Case 31: Bankgesellschaft Berlin (Germany, 2001)
It is a spectacular tale of incompetence, nepotism, corruption and accounting fraud that pushed one of Germany’s biggest banks to the brink of collapse. The news magazine Der Spiegel spoke of the “greatest banking crisis in post-war Germany” and stressed that, as opposed to the failure of Herstatt in the mid 1970s (until then the country’s largest bank insolvency), this time it did not involve any elite private bank, but the most powerful banking house in the German capital. The crisis exposed an opaque network of ties between politicians, bankers and company executives in Berlin. Rarely has the close intertwining of business and politics, with the accompanying problems, become so clearly visible. Politicians sat on the bank’s board for decades, and control of the bank’s activities was largely lost as a result of the politicians’ failure to fulfil their supervisory role. Said one observer: “Give politicians control of banks, and you have a recipe for sleaze.”
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