East shakes as Schneider runs: Cities such as Leipzig face the worst damage if the edifice collapses. Steve Crawshaw in Bonn assesses the ramifications

A LACONIC press release contained the bombshell. 'To our surprise and dismay Dr Jurgen Schneider has informed the board of Dr Jurgen Schneider AG that he has become ill over Easter and that, on the advice of doctors, he must immediately withdraw from active involvement in the business. We do not know his whereabouts.'

Translated: one of Germany's largest property groups was on the verge of collapse, putting thousands of jobs at risk and endangering economic recovery, especially in the east.

'Panic]' cried the front-page headline in Bild, the mass-circulation daily. 'Where is the rogue?'

Speculation has variously suggested that the 59-year-old property developer and his wife, Claudia, may now be in Switzerland (where he has a pounds 2m villa on the shore of Lake Lugano), or in Brazil or in Iran. Other accounts place him in Barbados or Martinique, which he regularly visited on holiday (with wife, son, daughter and bodyguards) in his private Lear jet. In short: name your exotic destination - he might be there.

Bild says that Mr Schneider helped himself to between DM50m (pounds 20m) and DM100m, which he allegedly cleaned out of various accounts in order to prevent the money being frozen or seized. According to Bild he took the money with him 'in four to eight suitcases'. Whether or not Mr Schneider took the suitcases with him before succumbing to his 'illness', the cause for the group's collapse appears to be a familiar one: property dealings. Mr Schneider bought many properties at a premium a few years ago when the market was high; then, after expensive renovation, and as prices began to drop, he found it difficult to get his money back.

Like Robert Maxwell, Mr Schneider insisted up to the moment of his disappearance that all talk of financial problems was nonsense. Two months ago he blithely told Frankfurter Allgemeine Zeitung: 'My projects are always sound and pay for themselves.'

Last week those reassurances were revealed to be fantasy. On Friday the Schneider group filed for bankruptcy. Meanwhile, as a result of evidence supplied by the Schneider group's biggest single creditor, Deutsche Bank, the authorities opened investigations into Mr Schneider in connection with attempted fraud.

A shopping arcade that Mr Schneider wanted to purchase was said to contain 20,000 square metres of rentable space (in reality: 9,000sq/m), which would bring in DM57m a year (in reality: DM8m). Not surprisingly, many are now asking how the banks allowed themselves to be so credulous.

It is reckoned that he has left behind debts and commitments of around DM5bn - most of it owing to the banks, and the remainder to contractors who will somehow have to pick up the pieces. Politicians of all parties, including Chancellor Helmut Kohl, have insisted that the banks should behave 'responsibly' and not force the smaller firms to carry the brunt of the disaster.

Deutsche Bank, which is thought to be exposed to the tune of DM1.3bn, saw its share price drop sharply when Mr Schneider vanished. By the end of the week, however, after 40 creditor banks attended a meeting with the rump board, the banks sounded almost sanguine. The properties are mortgaged, so the banks' own losses can be contained. There are suggestions, too, that at least some of the construction work will continue.

When things looked good for the Schneider group they looked very good. The headquarters of the now-collapsed empire was - is - a castle in the town of Konigstein, near Frankfurt. Schneider properties in both east and west were among the most prestigious in Germany. The 'building lion', as he was known, insisted that he loved old buildings, and gained praise for his schemes.

In the east German city of Leipzig and in his home city of Frankfurt Mr Schneider was particularly active. His company bought and renovated a number of historic sites in Leipzig - most notably, the upmarket Madler Passage, which opened last autumn, and includes the Auerbach's Cellar restaurant, the renowned setting of a scene in Goethe's Faust.

Now that the bubble has burst, there is no shortage of analysts who persuasively explain that the crash had long been inevitable and that the sums simply did not add up. Until recently, however, when the first complaints surfaced about delayed payments to contractors, few such worries were heard. Instead, in Leipzig and in Frankfurt, the authorities were delighted. The mayor of Frankfurt told him: 'Frankfurt can be proud of you.' In Leipzig Mr Schneider was welcomed as 'the saviour of the old city centre'.

Now, as with Maxwell, the enthusiasm has turned to bitterness. In the words of one critic, 'The dummies will again be the small firms, who were already squeezed.' Several thousand jobs could be lost, in Leipzig alone. In the east especially, such a blow would be considerable. The economy is just beginning to gain a momentum of its own. Growth is still fragile, at best. Crucially, the east German boom is still construction- led. Cranes crowd the city skylines, as buildings are renovated and rebuilt after wartime bomb damage and 40 years of decay. If that work were to slow down or come to an end the knock-on effect on economic confidence throughout east Germany would be enormous.

(Photograph omitted)

Start your day with The Independent, sign up for daily news emails
New Articles
tvDownton Abbey Christmas special
Arts and Entertainment
Wolf (Nathan McMullen), Ian (Dan Starky), The Doctor (Peter Capaldi), Clara (Jenna Coleman), Santa Claus (Nick Frost) in the Doctor Who Christmas Special (BBC/Photographer: David Venni)
tvOur review of the Doctor Who Christmas Special
News
peopleIt seems you can't silence Katie Hopkins, even on Christmas Day...
Arts and Entertainment
Left to right: Stanley Tucci, Sophie Grabol and Christopher Eccleston in ‘Fortitude’
tvSo Sky Atlantic arrived in Iceland to film their new and supposedly snow-bound series 'Fortitude'...
PROMOTED VIDEO
Arts and Entertainment
Kellie Bright as Linda Carter and Danny Dyer as Mick Carter

EastEnders Christmas specials are known for their shouty, over-the-top soap drama but tonight the show has done itself proud thanks to Danny Dyer.

Arts and Entertainment
Jenna Coleman as Clara Oswald in the Doctor Who Christmas special
tvForget the rumours that Clara Oswald would be quitting the Tardis
Arts and Entertainment
Japanese artist Megumi Igarashi showing a small mascot shaped like a vagina
art
News
The Queen delivers her Christmas message
newsTwitter reacts to Her Majesty's Christmas Message
Arts and Entertainment
tv
Life and Style
fashion
Sport
sport
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Arts and Entertainment
Call The Midwife: Miranda Hart as Chummy
tvCall the Midwife Christmas Special
Sport
Laura Trott and Jason Kenny are preparing for the Commonwealth Games in Glasgow
sport
Arts and Entertainment
Sir Bruce Forsyth with Tess Daly in the BBC's Strictly Come Dancing Christmas Special
tvLouis Smith wins with 'Jingle Bells' quickstep on Strictly Come Dancing's Christmas Special
News
news
Arts and Entertainment
tv
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

The Jenrick Group: Night Shift Operations Manager

£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...

SThree: Trainee Recruitment Consultant - LONDON

£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

Day In a Page

Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all
The week Hollywood got scared and had to grow up a bit

The week Hollywood got scared and had to grow up a bit

Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

Panto dames: before and after

From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
Thirties murder mystery novel is surprise runaway Christmas hit

Thirties murder mystery novel is surprise runaway Christmas hit

Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

Anne-Marie Huby: 'Charities deserve the best'

Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
The botanist who hunts for giant trees at Kew Gardens

The man who hunts giants

A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there