BERLIN — The heat is on Leo Kirch and his former top execs after one former manager was arrested Tuesday following police raids on 13 properties in Germany and Switzerland.
Bust was part of a search by police and prosecutors for evidence in an investigation of the former Bavarian media mogul, whose Kirch Media empire collapsed last year.
Herbert Schroder, Kirch Media’s former finance chief, was remanded in custody for suspected breach of trust and making illegal loans.
Prosecutors launched their investigation against Kirch and his associates late last year after Kirch Media’s insolvency administrator notified authorities of “irregularities” in documents allegedly prepared by Schroder, who stayed on at Kirch Media in an advisory role after the company’s insolvency in April 2002.
Prosecutors declined to comment further until they had evaluated material seized in the raids. Authorities said they were looking into illegal loans that had caused damages of at least E50 million ($58.8 million) as well as two consultancy contracts worth $9.4 million. Kirch Media’s bankruptcy administrators reportedly want to recover millions paid to former consultants.
Kirch’s media empire, which included Germany’s largest broadcaster, ProSiebenSat 1, collapsed last year under the weight of debt.
A consortium headed by Haim Saban took majority control of the broadcaster in August in an initial deal worth some $650 million, although further investments are set to double that price.
Meanwhile, U.K. private equity firm Bridgepoint Capital is among the bidders for the Kirch Media library as well as Beta Film, the distribution and world sales division of the insolvent TV group.
Bridgepoint is said to be backing a management buyout of Beta led by company topper Jens Richter.
At least two private equity firms in addition to other potential buyers, including former Kirch Media exec Jan Mojto, are participating in the auction.
Beta Film owns and distributes rights to thousands of movie and TV classics and continues to handle sales for ProSiebenSat 1.
German pubcasters ARD and ZDF reportedly are among the interested buyers as well.
(The Associated Press contributed to this report.)