KPMG finds compliance and governance flaws at German property group Adler

KPMG’s investigation into the German real estate group Adler revealed widespread shortcomings in governance and obedience, a risk of large reductions and questionable payments to a real estate investor who has long denied influence over the company.

Adler, which owns 52,000 apartments in northern and western Germany, was set on fire last year by the Viceroy Research shortage sales group, led by Fraser Fringe. Fring accused the company of widespread fraud, improper transactions with related parties and inflating the value of its asset portfolios. Adler denied any wrongdoing, hired KPMG to investigate the allegations and postponed the publication of its 2021 annual report.

New Adler chairman Stefan Kirsten, who has been in charge since February, admitted that KPMG’s findings, published by Adler on Friday, showed “improper attempts” to influence the group’s decision-making by Austrian real estate tycoon Svetad Kenner. The interactions with Caner showed that as a listed company, Adler had a poor understanding of corporate governance, Kirsten said.

However, Kirsten, the former CFO of Venobia, stressed that KPMG did not find evidence of “systematic enrichment at the expense of other stakeholders”. “There was no fraud and deception,” he said.

KPMG has found ample evidence that Lekner has been significantly involved in strategic decisions, recruitment and remuneration, as well as other operational matters.

“The board members of the Adler Group told us that in interviews [Caner] Was not involved in day-to-day business, “KPMG said, adding that it’s clear that it was. ‘

Investigators also found € 12.6 million in payments for undocumented “consulting services” to Kenner in two mergers and acquisitions. For some payments, the goal “did not match the agreed-upon activities,” KPMG said.

Kirsten argued that Kenner did indeed play important roles in the real estate transactions for which he charged consulting fees, and that the amount of payments was appropriate.

Adler shares, which fell 40% in 12 months, rose 3%.

KPMG found no problems assessing the value of Adler’s rental portfolio, but warned that its asset development portfolio appeared to be overvalued. Based on a sample, KPMG estimated that the real market value was 17% below € 2.4 billion in Adler’s accounts.

“In the worst case scenario. Adler disagreed with KPMG’s assessment that another deal, involving Kenner’s brother-in-law, needed to be revised in the balance sheet.

KPMG said it could not verify or refute many of Fring’s allegations because it could not access all the necessary documents.

Kirsten said he would rectify the compliance and corporate governance failures observed over the coming months.

Kenner said he was “pleased to see that KPMG’s legal report on the Adler group refuted the Vice King’s economic and reputation allegations” and accused Fring and his associates of causing “tremendous damage to me and the companies I worked for”.

Fring said: “Again, a German company was unable to cooperate with an investigation, and surprisingly claimed it was exempt,” adding that the finding showed that Kenner was “running Adler out of the shadows.”

KPMG finds compliance and governance flaws at German property group Adler Source link KPMG finds compliance and governance flaws at German property group Adler

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