Berlin Airport

Management Oversight Questioned in Bribery Probe

Mehdorn Hartmut on Dec 12, 2014. Source AP Wolfgang Kumm
The CEO of Berlin's troubled new airport, Hartmut Mehdorn, once had praise for an employee now suspected of corruption.
  • Why it matters

    Why it matters

    Documents obtained by Handelsblatt suggest that the chief executive of Berlin’s new international airport, Hartmut Mehdorn, may have underestimated the gravity of a corruption allegation at the building project.

  • Facts

    Facts

    • The documents suggest managers of Berlin’s airport did not respond adequately to a whistleblower letter alleging corruption.
    • In a recommendation letter, airport CEO Hartmut Mehdorn lauded a departing executive now being investigated for taking bribes from a contractor.
    • Mr. Mehdorn announced his intention to step down as CEO three days after prosecutors opened an investigation into the alleged bribery case.
  • Audio

    Audio

  • Pdf

Hartmut Mehdorn had five minutes.

It was the afternoon of Thursday, February 26. The head of the company that is managing construction of Berlin’s scandal-plagued new airport was a guest on the local nightly television news show, “Abendschau.” Only a few hours had passed since the latest piece of bad news had surfaced about the airport, which was already three years overdue and more than four times over budget.

A manager at Germany’s largest building site had reportedly accepted bribes from a construction company doing work on the massive, unfinished project located on Berlin’s southeastern edge.

The public prosecutor’s office found €300,000 ($332,000) in cash in the manager’s apartment.

Mr. Mehdorn, the former chief executive of the German railroad, Deutsche Bahn, looked glum as he walked into the TV studio, wearing a black suit and striped tie. A gruff, squat manager known in Germany for his ability to get things done, Mr. Mehdorn faced the music.

“The man was brought in before I arrived,” Mr. Mehdorn told the television interviewer. “And I removed this man from the construction site relatively soon after I took the position, because a number of things hadn’t been done correctly.”

“Hasn’t this completely spoiled your departure?” the interviewer asked Mr. Mehdorn, who had announced his plans to leave the project two months earlier. “The public is increasingly under the impression that the airport is nothing but a money-destroying machine.”

Things only began happening when the criminal prosecutor's office became aware of the corruption, but by then, it was much too late.

Mr. Mehdorn grew emphatic, and didn’t dispute that mistakes had been made at the airport in the past.

“But not by me,” he explained. “I was brought in to fix things, and that’s what I did.”

It’s a role Mr. Mehdorn likes to play.

The Berlin airport — officially the Berlin-Brandenburg Willy Brandt International Airport — has a reputation throughout Germany as a disastrous project, plagued by delays and exploding costs. The current price of the mammoth project has reached €5.4 billion, more than double the €2 billion originally estimated.

In public, Mr. Mehdorn portrays himself as a problem-solver.

The thing is, there are many problems he never solved, not even the ones he confronted directly.

Handelsblatt has gained access to a large number of documents from the project. They include warning letters to Flughafen Berlin-Brandenburg, the publicly owned company that is managing the airport known by its abbreviation FBB. There are internal FBB emails and calendar entries.

The documents show that airport officials knew in 2013 that bribes had been paid to a department head.

But no one, not even anti-corruption officers hired to monitor wrongdoing on the project, reported these suspicions to authorities when Mr. Mehdorn was chief executive of FBB. Things only began happening when the criminal prosecutor’s office became aware of the corruption, but by then, it was much too late.

The search for explanations began in December 2012, four months before Mr. Mehdorn became chief executive of the airport management company, which is run by the city-state of Berlin, the surrounding state of Brandenburg and the German federal government. The three governmental entities decided to manage the construction job themselves after private bidders pulled out.

 

Berlin Brandenburg Airport Feb. 10, 2015 Source DPA
The main terminal building of Germany’s eternal construction site, Berlin’s unfinished, scandal-plagued airport. Source: DPA

 

Months before Mr. Mehdorn arrived, the construction site was in chaos.

The planned opening had been postponed indefinitely again, but government officials were determined the delays would not extend beyond 2013.

The pressure to bring a close to the endless delays, which were the result of planning errors and mismanagement, placed the construction companies in a strong negotiating position.

The contractors felt confident enough to make substantial demands.

A Dutch building equipment supplier, Imtech, was especially aggressive.

The Dutch company raised its hourly rates, and threatened to withdraw from the site. Imtech was responsible for the airport’s fire safety system. Work could not continue on the project without the Dutch, and they knew it.

Before the end of 2012, the airport company suddenly paid Imtech €65 million, with €15 million going to one of its partner companies, Caverion. Rumors of corruption quickly spread around the construction site.

The department head in question, Ralf Berg (not his real name), had allegedly neglected to inspect work done by the two companies before approving the payments. (German law prohibits the naming of individuals in criminal investigations unless they are already public figures or top corporate officers.)

The pressure to bring a close to the endless delays, which were the result of planning errors and mismanagement, placed the construction companies in a strong negotiating position.

Mr. Berg was seen driving to the airport site in a brand new Porsche. The word bribery was on everyone’s lips.

Mr. Mehdorn took charge of the airport site in early March 2014. His appointment was not without controversy. The former railroad chief was already 70 years old, and his latest job, running Germany’s No. 2 airline, Air Berlin, had hit a few snags.

Still, Mr. Mehdorn had the reputation of someone who knew how to save money and restructure companies. He also had a zero-tolerance policy when it came to corruption.


Video: A drive through the empty Berlin Airport.

This is what makes what happened in the ensuing months so difficult to understand.

