„Es gibt ein paar tausend Banken in Europa, da kann man nicht alle kennen“

“There’s thousands of banks in Europe and you can’t know all of them”

is how BayernLB supervisory board member and former Bavarian state Economy Minister Erwin Huber (C.S.U.) supposedly explained in his April Fools Day testimony why he gave his approval to purchase the Hypo Alpe Adria yet knew nothing about the Carinthian bank. An S.P.D. politician responded, “Anyone who publicly documents their political inadequacy so authentically is, as the chair of the Economy Committee, a problem.” Mr. Huber has been chairing the Bavarian state parliament’s Economy Committee since October 2013.

Munich prosecutors had said they did not want to prosecute BayernLB’s supervisory board members for approving overpayment of >500 million euros in the purchase deal—plus some bribes that might be easier to prosecute, in separate trials—because the supervisory board was fooled by the dishonest representations of the bank’s management board, the defendants in the current trial. Three high-ranking C.S.U. politicians from the supervisory board have now testified at the management board’s criminal trial and stated that they were satisfied with the information presented to them by the management board in its argument for purchasing the HGAA.

Defendants in the trial of the BayernLB management board include Michael Kemmer, who moved on to become “managing director of the German Bankers’ Association” [Hauptgeschäftsführer des Bankenverbands], “an influential lobbyist.”

At the time BayernLB bought Hypo Alpe Adria, C.S.U. politicians on BayernLB’s supervisory board [Kontrollgremium] such as Bavarian finance minister Kurt Faltlhauser, interior minister Günther Beckstein and economics minister Erwin Huber wanted the Bavarian state bank to expand, into the Balkans. Bavaria’s then-governor Edmund Stoiber (C.S.U.) made a similar statement to journalists while on a visit to Croatia about then, ZDF heute journal reported.

Apparently BayernLB also bought a loss-plagued Hungarian bank that they want to sell.

(Ess   kipped   eye n   pah   t OW! zenned   BONK en   inn   oy ROPE ah,   dah   cannes   mon   nichh t   OLL ah   ken en.)

Rundfunk-Staatsvertrag

“Broadcaster’s treaty,” also short for the name of a law, the Staatsvertrag für Rundfunk und Telemedien or German Interstate Treaty on Broadcasting and Telemedia.

The broadcasting treaty regulating one of Germany’s two big public broadcasters, ZDF, is being reviewed by the supreme Constitutional Court [Verfassungsgericht] in Karlsruhe after a political fight in 2009 about firing ZDF’s editor-in-chief. Germany’s other big public broadcaster, ARD, reported that the case’s core question is whether governments and political parties have too much influence in ZDF’s current setup. The states of Rhineland-Palatinate and Hamburg brought the lawsuit to the supreme Constitutional Court in the form of a complaint about who’s on two boards that control ZDF.

“I believe that we have, step by step, walked ourselves into too much dominance by the government-influenced members of the Administrative Council [Verwaltungsrat] and Television Council [Fernsehrat].” –Kurt Beck (S.P.D.) former Rhineland-Palatinate governor and chair of the ZDF Administrative Council [Verwaltungsrat] who, after trying and failing to make legislative changes, co-brought the suit.

Former Hessian governor Roland Koch (C.D.U.) led the 2009 fight in the Administrative Council [Verwaltungsrat] to not renew ZDF editor-in-chief Nikolaus Brender’s contract.

The ZDF Administrative Council [Verwaltungsrat] has 14 members, of whom five represent German states and one represents the federal government. The remaining eight Administrative Council members are selected by the 77-member ZDF Television Council [Fernsehrat]. That board is supposed to “set guidelines for ZDF shows and advise directors about programming questions” and to consist of 77 people from societally important groups, namely

1 person from each of the German states signing the Staatsvertrag, 3 people sent by the federal government, 12 people sent by the political parties proportionate to their proportions in the Bundestag, 2 sent by the Protestant church, 2 sent by the Catholic church, 1 from the Central Council of Jews in Germany, 1 from the German association of unions [Deutscher Gewerkschaftsbund], 1 from the association of service job unions ver.di [Vereinte Dienstleistungsgewerkschaft e.V.], 1 from the bureaucrats’ union [Deutscher Beamtenbund], 2 from the federal association of employers’ unions [Bundesvereinigung Deutscher Arbeitgeberverbände], 1 from the national chambers of commerce association [Deutscher Industrie- und Handelskammertag], 1 from the German agriculture central committee [Zentralausschuss der Deutschen Landwirtschaft], 1 from the central association of German craftsmen [Zentralverband des Deutschen Handwerks], 2 from the association of German newspaper publishers [Bundesverbandes Deutscher Zeitungsverleger], 1 from the German journalists’ association [Deutschen Journalistenverbandes e.V.], 1 from the media section of the service jobs union ver.di, 4 from the Free Welfare Associations [Freie Wohlfahrtsverbände] (and that should be 1 from the German Protestant church’s Diakonie Werk, 1 from the German Catholic church’s Deutscher Caritasverband e.V. umbrella association of charities, 1 from the German Red Cross, 1 from the central committee of the German workers’ welfare group Deutsche Arbeiterwohlfahrt e.V.), 1 from the German cities’ council [Deutscher Städtetag], 1 from the German association of cities and communities [Deutscher Städte- und Gemeindebund], 1 from the German counties’ council [Deutscher Landkreistag], 1 from the German sports association [Deutscher Sportbund], 1 from Europaunion Deutschland e.V., 1 from the German association for the environment and protecting nature [Bund für Umwelt und Naturschutz Deutschland e.V.], 1 from the German nature protection association [Naturschutzbund Deutschland], 1 from the association of displaced persons [Bund der Vertriebenen], 1 from the coalition of victims of Stalinism [Vereinigung der Opfer des Stalinismus] and 16 from education, science, the arts, culture, the film economy, the free professions, family work, child protection, youth employment, consumer protection and animal protection.

