Munich Mayor Accuses State Government of Misappropriating Funds
Munich mayor Christian Ude (SPD) has accused the Bavarian government of unlawfully assisting in the purchase of 32,000 apartments owned by the GBW Group. In a letter to EU Competition Commissioner Joaquin Almunia, Ude outlined that EUR50 million was unlawfully used to fund part of a group offer to purchase Bayrische Landesbanks' GBW residential property unit.
Munich Mayor Christian Ude accused the Bavarian government of unlawfully helping to fund the 2.5 billion-euro purchase of 32,000 apartments and asked European Union regulators to halt the sale on the grounds that it violates EU state-aid rules.
The letter adds yet another hurdle to one of Germanys biggest property deals in several years. The purchasing group, led by Patrizia Immobilien AG, won the bid over four competitors, including a group of municipalities among whom were Munich and Nuremburg.
What further complicates this matter as that while Munich's mayor is a member of the left leaning Social Democratic Party of Germany (SPD), its state government is firmly in the hands of a partnership between conservative Christian Democratic Union (CDU) and Free Democratic Party (FDP), who have not worked well with the SPD in past.
The matter of whether or not the Bavarian government unlawfully used money from its capital is yet to be resolved though, as tensions run high. BayernLB bank spokesman Matthias Luecke stated that the government may join the buyers through a state foundation, providing a loophole to escape the state-aid rules.
Furthermore, the matter was unknown to the BayernLB when the decision to appoint the winning bidder was made. The bank is obligated to sell the stake in GBW by the end of 2013 after having received state aid during 2008.
Whether the purchase will be able to go through as planned or the Bavarian government will be forced to withdraw its funds, remains for the European Commission to decide.