Airport Scandal Berlin's €8 Billion Flight to Nowhere

New information uncovered by Handelsblatt suggests that bribery and corruption may now be added to the long list of problems that have plagued the construction of Berlin's new airport.
A recent photo of the main terminal at Berlin's new international airport, which was supposed to open in 2012. The airport, originally estimated to cost €2 billion, is now supposed to cost €8 billion and won't open before mid 2017 at the earliest.

Perhaps Karsten Mühlenfeld should have taken himself out of the running after all.

For weeks, there was a public debate over whether he was the right person for the top job at the new Berlin Brandenburg Airport.

Just a few days before a decision was reached, the German Federal Transportation Ministry added a new candidate to the mix. Mr. Mühlenfeld was ultimately offered the job, and he will likely assume his position as the airport's new chief executive this summer, only to have to deal with charges of alleged corruption at Germany's eternal construction site.

The public prosecutor's office in the town of Neuruppin northwest of Berlin is investigating a former construction manager at the airport for allegedly accepting bribes. According to the allegations, Ralf Berg (not his real name) received €200,000, or $224,000, in cash, which he received for authorizing two payments to a Dutch construction company in 2012, apparently without having inspected their work first.

The payments reportedly totaled €65 million.

The public prosecutor's office confirmed that there is an investigation, but was unwilling to comment on the details.

Berlin's costly, still unopened grand new airport, conceived to be a showcase for the German capital, has become an albatross instead, eroding the city's reputation as the years go by. Today marked the 1,000th day since the airport was supposed to open, according to Berlin daily newspaper Der Tagesspiegel.

Berlin's costly, still unopened grand new airport, conceived to be a showcase for the German capital, has become an albatross instead, eroding the city's reputation as the years go by.

The idea for the project began at the end of the last century.

After Germany reunified, the country wanted an airport in Berlin that symbolized German unity.

In 2003, the state of Berlin and the surrounding state of Brandenburg, with the federal government, decided to manage the project themselves after no private company was willing to oversee the airport, which will be named after Cold War chancellor Willy Brandt.

But the airport's opening -- originally set for 2012 -- had to be pushed back for the first time in the summer of 2010, and after that, a series of new opening dates were announced and never held -- mostly because of problems with the facility's fire protection system.

In March 2013, Helmut Mehdorn, the former chief executive of Deutsche Bahn, who has a reputation for being a take-charge manager, was brought in to save the project, which had become a political embarrassment.

In the end, the chairman of the airport's non-executive supervisory board, Berlin's then mayor, Klaus Wowereit, stepped down. Over 11 years, the airport's costs have exploded from an initial €2 billion to an estimated €8 billion.

Mr. Wowereit, who once harbored the goal of becoming the Social Democratic Party's candidate for chancellor, became the most prominent political victim of the airport, which is now not expected to open until at least mid-2017 -- five years later than planned.

Amid public outrage over the fiasco, the problems at Germany's largest building project have up until now been largely attributed to bureaucratic bungling and the failure of three governmental entities to work together to efficiently manage the massive construction site.

 

Quelle: dpa
An aerial view of Berlin's planned new airport southeast of the city in 2012, the year it was originally supposed to open. Project managers are now hoping to open the airport in mid-2017.
(Source: dpa)

 

As Handelsblatt has learned, the money for the alleged bribe paid to the former airport construction supervisor came from an undeclared bank account held by Imtech, a Dutch contractor at the site that had run into serious cash-flow problems in late 2012.

Imtech had acquired several companies over the years and had made a few mistakes in the process.

In its search for fresh cash, Imtech thought of Berlin Brandenburg Airport, where it had several large contracts worth a total of about €300 million. An Imtech manager has testified that he learned in the spring of 2013 that Imtech had already paid €200,000 to Mr. Berg, the airport manager.

The Imtech manager was then instructed to funnel another €1.8 million to Mr. Berg.

He refused and heard nothing further about the matter.

It remains unclear how much money was actually paid to Mr. Berg, but when investigators with the Neuruppin public prosecutor's office searched his apartment a few weeks ago, they found €300,000 in cash in a personal safe.

When contacted, Mr. Berg's attorney declined to comment on the allegations.

But the airport's opening -- originally set for 2012 -- had to be pushed back for the first time in the summer of 2010, and after that, a series of new opening dates were announced and never held -- mostly because of problems with the facility's fire protection system.

The public prosecutor's office is now investigating Mr. Berg and four former Imtech managers, Handelsblatt has learned.

Handelsblatt was able to reach some of them, but they declined to comment. A spokesman for Imtech said the company was aware of the allegations, but that an internal investigation by Imtech had produced no evidence of wrongdoing.

He also said Imtech was cooperating with authorities.

As Handelsblatt has learned, FBB, the company that manages the airport, received an anonymous letter containing the allegations in the spring of 2013.

An FBB spokesman said that the company supports the investigations and reserves the right to take legal action against former employees.

 

Lights, camera, no action. A nighttime scene at Berlin's unopened new international airport, already three years overdue and four times as costly as planned.