Yet ARD tagesschau.de legal correspondent Frank Bräutigam’s chart broke these 77 members down into only three main groups: 45.4% board members from governments/political parties, 27.3% from unions, 20.8% from professional groups. The current judicial review will be casting a sharp eye on the complaint that the 27.3% unions and 20.8% professional groups are also nominated by the political parties. In fact, said ZDF heute journal, a considerable portion of them are selected by state governors, adding that informally the television council actually breaks down into two large groups: the C.D.U.’s allies and the S.P.D.’s allies. Usually, said people defending the current system, the duopoly controlling the ZDF television council is balanced enough to prevent the appearance of violation of the German Constitution, which guarantees freedom of reporting in broadcasting and film (Grundgesetz, Art. 5).

ZDF heute journal said the supreme court cannot change the Staatsvertrag but can define criteria limiting it.

ARD tagesschau.de calmly concluded their report by noting that the German supreme court in Karlsruhe has been issuing decisions that help define Germany’s media landscape for decades now. A verdict is expected in 2014.

Update on 25 Mar 2014: The court issued its verdict, invalidating the ZDF charter because it allows too much political influence to be taken. Germany’s public broadcasters must not become state broadcasters, said the judges. In future, the 44% of ZDF’s board members who are politicians or “part of government or close to government” must be reduced to 33%, and political parties must stop exerting “determining influence” on the naming of the other board members (who are supposed to be “far from government” but were in part being named by e.g. state governors).

Germany’s public broadcasters must also remain available to the public and not be allowed to wither by being restricted to obsolescing technology.

The judges demanded a cultural change at German public broadcasters, to become more of what they were always intended to be, said Süddeutsche.de: an institution for the entire society, reflecting diversity and variety in that society. Freedom of broadcasting as it is guaranteed in the German constitution is based on ensuring variety of content that cannot be achieved via a free market alone, the judges said. One judge’s minority opinion said these measures were too lenient, that 33% was still too high, and he called for emancipation of the public broadcasters from government entirely.

(ROOND FOONK shtots fair TROG.)

Anklagebehörde

“Prosecuting authority,” prosecutors’ office.

The Bavarian state bank BayernLB (Bayerische Landesbank), owned by the state of Bavaria and the Sparkasse banks (the largest German public bank), bought the Austrian bank HypoGroup Alpe Adria in 2007 and lost billions of euros as a result. On 07 Aug 2013 the Munich regional court Münchener Landgericht I announced it would not permit prosecution of charges brought against the entire Landesbank’s management board [Vorstand] while criticizing that charges hadn’t been brought against members of the higher-level overseeing “administrative board” [Verwaltungsrat], which gave permission for the sale. The supervisory Verwaltungsrat contained important C.S.U. politicians who might have been thus being protected by Bavarian prosecutors, the Bavarian judges imputed. Bavarian opposition parties S.P.D. and Freie Wähler [Free Voters] had filed complaints against BayernLB Verwaltungsrat members and state ministers Erwin Huber, Günther Beckstein and Kurt Faltlhauser plus some less important C.S.U. politicians for breach of trust of bank assets [“Veruntreuung von Bankvermögen”] in the Austrian acquisition, according to Süddeutsche.de and tagesschau.de.

BayernLB’s management board allegedly cited a falsely inflated purchase price to the supervisory administrative board, so theoretically criminal charges should be brought against management board members, according to tagesschau.de. But the Munich Landgericht I court denied prosecution of that on 07 Aug 2013, citing the latitude enjoyed by managers in negotiating sales. This allegedly angered Bavarian state prosecutors. Also angered by accusations they’d protected C.S.U. politicians by not bringing charges against members of the higher-level Verwaltungsrat [administrative board] supposed to monitor or do “controlling” of BayernLB’s management board, Bavarian state prosecutors responded that the management board members had failed to adequately inform the higher-level administrative board; indeed the supervisory Verwaltungsrat was deliberately defrauded with malice aforethought (“vorsätzlich arglistig getäuscht”) by members of the BayernLB management board, in the opinion of the prosecutors. The supervisory administrative board that okayed the deal consisted of people from the Bavarian state government (ruled by the C.S.U. since 1946) headed by Edmund Stoiber and people from the Sparkasse banks.

