Germany’s Trial of the Century

Retail Heiress Demanding 1.9 Billion Euros – Published on Spiegel Online International, by cgh, December 18, 2012.

When German retailer Arcandor (née QuelleKarstadt) went bankrupt in 2009, it marked the end of a company rich in tradition. It also, though, resulted in the ruin of company heiress Madeleine Schickedanz after the collapse of a shady investment deal she made with bank Sal. Oppenheim. Now, she is demanding almost 2 billion euros in damages. 

It was an odd interview. In July 2009, just weeks after the once iconic German retailer Arcandor filed for bankruptcy, Madeleine Schickedanz, formerly one of Germany’s richest women and the heir to the company, told the tabloid Bild am Sonntag of her and her husband’s sudden monetary woes. “I save where I can,” she said. “We have reduced our personal expenses, from groceries to cosmetics and clothes.” She also confided in the paper that “we live from €500 to €600 per month. We shop at discounters and get fruit, vegetables and herbs from our garden.”

Now, Schickedanz is trying to get back some of the astounding wealth that her family had amassed and then lost when Arcandor, formally QuelleKarstadt, lost in one of the most dramatic company collapses in postwar German history. She is suing the bank Sal. Oppenheim and portfolio manager Josef Esch for €1.9 billion euros in damages. The trial begins on Tuesday in Cologne.

The proceedings promise to be anything but straightforward, though at its core, it has to do with questionable investments made by Schickedanz. She inherited the massively successful mail-order retailer Quelle (which merged with department store Karstadt in 1999) from her father Gustav Schickedanz and lived with her husband in luxury at the family villa near Nuremberg, in addition to owning several other choice pieces of real estate around Europe.

But in the search for the perfect investment to generate even more wealth, Schickedanz claims she followed the advice of Esch, who managed an investment fund under the auspices of Sal. Oppenheim. Esch, she says, pushed her into taking large loans from Sal. Oppenheim, worth hundreds of millions of euros, to massively increase her stake in Karstadt/Quelle, and later in Arcandor. According to the legal complaint, the ultimate goal was the creation of a new investment fund.

A Disaster: … (full text).

Links:

A radical reformation of economics education: educating real world economists, by Jack Reardon, December 15, 2012, 18 pdf-pages;

Financial Capitalism – at Odds With Democracy: The trap of an “impossible” profit rate, by Wolfram Elsner, December 15, 2012, 26 pdf-pages;

Verschuldung, Arbeit, Eurobetrug, Medienmanipulation, auf Berhane Tewolde’s Development Blog, 17. Dez. 2012.

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