The Cologne connection
Things just don't add up with the construction of Cologne expo's northern halls. The exhibition company sees itself cast in a false light.
The crucial words were uttered, so to speak, in an aside. In passing Friedel Abel, chairman of the management board of builders Hochtief Construction AG, mentioned at the laying of the foundation stone for Kölnmesse's new Nordhallen that his company would now be building there month for month to the tune of EUR 10 million. For 14 months. Now it doesn't take a rocket scientist to work out that this adds up to total investment of EUR 140 million. Yet officials had always spoken of construction costs totalling EUR 260 million, not counting the EUR 70 million for the land. Meanwhile the state prosecutor has launched an investigation. Officials in his department say Fritz Schramma, the governing mayor of Cologne and chairman of the exhibition company's supervisory board, is under suspicion of breach of trust, corruption and personal gain.
At the end of 2003 Cologne city council awarded the contract for construction of the exhibition company's new northern halls to a closed-end real estate fund managed by the Cologne-based Oppenheim-Esch holding company, which operates Germany-wide. This is a tie-up between Europe's biggest private bank, Sal. Oppenheim, Cologne, and property developer Josef Esch from neighbouring Troisdorf. The investor, which also handled the construction of Kölnarena together with the Technisches Rathaus, is financing construction of the new expo centre begun last September and subsequently leasing the property to the City of Cologne, which in turn will charge Kölnmesse an annual rent, beginning in 2007 on a 30-year lease, of EUR 20 million.
Law experts are now casting doubt on the legality of the contract award, which was apparently not preceded by a public tender. "The case in point is a botched attempt to get round the obligation to invite tenders by declaring the contract as a rental," says Jan Byok, a specialist in municipal law, for one. The expert perceives this as an illegal transaction deliberately intended to evade the law and even sees the possibility of a fine from the European Union for breach of competition rules. The City of Cologne views the matter in a different light, dismissing all charges of collusion. "We've checked it. Everything is watertight - in terms of European law, contract award regulations and competition law," city treasurer Peter Soénius says. He also insists that the offer from Oppenheim-Esch was recommended to the city council as "the most deserving of preference".
A report in "Manager-Magazin" suggests otherwise. The article entitled "The grabbers of Cologne" speaks of "grotesquely inflated costs", claiming the building project is turning out to be a gigantic milking machine. For project development alone, the magazine says the Oppenheim-Esch fund is billing EUR 56 million. Another EUR 19.8 million is due for putting up the equity, EUR 6.6 million more for project management and construction supervision and yet another EUR 7 million for the arrangement of tenants - although it was clear from the outset that Kölnmesse would take over the lease.
Kölnmesse itself is annoyed by the constant debate on what is being dubbed an exhibition scandal. The trade fair's CEO Jochen Witt says this is casting Kölnmesse "in a false light" through association with possible irregularities. He insists that the decision in favour of Oppenheim-Esch-Holding as investors was taken by the city fathers alone, not the expo company, which was the subject of the deal but not the power behind it. The parties to the contract are Oppenheim and the municipal authorities, Witt stresses. He is said to have opposed the fund ahead of the transaction, cautioning against the contract's precise terms. Carsten Dierig
m+a report Nr.8 / 2005 vom 08.12.2005
m+a report vom 8. Dezember 2005