Former Schlecker drugstore owner has his day in court

A court in the western German city of Stuttgart has sentenced the 73-old former drugstore tycoon to two years probation, finding him guilty of intentionally leading the eponymous firm into bankruptcy. The judge on Monday also imposed two-and-a-half-year prison terms on his children, Lars and Meike.

The trial started in March and the founder of the drugstore chain, his wife Christa, son Lars and daughter Meike have now all had their day in court. The prosecutor was aiming for a three-year jail sentence for Schlecker and slightly shorter sentences for both of his children.

In Germany, removing assets from a company facing bankruptcy can result in prison terms of up to 10 years. Schlecker's sentence is considerably lighter than prosecutors had aimed for though. He has avoided jail, but nonetheless will have to pay a €54,000 ($64,487) fine for intentional bankruptcy.

“He knew that the company had reached the end of the line, and still kept hoping,” presiding judge Roderich Martis said on Monday.

Schlecker's children will go to jail though, 46-year-old Lars for 33 months and 44-year-old Meike for 32 months. They have been convicted of embezzlement, being accessories to bankruptcy and delaying the insolvency process.

The family patriarch was accused of pulling several million euros' worth of assets and money out of the company and transferred them to accounts of his closest relatives, in effect hiding these assets from creditors, although he knew that the company was facing bankruptcy.

Two of the firm's auditors from EY also faced charges because they certified the company's annual financial statements for 2009 and 2010 despite having realized that Anton Schlecker had manipulated them. Moreover, prosecutors claimed the founder lied about these financial statements in court. When the drugstore went bust in 2012 no buyer was found to take over the business, and well over 20,000 workers, mostly women, lost their jobs. 

Rising to the top

Anton Schlecker's parents had been successful entrepreneurs and owned 17 butchers' shops and a meat processing plant. He worked for the family firm before striking out on his own.

Schlecker founded the first Schlecker drugstore in 1974 at the age of 30. By 1977, he had already opened 100 branches. By 2008, the chain included more than 15,000 locations across Europe, with around 50,000 employees and annual sales of €7 billion ($8 billion).

Since Schlecker had run his company as a "registered merchant" rather than as a limited company, when he applied for insolvency proceedings in January 2012, his personal fortune was bound up with that of the drugstore chain.

In the years preceding insolvency Anton Schlecker sold or gifted some real estate holdings and other assets to his children and wife, according to prosecutors. Among other things, he sold a distribution center to his children for €2.5 million just six days before registering for insolvency.

According to German law, transactions that occurred within a four-year period prior to insolvency can be reversed, but such decisions are often left to court-appointed administrators who are looking after an insolvent firm's assets.

Schlecker's creditors are said to have outstanding claims of close to €1 billion, and include debt to the tune of €300 million owed to Euler Hermes credit insurance group, as well as €150 million in unpaid social insurance owed to the German labor agency.

 tr/hg (Reuters, AFP, dpa)