Munich prosecutors raided German pension fund group BVK over its troubled US property investments just two days after the investigators had searched asset manager Deutsche Finance Group as part of the investigation.
The underlying corruption investigation is targeting a former and a current employee of BVK who handled property investments and a member of DFG’s management, Munich prosecutors said in an emailed statement on Thursday. They also raided three private apartments in and around Munich.
The probe is focused on “loss making” investments by BVK in “seven real estate projects in New York, Miami Beach, Beverly Hills, Chicago, and San Francisco, carried out with the involvement of DFG,” the agency said.
BVK’s US property investments have become a matter of public scrutiny in Germany as the group has flagged big losses on a chunk of US properties that it links to Deutsche Finance and the real estate development firm SHVO, owned by New York developer Michael Shvo. BVK oversees €122 billion in retirement assets for 2.8 million people in Bavaria, from doctors and lawyers to stage workers and chimney sweeps, making it Germany’s largest public-sector pension group.
Munich investigators suspect the BVK employee exerted “improper influence” on BVK’S real estate investments as well as on the decision-making to provide additional capital to keep these projects going.
In return, he allegedly accepted benefits for himself and others from a member of DFG’s management. He is accused of accepting invitations to high-end restaurants in Munich, London, Los Angeles, and New York, as well as stays in a suite at a luxury hotel in New York, according to the statement.
BVK has previously said it may end up writing off as much as €853 million of the roughly €1.6 billion it has invested in those properties, with €392 million of that having already happened by the end of last year.
The Munich prosecutors didn’t mention Shvo or his firm in their communications on Tuesday and Thursday and neither of them has been accused of wrongdoing.
BVK and Deutsche Finance didn’t immediately reply to emails seeking comment.
This article was generated from an automated news agency feed without modifications to text.
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