the state of Berlin was the ultimate guarantor for these promises. Whether this construction was compatible with current law was never checked.

These funds were used to hide the true situation of the banking company - write-downs on bad loans were avoided by buying critical properties from borrowers and moving them to the funds. The funds, in turn, were sold to private investors as a safe investment. In this way, credit risks became guarantee risks that the banking supervisory authorities obviously did not notice.

Business partners and methods

The real estate mainly included prefabricated buildings in north-eastern Germany. These were bought by the Aubis Group, a company holding company, from indebted municipalities on favorable terms. The funds for this came from a loan of DM 650 million that BerlinHyp granted, even though Aubis had almost no equity.

When Aubis got into financial distress for the first time in 1997, a real estate subsidiary of the banking company bought 4,000 Aubis apartments and commissioned them with the renovation. In 1999, further loans were refused and the remaining 10,000 apartments were taken over against the protests of the Aubis.

Exposure

Although the problems were already increasing in 2000, official bodies were still spreading optimism with annual reports and expansion plans that had been approved by PricewaterhouseCoopers, among others . In early 2001, the first reports of bogus deals, accounting tricks and financial difficulties hit the press. The reason was the attempted sale of the real estate subsidiary IBAG to a front company on the Cayman Islands , which was to be financed by loans from the bank company ( self-contained business ).

In February the public prosecutor's office started investigations, at the beginning of March Klaus-Rüdiger Landowsky , who is considered the architect of the banking company and the gray eminence of the Berlin CDU , resigned from his post as CEO of BerlinHyp, and later he also resigned from the Berlin CDU as well available in the House of Representatives, as he was accused, among other things, of accepting 20,000 DM, presented in cash by Aubis. A parliamentary committee of inquiry was set up in the middle of the month to shed light on the events surrounding the bank company and Aubis.

In the following, hectic rescue attempts began, but they did not lead to anything. In May it became clear that the banking company needed 2 billion euros to continue its business. At that time, several buildings of the bank company were broken into in quick succession, but the investigative authorities were unable to determine any connections.

Reconnaissance and rescue attempts

Eberhard Diepgen, 2012

On June 16, 2001, the Governing Mayor Eberhard Diepgen (CDU) was overthrown by a vote of no confidence. Until the new elections, the official business was taken over by a red-green transition senate under Klaus Wowereit, tolerated by the PDS . In the months that followed, the extent of the violations of the law gradually emerged. For a long time, losses have been systematically hidden through networks of straw men, risks from business transactions have been passed on to the State of Berlin with dubious contracts. For a selected group of people (above all celebrities, members of the governing parties CDU and SPD, bank managers and their circle of friends) special funds were offered whose conditions were much better than those of normal real estate funds. There were also high severance payments and pensions for the laid-off bank managers, as well as contracts with inappropriate rents for the bank's own villas that were used by the managers. The free renovation of several of these villas also came to light.

On December 1, 2001, Hans-Jörg Vetter, a new CEO, was appointed to the head of Bankgesellschaft Berlin. Vetter drafted a restructuring program and ultimately saved the banking group with a second, unapproved and unapprovable aid amounting to 1.1 billion euros from the assets of the Investitionsbank Berlin , which was spun off from Landesbank Berlin with effect from January 1, 2004 which was then renamed Landesbank Berlin Holding and ended with the sale of the 81% shares in the state of Berlin to the German Savings Banks and Giro Association in June 2007 for 5.3 billion euros.

In early 2002, prosecutors were investigating dozens of cases. The Aubis IT manager was found dead in Grunewald, and the authorities assumed suicide. It later became clear that the man had collaborated with the committee of inquiry and that the Aubis had access to the confidential minutes of the meetings. In April, the House of Representatives decided with the majority of the new SPD / PDS government that the country would take on risks from the real estate business of up to 21.6 billion euros. At the same time, a citizens' initiative was formed that wanted to bring this law down through a referendum . However, this was declared inadmissible by the Berlin Senate and finally not approved after a complaint by the citizens' initiative before the state constitutional court in autumn 2005.

Up until the spring of 2003, the bank management tried unsuccessfully to sell the company; at the same time, restructuring measures were initiated.

Effects on the financial situation of the state of Berlin

The legal processing of the banking scandal is still ongoing, but the state of Berlin is now financially heavily burdened by the capital injection of 1.7 billion euros and the assumption of up to 21.6 billion euros in real estate risks. How to deal with the accumulated credit risks, which were the second cause of the bankruptcy in the banking company, will be shown in the upcoming sale process.

The consequence is an “extreme budgetary emergency ”, as the Senate decided in November 2002. In April 2003, the federal government refused to grant the state debt assistance. As a result, Berlin filed a complaint with the Federal Constitutional Court in the fall ; A statement by the Senate states that the state fulfills the criteria as determined in the 1992 judgment on the budgetary emergency of the states of Saarland and Bremen . It was hoped that aid to reduce debts amounting to 35 billion euros was rejected on October 19, 2006 on the grounds that the lack of restructuring aid was compatible with the constitution. According to the judgment, Berlin could overcome its financial problem on its own.