 

Mr. Berg began working at the Berlin airport site in the summer of 2012, when the project was already in turmoil. The airport had been scheduled to open on June 3, but the date had to be postponed. To prevent the gigantic money pit from turning into an even-greater disaster, FBB brought in new personnel in August, including Mr. Berg.

Although his official title was that of department head, his position was in fact more powerful. He was in charge of awarding contracts and reviewing the performance of many construction companies.

He was also authorized to approve invoices.

Mr. Berg soon found himself between fronts. On the one hand, his employer, FBB, was applying enormous pressure on its employees. The opening date had been postponed twice, and FBB was determined this would not happen again in 2013.

When several construction firms threatened to pull out of the job unless they were paid, Mr. Berg was instructed to provide an overview as quickly as possible. What had the individual companies actually done at the construction site? How many of these companies' claims were still unpaid?

And were these claims justified?

Mr. Berg's goal was to put an end to the dispute between FBB and the companies, in the interest of moving forward with construction.

On the other hand, there was also external pressure, especially from Imtech. According to an insider, the Dutch company's German subsidiary was in deep trouble at the time, and it was desperate to collect millions in receivables it was owed at the Berlin construction site. Imtech management always brought along an attorney to meetings about unpaid invoices.

Mr. Berg reviewed Imtech's many claims -- and initially rejected them, noting that there was no documentation for many of the services Imtech was claiming it had provided.

Last October, Jochen Grossman, the former head of technology at the airport project, was sentenced to a one-year suspended sentence and ordered to pay a €200,000 fine for corruption and fraud.

But current investigations reveal some surprising details: A short time later, in December 2012, Mr. Berg suddenly signed off on a large invoice from Imtech and another large invoice from a joint venture called Imca consisting of Imtech and building technology company Caverion.

The invoices came to a total of €65 million. The money was received before fireworks were launched on New Year's Eve 2012, with Imtech receiving €50 million and Caverion, €15 million.

The problem, as insiders claim, is that Imtech did not perform the agreed services in return for these millions.

But FBB paid the invoices nonetheless, in return for a bank guarantee.

Now the invoices are being referred to as "fake invoices." And Mr. Berg, the airport construction supervisor, is suspected of having accepted bribes shortly before the end of the year, in return for approving the invoices.

Corruption specialists with the Neuruppin prosecutor's office have been investigating Mr. Berg and four Imtech managers for bribery and corruption since mid-December. They searched Mr. Berg's home in January.

FBB, the airport construction manager, has launched an internal review of the matter.

The compliance division, headed by a former prosecutor, Elke Schaefer, examined the issue and forwarded conclusions to the public prosecutor's office.

"We would be pleased if the investigations led to the conviction of a former employee," said a spokesman.

The hurried payment before the end of 2012 marked the low point of the troubled relationship between Imtech and FBB.

Prosecutors have been investigating a former airport construction manager and four Imtech managers for bribery and corruption since mid-December. When they searched the homes and offices of the accused in January, investigators found several hundred thousand euros in the former airport manager's personal safe.

Like almost every liaison, the relationship began on a positive note.

In February 2009, Imtech Germany Chief Executive Klaus Betz boasted about two large contracts he had received at Berlin Brandenburg Airport. In a joint venture with Caverion, Imtech was to install heating and air-conditioning equipment, along with 50,000 sprinkler heads for the fire protection system.

The contract was worth millions.

"Thanks to our unique portfolio, we can maintain or expand our market position, even in this difficult market environment," Mr. Betz said at the time.

But cracks soon began to develop in the relationship.

Airport officials soon lost their enthusiasm for Imtech, and frustration grew.

 

 

WTB

 

According to then-construction supervisor Knut Nelle, Imca neglected to provide the necessary number of employees at the airport construction site for months. Instead, said Mr. Nelle, it provided doctored reports and warm words, but there was no follow-through.

"Unfortunately, the airport management company, despite all threats, never drew the necessary consequences with regard to the companies in question."

If the allegations are confirmed, it will be the second known corruption scandal to shake the still-unopened airport.

Last October, Jochen Grossman, the former head of technology at the airport, was sentenced to a one-year suspended sentence and ordered to pay a €200,000 fine for corruption and fraud.

The outgoing Berlin airport chief executive, Mr. Mehdorn, created an anti-corruption task force in the wake of the Grossmann scandal and declared a "zero tolerance'' policy on corruption.

"If there is anything else going on, we will find it," Mr. Mehdorn warned.

But his task force apparently overlooked the questionable payments to Imtech, even though the allegations strike at the very core of the large-scale construction site: the services surrounding the airport's fire protection system, which was determined to be "incapable of being approved."

Mr. Berg, the former executive under investigation for alleged bribery,  left his airport job in 2013. But the final chapter in Berlin's endless construction debacle -- an €8 billion flight to nowhere so far -- is far from over.

 

Massimo Bognanni is an editor at Handelsblatt and a member of the newspaper's investigative reporting team. Sönke Iwersen is a prize-winning investigative reporter who oversees the team as editor in chief of Handelsblatt Online. To reach the authors: [email protected] and [email protected]