In 2013, a letter was sent to the Berlin airport management company’s compliance section. The compliance department was headed by a former public prosecutor, Elke Schaefer, who should have known what to do with the information.

“Who can you trust anymore?” the anonymous author of the warning letter asked.

Then the letter mentioned Ralf Berg by name and claimed the department head had accepted millions of euros from Imtech.

The letter’s author even provided names of others who had allegedly delivered the bribery money. The writer cited certain services that had not been provided but had been paid for, and talked about obfuscation methods and the risk that the culprits could escape.

What did the airport’s managers do under Mr. Mehdorn’s leadership?

“We investigated the information, but we were unable to corroborate it in the context of our investigation,” said an FBB spokesman, Ralf Kunkel. “This meant that all other steps were now unnecessary.”

All other steps?

Handelsblatt asked Imtech when exactly Mr. Mehdorn’s team had contacted the Dutch firm to question the possible corruption.

Not at all, Imtech officials replied.

“We only learned about the allegations in August 2014 through a whistleblower,” said an Imtech spokesman, Ward Snijders, noting that his company then took all necessary steps and notified the public prosecutor’s office.

“Who can you trust anymore?”

Anonymous Letter, to the Berlin airport's compliance department

FBB, the airport management company, felt this was unnecessary. Mr. Berg, the prime suspect, kept his job for several more months. When he left in August 2013 for other reasons, Mr. Mehdorn personally gave him a glowing reference.

“I wish to take this opportunity to thank you, once again, for your exceptional commitment in the context of your responsibilities as an authorized agent and department head,” Mr. Mehdorn wrote in his recommendation letter.

And then he proceeded to thank Berg for his “outstanding professional expertise,” his “excellent sense of responsibility and cost awareness” and his “exceptionally high trustworthiness and loyalty.”

“You work very effectively, conscientiously and with the greatest diligence,” Mr. Mehdorn wrote. “Your personal conduct was consistently above reproach.” At the end of the letter, the airport chief executive wrote that he hoped “we will remain in touch. Your new employer will find you to be a valuable asset, and I wish to offer him my personal recommendation.”

When Mr. Berg left the company, it was with Mr. Mehdorn’s warm recommendation.

For the next year, no one at FBB paid any further attention to the suspicions of corruption, no one except the head of compliance.

Mr. Mehdorn also ignored the case, despite publicly singing the praises of the airport management company’s “anti-corruption task force and our zero tolerance policy when it comes to corruption.”

The public prosecutor’s office would be notified immediately of even the “slightest suspicion” of corruption, Mr. Mehdorn said.

But he apparently notified no one concerning the allegations involving Mr. Berg.

Mühlenfeld Karsten new Berlin Brandenburg airport manager Feb. 20, 2015 press conference. Source dpa
After Mr. Mehdorn resigned suddenly in December 2014, airport managers in February appointed Karsten Mühlenfeld, a former executive at aircraft maker Bombardier, to see the Berlin airport construction through to completion. Source: DPA

 

Instead, he himself was notified of the situation.

On December 1, 2014, Mr. Mehdorn received a call from Felix Colsman. Mr. Colsman, the new head of German operations for Imtech, had his own zero-tolerance policy, and he adhered to it.

When the company learned of the corruption allegation against the managers, they were no longer working for Imtech.

Imtech combed through its filing cabinets, searched its mail server and hired Hengeler Mueller, a well-known German law firm, to conduct a large-scale investigation that included interviewing anyone involved.

Imtech then turned over the results of the investigation to the public prosecutor’s office.

On December 12, Imtech also sent all of the documents it had gathered to FBB, including emails, calendar entries and correspondence that suggested “informal contact occurring at about the same time” as the suspected bribery.

Three days later, Mr. Mehdorn announced his intention to resign as CEO, which surprised officials in Berlin. He will leave the post in June.

To this day, he has yet to offer an official reason for why he stepped down.

During his last few days at the airport, Mr. Mehdorn was suddenly confronted with a corruption scandal.

Since 2013, he had had enough time to set things right within the company, but now it was too late.

A frenzy of activity began at the public prosecutor’s office in the town of Neuruppin, northwest of Berlin, a few days after Imtech released the results of its internal investigation. The authorities searched the apartments of several former Imtech employees as well as that of Mr. Berg, where they found the €300,000 in cash. Mr. Berg could not explain to investigators where the money had come from.

 

WTB BER Airport-new Berlin Brandenburg Airport

 

An Imtech manager has already told authorities that Mr. Berg actually received €2 million.

The public prosecutor’s office is referring to its investigation of five individuals as “investigations into an especially serious case of suspected bribery and corruption.” As if it didn’t have enough problems on the construction site, FBB was now burdened with a corruption scandal.

Mr. Mehdorn said his resignation had nothing to do with the suspected bribery case.

“There is a certain logic to this for me. There are a variety of reasons, but there isn’t enough time to discuss them all,” he said in a short interview with a Berlin television station after the investigation became public.

Mr. Mehdorn certainly has his reasons.

But he may soon have another opportunity to explain his behavior. By then, the people asking the questions won’t be harried journalists with only a few minutes of time for an interview.

The people who may ask Mr. Mehdorn to explain himself will have more time, and they may include FBB’s supervisory board and the prosecutor’s office.

 

Massimo Bognanni is a Handelsblatt editor and member of the newspaper’s investigative reporting team. Sönke Iwersen leads Handelsblatt’s investigative reporting team and is editor in chief of the Handelsblatt Live app. To reach the authors: bognanni@handelsblatt.com and iwersen@handelsblatt.com

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