More raids have unfolded in connection to the U.S. property investments made by Bavarian pension manager BVK.
Prosecutors in Munich raided the offices of the German pension giant as part of a corruption investigation, Bloomberg reported. They also raided three private homes in and around the city, disclosing those actions days after the offices of German asset manager Deutsche Finance were searched.
In a statement, prosecutors said they were investigating a pair of BVK employees who handled investments, as well as a Deutsche Finance manager. They are looking at seven “loss making” investments by BVK, all of which are linked to Deutsche Finance.
Investigators believe a BVK employee applied “improper influence” on investments and capital decisions. He allegedly accepted benefits from a Deutsche Finance manager to exert that influence, including meals at fancy restaurants and a luxury hotel booking in New York.
Stateside investments by BVK include the Transamerica Pyramid in San Francisco; 9200 Wilshire Blvd in Los Angeles; 685 Fifth Avenue, 711 Fifth Avenue and 530 Broadway in New York; the Raleigh in Miami; and 333 South Wabash in Chicago.
Deutsche Finance reportedly served as BVK’s investment partner in a deal with developer Michael Shvo. Several months ago, Cyprus-based investment firm Yoda PLC paid $691.6 million for the Transamerica Pyramid, which was owned by a group consisting of Deutsche Finance, BVK and Shvo.
Shvo and his companies — Shvo Group, Shvo Property Management and Shvo Brokerage — received $34 million in the deal. But his German partners absorbed significant losses on the deal.
Shvo is not accused of wrongdoing.
BVK is the largest public-sector pension group in Germany, managing assets for doctors, lawyers, stage workers, chimney sweeps and beyond. It oversees $137 billion in assets.
BVK earlier warned the total losses on its seven-investment portfolio could reach nearly $1 billion. It is cooperating with authorities and fired one of the two employees under investigation; the other had already left the firm.
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