Four years ago, René van der Bruggen, the chief executive of Imtech, could barely contain his excitement over the Dutch engineering firm being awarded a royal distinction.
“Her royal majesty, the Queen of the Netherlands, decided to award Imtech the right to call itself Royal Imtech from now on,” he said at the time.
It was the high point in Imtech’s 150-year history, symbolizing the trust of its customers, investors and business partners.
Today, the company is a royal mess.
Following the insolvency of its key German subsidiary, which last had a negative equity ratio of 142.2 percent, Imtech itself filed for bankruptcy protection, granted by a Dutch court on Tuesday.
Imtech now stands on the brink, with a big question mark looming over many of its centerpiece building projects in Germany.
The company's insolvency could have an impact on Commerzbank, Germany's second-largest bank, as well as the Netherlands' top three banks, Rabobank, ING and ABN Amro. Commerzbank owns almost 12 percent of Imtech, while the others hold between 6 and 16 percent of Imtech after a rights issue failed last year.
First, we were led by corrupt bosses, then by incompetent ones. I don’t really know which is worse. Imtech employee
That's not all: The opening of Berlin’s chaos-plagued new airport could be delayed even further because of Imtech, a key contractor in the mammoth construction project. There are allegations that the Dutch company paid bribes to airport officials.
Imtech is also involved in Germany’s largest rail project, Stuttgart 21.
Until its problems surfaced, Imtech was known for its engineering prowess, contributing to the Sony Center in Berlin, the Allianz-Arena in Munich, the Mercedes-Benz Museum in Stuttgart and the Spiegel magazine house in Hamburg. But then came the revelations of accounting fraud and a cartel at the German subsidiary, after German prosecutors began an investigation last year. The cartel is expected to have pushed up construction costs for customers including Audi, RWE and Siemens.
Four out of five executives in Germany had to resign. Three state prosecutors and the German competition authority continue to investigate.
Imtech said last month that it had filed criminal complaints against former managers of Imtech Germand and Poland in January last year, and that German authorities were investigating "possible violation of competition laws."
Imtech could face a complete disaster after announcing that talks with creditors had hit a wall, forcing a total payment stop.
“There will be absolutely no payments today. That includes payments that are crucial to the business,” an email from an executive to staff said on Monday. “There will also be no orders for more than €10,000 and no customer orders for more than €20,000 accepted,” said the email, which was seen by Handelsblatt.
It appears as if Imtech were sidelining itself. “I’m aware this appears to be foolish, from the business perspective,” the unit manager wrote, explaining that such payments posed a legal risk not worth the potential business.
The company said in a statement on Tuesday: "Filing for suspension of payments now may optimize the chances that substantial parts of the Imtech Group may continue in the interest of all stakeholders and specifically our employees."
In 2012, Imtech's head of German operations was confronted with an offer: The manager of the troubled Berlin airport said he knew Imtech was desperately waiting for €65 million, or $71.3 million, for rendered services and he could help – for €2 million in cash. As the Imtech executive left the room, he complained to a colleague: “What should I do now? Can’t the idiot write an invoice?”
Video: Imtech chief executive Gerard van de Aast discussed the company's 2014 results in March.
The dialog was culled from testimony by state prosecutors in the eastern German city of Neuruppin, but there’s hardly a better portrayal of how Imtech’s German office in Hamburg operated: Bribes? Why not. But in cash? There are better ways.
The Dutch headquarters cast itself as the victim, firing the German executives and replacing 80 percent of the management staff. It has spent €150 million on efforts to resolve the crisis caused by the accounting fraud in Germany. Supposedly, the German managers sent only massaged figures back to the Netherlands in the hope of protecting their bonuses.
But the Dutch version of the story doesn’t entirely add up. Prosecutors have testimony from German managers accusing Imtech headquarters of at least being aware of what was going on at its wayward subsidiary and therefore partially responsible for the debacle.
Executives who have since left the company said no believed the numbers coming from Germany. Even during the darkest part of the global economic crisis, Imtech Germany reported booming profits. The bonuses of Dutch executives depended heavily on business in neighboring Germany.
Imtech's press department in the Netherlands was not immediately available to comment when contacted by Handelsblatt Global Edition on Tuesday morning.
An internal chronology pegs the Dutch hubris starting with an irresponsible buying spree beginning in 1997.
The end came after Imtech Germany became involved in an absurd project for a gigantic amusement part in Poland. It was meant to be the biggest deal ever for Imtech, slated to bring in €800 million. There was only one problem: the customer had no money.
To move the deal ahead, Imtech Germany took on bank guarantees worth hundreds of millions, in the hope the money would eventually be paid. It never was. First the Polish firm went bust and a few days ago the German unit filed for insolvency.
Now the insolvency administrators have taken the reins.
“First, we were led by corrupt bosses, then by incompetent ones,” said one Imtech employee. “I don’t really know which is worse.”