Drowning in Debt

A Spectacular Lack of Oversight

Teldafax
Teldafax is being investigated by authorities.
  • Why it matters

    Why it matters

    German taxpayers are bearing the cost of the government’s failure to stop a pyramid Ponzi scheme being run by the now insolvent electricity provider.

  • Facts

    Facts

    • Teldafax was shut down by an insolvency administrator in 2011.
    • It left behind €500 million ($570 million) in debts and 750,000 creditors.
    • The German government has now paid €100 million in compensation for failing to identify the insolvency earlier.
  • Audio

    Audio

  • Pdf

When insolvency administrator Biner Bähr walked through the door at discount electricity provider Teldafax on June 14, 2011, he immediately took stock of his surroundings.

Hundreds of plastic mail crates were stacked in the hallways and desks were covered with enormous piles of unread faxes. There was no cash on hand.

Mr. Bähr shut down the business three days later. His decision left behind about €500 million ($570 million) in debts and 750,000 creditors – primarily customers that had paid their electricity bills in advance.

Four years later, Teldafax’s former management faces criminal charges of delayed filing for insolvency.

Teldafax is the worst such case of delayed filing in Germany’s history. One former managing director has already accepted an order of summary punishment.

Another board member confessed earlier this month in exchange for a suspended sentence.

But the criminal processing of this case is only one side of the matter. Other parties, which were partly responsible for allowing this disaster to happen, must also be held to account. And this goes for Germany’s finance ministry above all.

Want to keep reading?

Subscribe now or log in to read our coverage of Europe’s leading economy.