Insurance Orgies

Ergo On Trial Over Sex Parties

Gellert budapest andreas engelhardt-dpa
Ergo subsidiary HMI had invited its top agents to a sex orgy, prostitutes provided, at an event at the historic Gellert Baths. Gellert
  • Why it matters

    Why it matters

    Ergo’s parent company Munich Re has been desperately trying to rehabilitate the insurer since it was forced to apologise for hosting sex parties for its best agents, but a new trial will drag all the issues back out into the open.

  • Facts

    Facts

    • Ergo was forced to apologize in 2011 after its sales bosses were found to have arranged sex parties for staff.
    • Handelsblatt has learned that a trial over the scandal will begin in Hamburg on June 14 and is expected to continue until February 2017.
    • The two defendants in the case are charged with serious breach of trust, with Ergo accusing them of violating company guidelines by hiring prostitutes.
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Everything was fine at Ergo in July 2007. More than fine. “There are things, impossible things. Or maybe they are just so wild, so incredible and so indescribable that they almost shouldn’t exist. But you can be sure of this: They do exist. And the only place they exist is here, here at HMI!”

Those breathless sentences appeared in an in-house newspaper for agents at Hamburg-Mannheimer Insurance. HMI, a subsidiary of Ergo Insurance. The company was boasting about the fact that it had invited its top agents to a sex orgy, prostitutes provided, in Budapest a month earlier – at an event at the historic Gellert Baths. The in-house publication read: “No matter how you look at it, it was definitely a blast. In any event, we haven’t found anyone yet who was there and doesn’t want to do it all over again.”

Times have changed. HMI no longer exists today. The sales organization underwent a major restructuring and streamlining, and the name was changed to Ergo Pro. Ergo filed charges against the former head of HMI and the former sales director in June 2011. What had been celebrated enthusiastically four years earlier was now viewed as a serious breach of trust and, from Ergo’s perspective, needed to be atoned for, preferably in court.

It was clearly not the best idea the Ergo leadership had ever had. Almost five years have passed since the entire company was talking about nothing but the unsavory details of that trip to Budapest. And now, just as the furor has died down somewhat, the incident is being revisited.

Handelsblatt has learned that the trial relating to the Budapest sex party is expected to begin on June 14. It will be a long haul. The Hamburg Regional Court has stated that it intends to wrap up the proceeding by February 2017. At two court days a week, that would be 70 sessions on the subject of Budapest, Ergo and sex.

The sex parties may have taken place in 2007, but the scandal only really broke in 2011, when details were made public. Ergo launched an investigation, and quickly underplayed what had happened.

The people who are responsible, from Ergo’s perspective, will not even be required to enter the courtroom. The public prosecutor’s office only briefly investigated a former member of the board of HMI, and the action against the former sales director was abandoned in return for a fine, according to section 153a of the German Code of Criminal Procedure.

The public prosecutors extended investigations have led instead to the indictment of two other men: a former sales director at HMI, and an agent who was also the head of the travel agency that organized the Budapest outing. They are allegedly responsible for a loss of €52,000 ($59,000) and have been charged with serious breach of trust. Ergo accuses them of violating company guidelines by hiring prostitutes.

The sex parties may have taken place in 2007, but the scandal only really broke in 2011, when details were made public. Ergo launched an investigation, and quickly underplayed what had happened.

Former Ergo Chief Executive Officer Torsten Oletzky insisted that the audit had “left almost no stone unturned,” and in doing so had found nothing comparable to the Budapest incident, but merely “minor rule violations.” When asked what a minor rule violation is, Mr. Oletzky said: “During one trip, for example, an employee who was clearly inebriated became abusive to a receptionist. He was sent home at his own expense.”

Those words would come back to haunt the company.

Handelsblatt soon reported on an entire series of trips organized by the insurer, including a 2005 visit to a brothel on the island of Mallorca and, in 2009, 2010 and 2011, stays at the Hedonism II adults only resort in Jamaica. A branch manager said he had booked the trip to the swingers’ club because it was the place his first company trip had taken him 25 years ago.

Torsten Oletzky-Horst Vennenbernd-dpa
Former Ergo CEO Torsten Oletzky insisted that the audit had “left almost no stone unturned.” Source: Horst Vennenbernd/DPA

 

All of this was documented in the audit reports that Ergo management had at its disposal since June 2011. Mr. Oletzky clearly knew about the Budapest trip since June 2010, and yet the company only filed charges after the orgy was reported in the press.

Now the contradictions are reemerging in a trial. The defendants are not trying to prove their innocence to the court. Instead, they want to show that they cannot be guilty because it was normal for good salespeople to be rewarded with sex at Hamburg-Mannheimer for years.

Mr. Oletzky will not be facing the music, however, because he left Ergo in 2015, even though his contract continued until 2018. His successor, Markus Rieß, must now deal with a public trial that will drag on for months, a trial in which it will be revealed what methods Ergo subsidiary Hamburg-Mannheimer used to encourage top performance among agents.

Ergo is not commenting on the current proceedings. Many veteran salesmen agree the company stabbed its best men in the back when it reported the Budapest incident to the police. While there was still a siege mentality in place in 2011, the men who are now on trial, as well as many of the witnesses expected to testify in the Hamburg Regional Court, have lost their respect for management. When they are asked about what really happened in the insurance company’s sales department, it’s quite possible that they will not be mincing words.

If that happens, Mr. Rieß can expect to come under the full glare of the media spotlight. The details of his company’s outdoor orgy have already become part of history. In late 2014, the House of History in Leipzig included details of the Budapest trip in an exhibition titled “Shameless. Changing Sexual Morality.”

The museum’s collection now includes the armbands worn by Ergo agents at the Gellert Baths, next to books about sex by Oswalt Kolle and sex toys by Beate Uhse.

Ergo has certainly done what it can to get rid of the notion that insurance is somehow a dull industry.

 

Sönke Iwersen leads Handelsblatt team of investigative reporters. To contact the author: iwersen@handelsblatt.com

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