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   Vol. 15  No. 23
Thursday March 17, 2016

BER Bumbles Into 2016
BER Bumbles Into 2016
A construction site sign can be seen behind a warning light at the BER Airport in Schoenefeld, Germany. In connection with the numerous postponed opening dates and cost increases amounting to billions of Euros, last month the Brandenburg audit office delivered a disastrous report to the Finance Ministry. Among other things, auditors proposed a reevaluation of the responsibility of the advisory committee under then state heads Klaus Wowereit and Matthias Platzeck

     In Germany—more precisely, in Berlin, its capital and former Reichshauptstadt—when it comes to the airport business, everything is far from being “in ordnung” (order); in fact to use another German word, things at BER are “chaos” (a mess)!
     The large infrastructure project at Berlin’s Willy Brandt International Airport has run out of money and despite huge cost overruns and a seeming endless period of time, it still requires more time to be completed.
     So maybe that is not big news, but keep reading.
     What has now emerged in the media and by word of mouth to us from trusted sources is an astoundingly complex system of mismanagement, graft, corruption, and incompetence, all reportedly connected to the airport building in Berlin.
     It now appears all of it is connected to both management and the supervisory board representing the three public shareholders: the State of Brandenburg, the city of Berlin, and the Federal Republic of Germany.

Report Of The Accountant

     This news not only came to light but also is, by means of a recently published confidential report of the Brandenburg General Accountant’s office, a matter of public record, which is something new and quite extraordinary.
     The 504-page report, written in elaborate German bureaucratese, outlines in detail the shortcomings surrounding the BER airport project from its very early stages. The report condemns both senior management and politicians acting on the supervisory board alike.
     A list of the shortcomings would fill several books, and in any case most of these have already been detailed in past issues of FT.
     In simple, direct words the general accountant’s office details how the supervisory board neglected their legal obligation to question and supervise the management’s decision and how some members even made sure that reports and facts imperative for decision-making were not communicated to the supervisory board the standard three weeks in advance, but in fact a mere day before the meeting, which dealt with the question of whether or not the second opening date on June 3rd, 2012, could be upheld.
     What emerges in the report is that most members of the BER board lacked any expertise or even elementary knowledge of the management of large infrastructure projects.
     Further, the report notes that despite crucial information being made available (albeit quite late in the game), the board decided to support the management’s decision to go ahead.

Two-Minute Wonders

     Revelations that some meetings of the supervisory board took as little as two minutes (tell me all you know in two minutes) is a real shocker considering what is (was) at stake and the general, unified uproar over the inefficiencies’ at play at BER.
     Particularly damning are a number of paragraphs in which the General Accountant’s office deals with the oversight executed by the State of Brandenburg’s Ministry for Finance.
     The explanations provided by the Ministry were rebuffed as untrue within the report.


     The report explains that the Airport’s annual reports were neither challenged nor questioned by the Supervisory Board and the Ministry for Finance, despite clear evidence of insufficiently detailed risks and mounting budget overruns that would have mandated otherwise.
     The rather simple fact that changed EC Directives mandating additional security measures required a substantial redesign of the Terminal and that therefore construction activities were carried out, not based on blueprints approved by the authorities, but on a “construct-as-you-go” basis necessitated, in the view of the BER’s management, “a shifting of legal questions towards the end of the construction period” only.
     In other words, the airport was replanned and replanned again, changed and expanded and any plans for eventual approval were to be drawn later.

Horst To The Rescue?

     Horst Amman is experienced in large-scale infrastructure projects and serves as the technical manager appointed from FRAPORT. He had halted construction temporarily to get a grip on the mounting issues and problems, and to collect a detailed inventory.
     The report suggests that because Horst’s measure clashed with the schedule of former CEO Hartmut Mehdorn, he was relegated to a post managing the airports’ waste and water systems so as not to upset the political stakeholders by further halts in the construction process.

Gobbledy-Gook Reports Of Progress

     The controlling reports—submitted quarterly and detailing the progress of the construction—were deemed “implausible,” “inconclusive” and “gave no clear picture about the current state of planning and construction,” the general accountant’s report concludes.
     That the supervisory board conducted only the bare minimum of meetings (four per year) despite mounting problems, and never questioned advancing construction while approving annual reports in gross mismatch with projected figures is seen by the GA’s office as a clear neglect of duty on the side of board members.

Could Have Been Should Have Been

     Had the BER board asked questions regarding the plausibility of the management’s report on progress, the contractors involved would have outlined that they had communicated beforehand that from their point of view the anticipated finishing date was “impossible.”
     Another main issue is raised in the general accountant’s report here in the innocuous headline:
Lacking Validity of Increased Capital Requirements Because of Evident Risk Factors Not Having Been Considered.” Apparently, (according to the report) both management and board knew that the annual reports and projections were more wishful thinking than factually based.
     Apparently, to sum up, the only measure the board made was to support the switch of the airports sole technical expert, Horst Amman, who had expertise and a proven track record, to the task of waste disposal.
     In 3.2, the GA’s office simply concludes that “lack of business acumen and planning competence” were evident of the airport management’s side.
     3.4 concludes stating:
     “Serious shortcomings and lapses on the risk management side were evident,” as the management “neglected to either inform the board about important factors at all or too late.”
     The GA’s office summarizes that the board members were not qualified to supervise a large and challenging project such as BER and that in particular a previously conducted review of liabilities and accountabilities on the side of management and board members was “structurally faulty,” biased by conflicts of interest and that “factual and structural shortcomings were far too numerous to exonerate the management and board from the responsibilities of their offices.”

Criminal Dummkopfs

     The public prosecutor in Cottbus confirmed reports that his office was looking into the allegations and considering whether to file criminal charges against some of the former or current members of the BER management and board.
     As we go to press, Senior Prosecutor Horst Nothbaum denied previous reports within the German media that the investigations were directed at former Berlin Mayor and Head of the Supervisory Board Klaus Wowereit and former Brandenburg MP Matthias Platzeck.
     Stay tuned.

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