Investigators searched the offices of Bayerische Versorgungskammer on Thursday, bringing a corruption investigation involving the German pension institution’s troubled US real estate investments to its own headquarters, two days after a search at asset manager Deutsche Finance Group. Handelsblatt
The Munich I public prosecutor’s office said the inquiry concerns seven property projects in New York, Miami Beach, Beverly Hills, Chicago and San Francisco undertaken with Deutsche Finance’s involvement. Its statement identified a current and a former BVK property investment employee and a member of Deutsche Finance’s management among those under investigation, according to Bloomberg. Bloomberg, via Mint
About 100 police officers and six prosecutors participated in the searches across Tuesday and Thursday, which also covered three private homes in and around Munich. Investigators secured documents and digital storage media for examination, the prosecutor’s office told Munich newspaper Abendzeitung. Abendzeitung
What investigators allege
Prosecutors suspect that a BVK employee improperly influenced investment decisions in return for benefits from a Deutsche Finance manager. Those allegedly included expensive restaurant invitations in Munich, London, Los Angeles and New York, and stays in a suite at a luxury New York hotel, according to the dpa-AFX news agency. dpa-AFX, via Onvista
The alleged influence also extended to decisions to commit additional capital to the projects, Bloomberg reported, citing prosecutors. The allegations remain unproven, and the searches do not establish criminal wrongdoing. Bloomberg, via Mint
The distinction between the corruption inquiry and the investment losses is important. Prosecutors told dpa-AFX that alleged breach of trust connected with the loss-making investments was not currently part of the investigation. Poor financial performance alone does not establish that an investment decision was criminal. dpa-AFX, via Onvista
BVK and Deutsche Finance say they are cooperating
Deutsche Finance confirmed the November 3 search in a statement on its website, describing itself as a “third party” to the search. It said it was cooperating with investigators and had been in contact with them for some time. Deutsche Finance statement
BVK likewise told Abendzeitung that it was cooperating and providing documents. It characterised the search as one conducted at a third party. Those descriptions concern the organisations’ position and do not negate the prosecutors’ account of an investigation involving individuals associated with them. Abendzeitung
There is a difference in how the parties describe the BVK employees’ status. Prosecutors referred to one current and one former employee; BVK said one had left and the other had been dismissed. BVK also said it had itself brought concerns to investigators’ attention. dpa-AFX, via Onvista
A costly portfolio, but no announced pension cuts
BVK is a Bavarian public authority that manages 12 professional and municipal retirement institutions. Its responsibilities extend beyond investing to administering retirement, disability and survivor benefits. BVK organisational overview
It says approximately €1.6 billion of equity was invested in US properties involving Deutsche Finance and SHVO. The portfolio included the Transamerica Pyramid in San Francisco, the Raleigh development in Miami Beach and properties in New York, the Los Angeles area and Chicago. BVK investment disclosure
BVK continues to estimate total potential losses at €853 million. It distinguishes that forecast from approximately €392 million in losses realised at underlying-fund level by December 31, 2025. The forecast therefore should not be presented as an entirely realised loss. BVK says the potential total amounts to about 0.7% of its investment assets at that date and that pension commitments will not be affected. BVK loss disclosure
SHVO’s involvement in the property portfolio should not be confused with the scope of the criminal inquiry. Bloomberg reported that prosecutors did not mention Michael Shvo or his firm in their Tuesday or Thursday communications, and neither had been accused of wrongdoing in this investigation. Bloomberg, via Mint
A separate dispute over responsibility
The searches come amid civil litigation between the investment partners. In a September 1 announcement, Deutsche Finance America and DF Deutsche Finance Holding said they had sued BVK in Delaware Superior Court. They alleged that BVK had controlled important property decisions and then wrongly blamed Deutsche Finance for losses. Their claims include breach of contract and defamation. Those are the plaintiffs’ allegations, not court findings. Deutsche Finance litigation announcement
BVK rejects the claims and describes them as one-sided allegations. BVK response
The criminal investigation is likely to take time. Prosecutors told Abendzeitung that the events span several years and extend outside Europe, with corporate structures and responsibilities still requiring examination. The seized material will be analysed in the coming weeks and months. Abendzeitung
Published by The Basis. Research dates, source references and illustrative assumptions are retained from the original article.
