The scandal surrounding the Luxembourg real estate group Adler Group is spreading further. The public prosecutor’s office in Frankfurt and the Federal Criminal Police Office searched the offices of the subsidiary Adler Real Estate on suspicion of false accounting, market manipulation and breach of trust. A spokesman for the Adler Group confirmed the raid. The investigations were carried out “against the background of business transactions at Adler Real Estate AG from the 2019 financial year, which will extend into 2020”. The group cooperates with the authorities.
The public prosecutor’s office in Frankfurt said they were using the BKA to search 21 properties – including business premises, apartments and a law firm – in Berlin, Düsseldorf, Cologne and Erftstadt, as well as in Austria, the Netherlands, Portugal, Monaco, Luxembourg and Great Britain. Around 175 officials were involved.
The authorities said the suspects were German, Austrian and English nationals between the ages of 38 and 66. They are accused of “incorrectly presenting the company’s balance sheets or providing assistance in their function as (former) board members of the real estate group from 2018 to 2020”. In addition, they are said to have concluded consultancy contracts on behalf of the company and to have made payments for them, for which there is no consideration according to the current status of the investigation. This put the company at a financial disadvantage.
In addition, there is the suspicion that the accused made offers of accommodation or bogus deals in order to drive up prices for projects and achieve a favorable “Loan to Value” (LTV). LTV stands for the ratio of the loan amount to the fair or market value of a property. “This sent the wrong signals to the capital market, as the LTV is a key factor influencing the investment decision and the market price for shareholders and bondholders of the group.”
The searches are a setback for the ailing Adler Group, which suffered a loss of almost 1.7 billion euros in 2022. Adler was repeatedly exposed to allegations regarding the valuation of real estate projects. Shares plummeted after KPMG’s auditors refused to certify the company’s 2021 accounts. It was not until April that a British court gave the real estate group the green light to restructure. Adler emphasized that the searches were not aimed at members of the Adler Group’s board of directors.
