Schlecker drugstore boss charged over insolvency | Business| Economy and finance news from a German perspective | DW | 14.04.2016
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Schlecker drugstore boss charged over insolvency

State prosecutors have charged the founding family of the Schlecker drugstore chain with embezzling millions of euros in the lead-up to the firm's official bankruptcy. Two of the firm's auditors are also facing charges.

German prosecutors filed a raft of charges against four members of the wealthy Schlecker family on Thursday, accusing them of pulling valuable assets out of their namesake drugstore chain and hiding them from shareholders before the company went bust in 2012.

The prosecutors, based in Stuttgart, have leveled 36 counts of embezzlement, purjury and other misdeeds against the founder of the Schlecker drugstore chain, Anton Schlecker, his wife Christa, son Lars and daughter Meike.

Prosecutors allege the former billionaire pulled several million euros' worth of assets and money out of the company and transferred them to the accounts of his closest relatives although he knew that the company was facing insolvency.

Such a move, if proven true, would have had the effect of cheating creditors out of money due to them. Schlecker's spouse and children helped in the transactions, according to prosecutors, as did two auditors employed by the Stuttgart branch of EY (Ernst & Young).

EY's auditors are charged with having certified the Schlecker company's annual financial statements for 2009 and 2010 despite having realized that Anton Schlecker had manipulated them. Moreover, prosecutors claimed the founder had lied about these financial statements in court.

Whether or not a legal process will proceed on the basis of the state prosecutor's charges will be decided by Stuttgart's district court within the next several weeks.#b


The bigger they are, the harder they fall

Anton Schlecker, now 71 years old, founded the first Schlecker drugstore in 1975 at the age of 30. Just over two years later, he had already opened 100 branches, and by the time the company hit the wall in 2008, the chain included more than 15,000 locations Europe-wide, with around 50,000 employees and annual sales of seven billion euros ($8 billion).

Schlecker's parents had been successful entrepreneurs, with 17 butchers' shops and a meat processing plant. He worked for the family firm before striking out on his own in the drugstore business.

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No help for Schlecker's laid-off employees (30.03.2012)

When Schlecker applied for insolvency proceedings in January 2012, after several years during which the drugstore chain had been doing poorly, the proceedings applied to his entire personal fortune as well as the Schlecker drugstore chain in which it was bound up. The reason: Schlecker had run his company as a "registered merchant" rather than as a limited company, which meant that there was no legal wall between his personal and company finances.

In the years preceding insolvency, Anton Schlecker ellegedly sold or gifted some real estate holdings and other assets to his children and spouse, according to German prosecutors. Among other things, he sold a distribution centre to his children for 2.5 million euros ($2.8 million) just six days before registering for insolvency proceedings.

Whether those properties will remain in their ownership remains to be seen. According to German law, transactions that occurred within four years prior to an insolvency can be reversed, depending on the decisions of court-appointed managers of an insolvent firm's assets.

Thirteen of the 36 charges against him were contraventions of bankruptcy laws of "especially serious nature," state prosecutors said - a technical legal distinction which implies jail sentences of six months to 10 years if a defendant is found guilty.

nz/cjc (Reuters, AFP)

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