In 2018, the Senate assumed that the risk shield could be lifted by 2020. Up to this point in time, € 7 billion in financial resources had been outflowed; more were presumably not needed. This is offset by income of € 5.5 billion. In the end, there could even be a small surplus. On the recommendation of the main committee, the Berlin House of Representatives voted on August 29, 2019 to lift the risk shield.

Legal and parliamentary review

In April 2006, the public prosecutor charged the former BGB boss Wolfgang Rupf , the former Berlin Hyp boss Klaus-Rüdiger Landowsky and eight other persons responsible. The accusation was of breach of trust because, according to the investigation, the defendants had provided two risky real estate funds LBB 12 and IBV-Deutschland1 with 25-year guarantees (so-called all-round carefree guarantees ) for the investors, which resulted in damage to the state of Berlin 55 million euros threaten. According to the public prosecutor's office, the defendants violated the principles of commercial management.

In addition to criminally relevant misconduct by the accused, the circumstances of their appointment to the management of the credit institutions concerned are also seen as the cause of the damage suffered by the taxpayers, which is estimated at 60 million euros. In the case of the Berlin banking scandal, the non-governmental organization Transparency International criticizes party book management and official patronage in the allocation of positions in publicly controlled companies not based on qualifications, but according to the party book to “favorites”.

The parliamentary committee of inquiry of the Berlin House of Representatives presented its final report at the beginning of June 2006.

On March 21, 2007, Landowsky and four other managers of Berlin-Hannoversche Hypothekenbank AG were sentenced by the Berlin Regional Court to a suspended sentence of one year, four months and one year for breach of trust in the granting of loans in the millions. The appeal before the Federal Court of Justice was unsuccessful, but following a constitutional complaint, the judgment was overturned by the Federal Constitutional Court on June 23, 2010 and referred back to the Berlin Regional Court. The Berlin Regional Court closed the proceedings on December 23, 2014 with the consent of the public prosecutor's office at the expense of the state treasury.

Another case against Landowsky and others for breach of trust in connection with the launch of real estate funds was opened on June 22, 2009. It ended in an acquittal on February 14, 2011.

literature

  • Mathew D. Rose : Good company. Bankgesellschaft Berlin. Transit Buchverlag, Berlin 2003, ISBN 3-887471792
  • Mathew D. Rose: Berlin, capital of felt and corruption . Transit Buchverlag, Berlin 1999, ISBN 3-426269309
  • Mathew D. Rose: Waiting for the Flood. About clique economy, self-service and the rampant public debt with special attention to our capital. Transit Buchverlag, Berlin 2004, ISBN 3-887471962
  • Olaf Jahn, Susanne Opalka: death in the billion dollar game. The banking scandal and the end of a key witness. Transit Buchverlag, Berlin 2004, ISBN 3-88747-190-3
  • Lydia Krüger, Benedict Ugarte Chacón: Privatization Berlin Style , in: Blätter für deutsche und internationale Politik 9/2006, pp. 1113–1120.
  • Benedict Ugarte Chacón: Berlin Bank Scandal. A study of the processes surrounding the Bankgesellschaft Berlin . Westfälisches Dampfboot Verlag, Münster 2012, ISBN 978-3-89691-909-0

Web links

Individual evidence

  1. ↑ LAG-Berlin 951027
  2. ↑ Bankgesellschaft Berlin AG: Annual Report 2003. P. 54f. and Annual Report 2004. p. 6
  3. ↑ Ulrich Zawatka-Gerlach: Billions burned: The costs still burden Berlin today . In: Der Tagesspiegel . February 10, 2011
  4. ↑ Barbara Keller: “The whole soup doesn't taste good!” . Court report on berlinkriminell.de. August 3, 2005
  5. ↑ Annika Leister: Conclusion on the Berlin banking scandal: a mild end to a catastrophe. In: Berliner Zeitung. November 13, 2018, accessed October 2, 2019 .
  6. ↑ Printed matter 18/2111. Retrieved February 4, 2020 .
  7. ↑ Resolution protocol of the Berlin House of Representatives. Item 22 on printed matter 18/2111. August 29, 2019, accessed February 4, 2020 .
  8. ↑ berlinkriminell.de, Barbara Keller: Even more banking process - tax evasion complex Neuling-Schoeps-Lauritzen 2006–2009
  9. ^ Mathew D. Rose : An honorable company. Bankgesellschaft Berlin. , Transit Buchverlag, Berlin, July 2003, ISBN 3-887471792
  10. ↑ Olaf Jahn, Mathew D. Rose: Inconvenient special auditor is put on hold. Handelsblatt, August 22, 2002
  11. ^ Committee report of May 5, 2006, printed matter 15/4900, 900 pages. Access via parliamentary documentation of the Berlin House of Representatives PARDOK, episode 17
  12. ↑ Federal Constitutional Court, decision of June 23, 2010 - 2 BvR 491/09 -
  13. ↑ Tagesspiegel: Klaus Landowsky legally rehabilitated , January 5, 2014
  14. ↑ Infidelity charges against Klaus Landowsky and eleven bank managers . The daily mirror . June 7, 2009. Retrieved October 29, 2009.
  15. ↑ Collective commentary on the judgment in the Landowsky bank scandal trial. NG Internet newspaper.