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Family stakes claim to pounds 1.3bn Krupp fortune

Last members of dynasty mount an eleventh-hour challenge to patriarch's will barring them from business empire

Imre Karacs Arolsen
Tuesday 29 July 1997 23:02 BST

The family whose guns won the Franco-Prussian war, whose cannons thundered over Verdun and blitzed a trail through the Third Reich, are on the war path again. Thirty years after the death of the last Krupp, remnants of the dynasty are trying to get their hands on a business empire now worth DM4bn (pounds 1.33bn).

Barring their way is the loyal servant turned boss, who also happens to be the executor of the patriarch's testament. But the last will of Alfried Krupp von Bohlen und Halbach, which locked all his kin out of the business, is suddenly under attack. Just as the document was to have acquired the legal status of an inviolable tablet of stone today, the family have mounted a challenge, leaving the heirloom up for grabs.

On one side of the battlefield stands 84-year old Berthold Beitz, hired hand, administrative genius, a man of rare charm and wit, saviour of hundreds of Jews during the Second World War. Thirty years ago, Alfried Krupp's sudden death left his right-hand man, Mr Beitz, in charge not only of company management, but also his will. Alfried had left instructions that Krupp should pass into the ownership of a foundation bearing his name. The Alfried Krupp von Bohlen und Halbach Stiftung was duly set up. It has been headed by Mr Beitz and packed with the people of his choice ever since.

Enter the relatives, about 50 in all: Alfried's siblings and their descendants. Backed by the "Family Council", Eckbert, a 41-year old business- man, and Friedrich, aged 35 and owner of a biotechnology firm, are suing the Krupp Foundation. They want seats on its board.

"For seven generations, Krupp has only been as strong or weak as the support it received from the family," says Diana Maria Friz, the niece and biographer of Alfried, a businesswoman in her own right and official spokeswoman of the Krupp "Family Council".

There are many bones of contention in a court case which has cost more than DM100,000 so far. But beyond the esoteric points of order lies the more important question: are the Krupps entitled to be represented in the foundation, a charity which has disposed of grants in excess of DM400m in the last three decades?

Not one of the plaintiffs is actually called Krupp. The male line became extinct in 1902, when Friedrich Krupp shot himself after being exposed as a homosexual. Emperor Wilhelm II made an exception with his favourite family of industrialists, promulgating "Lex Krupp", which allowed Friedrich's son-in-law, Gustav von Bohlen und Halbach, to adopt the name of the company inherited by his wife. In 1943, when Alfried took over the business from his father, the law was upheld by another satisfied customer: Adolf Hitler.

That explains why all the people claiming to be the custodians of the Krupp legacy are called von Bohlen und Halbach, but it still fails to establish the strength of their claim. For true to Prussian custom, long before cutting his brothers and sisters out of his will, Alfried paid them all off, to the tune of DM11m each.

It looks cosy indeed in Ms Friz's abode, a nondescript house in the market town of Arolsen in central Germany, where only the drawing room stuffed with antique furniture betrays the abundance of old money. Milking Krupp for financial gains could not be further from her and her cousins' minds, she maintains. "We'll have no financial benefit if we succeed," she says. "Maybe a good lunch here and there. People nowadays find it hard to understand this."

What is at stake is tradition; the Krupp legacy that only a von Bohlen und Halbach can represent. The family accept Mr Beitz comes close, but what will happen when he passes away? There will be no one on the board remotely connected with Krupp the company, man or name.

Mr Beitz seems untouched by such concerns. "I am the last person to uphold the Krupp name," he said recently. Although he has had numer-ous meetings with the Family Council, he refuses to budge. As far as he is concerned, he is more Krupp than the von Bohlens. He says he is acting out of loyalty to his friend and mentor, fulfilling Alfried's last wish to keep relations out of the business. His adversaries find his motives suspect. "Beitz says Alfried did not want the family represented. We have no proof of this," Ms Friz says, "and even if he wanted this, he had no right."

The two men forged a special relationship shortly after Alfried was let out of jail in 1951. He had served 6 years of a 12-year sentence, imposed in Nuremberg for war crimes: plundering occupied countries during the war and "employing" 70,000 concentration camp inmates as slaves in his factories. "He emerged from prison a little embittered, and lost the joy of being with other people," Ms Friz remembers, insisting that her uncle had been unfairly condemned.

This introverted man went on to build one of the most successful business partnerships in history with his gregarious assistant. Alfried and Mr Beitz were like chalk and cheese; the Prussian a lover of Wagner and his assistant a jazz fan. Alfried was the analyst, the intellectual, and Mr Beitz his tool, communicator and executor of his will even in his life time. Under their joint stewardship, the burn-out factories rose from the ashes, and Krupp entered its golden age.

Upon Alfried's death, Mr Beitz held the reins for a while, steering Krupp from one liquidity crisis to the next. During one of those episodes, he was forced to sell a quarter of the shares to the Shah of Iran; these are now owned by the Ayatollahs. He was eventually booted out of the company, leaving him with nothing but the remote control buttons of the Stiftung and its treasure chests.

Now, as the tussle for the foundation intensifies, his prudent handling of the charity's wealth is being questioned. The Krupp lawyers, who have been in the family's employ for four generations are looking into alleged financial irregularities.

"For many years, the company has been losing money, yet the Foundation keeps paying out," Ms Friz says. "It should be distributing profits according to Alfried's testament. We suspect this ground rule is not observed; and that's certainly against the will of the family."

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