Munich prosecutors have raided German pension fund group BVK over its troubled US property investments, just two days after searching asset manager Deutsche Finance Group. The corruption investigation targets a former and current BVK employee who handled property investments and a member of DFG’s management. Prosecutors also raided three private apartments in and around Munich. The probe focuses 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 DFG’s involvement.
BVK’s US property investments have drawn public scrutiny in Germany as the group flagged big losses on US properties linked to Deutsche Finance and SHVO, owned by New York developer Michael Shvo. BVK oversees €122 billion ($137 billion) in retirement assets for 2.8 million people in Bavaria, making it Germany’s largest public-sector pension group. Investigators suspect a BVK employee exerted “improper influence” on real estate investments and decisions to provide additional capital, allegedly accepting benefits including high-end restaurant invitations in Munich, London, Los Angeles, and New York, plus a luxury hotel suite stay in New York.
BVK previously said it may write off as much as €853 million of the roughly €1.6 billion invested in those properties, with €392 million already written off by year-end. Munich prosecutors did not mention Shvo or his firm, and neither has been accused of wrongdoing. BVK and Deutsche Finance did not immediately reply to comment requests.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing