German officials to probe alleged fraud by ex Arcandor chief

14th June 2009, Comments 0 comments

The procedure was requested by German Justice Minister Brigitte Zypries and represents a "formal act" since "no new investigative element" has surfaced, the spokesman for prosecutors in the western city of Essen said.

Berlin -- German prosecutors are to investigate allegations of fraud against Thomas Middlehoff, former head of the retail and tourism group Arcandor that declared insolvency this week, a spokesman told AFP on Friday.

The procedure was requested by German Justice Minister Brigitte Zypries and represents a "formal act" since "no new investigative element" has surfaced, the spokesman for prosecutors in the western city of Essen said.

Zypries had already asked a regional justice minister to look into links between Middlehoff and his wife with a real-estate company that allegedly rented buildings to Arcandor for its stores at inflated prices.

The group, which owns nearly 53 percent of the British tourism operator Thomas Cook, was undermined by poor management of its Karstadt department store chain and filed for insolvency after the German government rejected pleas for credits and loan guarantees.

German officials justified their refusal by the fact that Arcandor's financial problems pre-dated an economic crisis which forced the government to establish a 100-billion-euro (140-billion-dollar) fund to help stricken firms.

AFP/Expatica

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