The German bank manager Bernie Ecclestone was accused of paying a bribe to was a member of BayernLB’s management board [Vorstand], not supervisory board [Verwaltungsrat].

In its 07 Aug 2013 announcement in the ongoing discussion about whom to prosecute at BayernLB, the Munich Landgericht noted that this sale of banks between state governments was partially a political act. But because no one could have foreseen events, the Munich Landgericht was only going to look into the BayernLB management board’s criminal culpability in overpayment of an additional 75 million euros lost by subsequently purchasing additional shares, and not into the BayernLB management board’s overpayment of 550 million euros in the 1.7-billion-euro deal as the prosecutors originally proposed.

Prosecutors filed a complaint about the Landgericht’s decision not to allow a criminal trial against the BayernLB management board for the lost half billion; the Munich higher regional court [Oberlandesgericht] “will now have to decide the dispute taking place in its own house.”

Before Bavaria bought it, according to the Guardian.co.uk, the Carinthian state government-owned Hypo Alpe Adria “acted as financier” for the horrifying Jörg Haider, charismatic leader of a terrifying populist racist Austrian political party that promoted hatreds in order to surf them to power. WienerTageszeitung.at wrote that HGAA had had to help support Haider’s Carinthian state government’s “patronage policies” [“gönnerhafte Politik”]. The recent Munich Landgericht I court decision about how to prosecute the Bavarian side did allow prosecution of an accusation that Jörg Haider, Kärntner Landeshauptmann [“Captain of Carinthia”] at the time of the sale, received a soccer stadium sponsorship bribe from BayernLB (2.5 million euros). An Austrian website also talked about overpayment for the expert opinion of an Austrian tax adviser associated with Haider as another possible bribe to him from the deal (6 million euros for six pages). No details found yet about money improperly funneled to Haider & Co. before the sale, when his party controlled the government that owned the bank.

According to the Manager-Magazin.de article, a 2007 audit by the Österreichische Nationalbank [Austrian National Bank] reported that Hypo Alpe Adria was shuffling fake capital around as early as spring 2006 to hide its losses, through obscurant Liechtenstein entities, and selling stock to itself to create the illusion of solvency. There was no Austrian regulatory follow-up on the audit report apparently.

BayernLB’s purchase of HGAA has already sparked multiple trials, with more to come. For example, Manager-Magazin.de wrote that Munich prosecutors initiated a criminal trial against BayernLB management board members on 05 May 2011—that trial hasn’t started yet—and BayernLB sued its former management board members for 200 million euros in damages in a civil trial that actually did start, on 19 Jun 2012. An Austrian criminal trial sentenced a Carinthian state party chief to five years in prison on 10 Oct 2012 for diverting money from the sale to his political party (a state government coalition partner with Jörg Haider’s FPÖ). The current head of the Bavarian C.S.U. party, Horst Seehofer, is to testify in Vienna before a commercial court [Handelsgericht Wien] about the schlamassel. When they gave Hypo Alpe Adria back to the country of Austria, did BayernLB sign a paper saying they would not sue for damages? The Vienna trial is about 3 billion euros of Bavarian taxpayer money that now-nationalized Hypo Alpe Adria does not want to return; this would be in addition to the 3.7 billion euros Bavaria already spent to bail out the bank.

Update on 24 Oct 2013: Bavarian prosecutors won their appeal! The Munich Oberlandesgericht overturned the Munich Landgericht’s decision and will be allowing full prosecution of ex-C.E.O. Werner Schmidt and six of the seven members of the BayernLB management board on the counts sought, for breach-of-trust losses of 550 million euros in the 2007 purchase of Hypo Alpe Adria in addition to the 75 million lost on extra HGAA stock bought after the purchase.

Update on 27 Feb 2014: Three former management board members of Hypo Alpe Adria were given prison sentences by an Austrian court for granting investors buy-back guarantees and thus, the court said, costing the bank several million euros. The Klagenfurt court [Schöffensenat] said they held back important information when they sold Hypo Alpe Adria to Bavarian state bank BayernLB. A 2.5-million-euro dividend they issued was also not in order, the court said.

In this breach of trust trial, former management board member Josef Kircher was sentenced to three years, some of which was changed to probation because he was willing to testify. Former management board member Siegfried Grigg was sentenced to three and a half years. The Flick Foundation was fined 600,000 euros. Former H.A.A. C.E.O. Wolfgang Kulterer was sentenced to one year. He has already been sentenced to several years in a related Hypo Alpe Adria matter in January 2014, when he admitted having kept mumm about side agreements. Former Hypo manager Tilo Berlin is also a defendent in the breach of trust trial but was unable to appear for health reasons, delaying resolution.

(ON clog ah beh HEARD ah.)

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