Bavarian utility experiences significant financial loss of 163 million euros following investment in the U.S. real estate sector.
In a series of eyebrow-raising events, the Bavarian Pension Fund (BVK) finds itself under intense scrutiny over its investments in US projects. The fund, which manages the retirement savings of nearly three million Germans, has been embroiled in a controversial investing saga that began under the tenure of its former head of a department, Rainer Komenda.
Under Komenda's watch, hundreds of millions of euros flowed into supposed prestige properties in the USA, including the Transamerica Pyramid in San Francisco, the Big Red Building in Chicago, luxury hotels near Miami Beach, and expensive buildings in the heart of Manhattan. These investments, however, have been a source of contention, with allegations of either naivety, gross negligence, or violation of duties.
Michael Shvo, a New York real estate developer, was responsible for these investments on the American side. Shvo, who was sentenced to a fine of $3.5 million for tax fraud in 2018, is now at the centre of the controversial investing. The BVK, on the other hand, claims to have only invested via a complex fund structure and had no operational tasks on site.
The financial dimension of the investments remains unclear, with the BVK speaking of 611 million euros and Uttenreuther mentioning 800 million in different interviews. As a result, the BVK has faced criticism, with Tim Pargent, the financial spokesman of the state parliament's Greens, accusing the ministry of negligence for allowing precautionary funds to be invested in insecure real estate deals.
The BVK has also raised allegations against Komenda in a 50-page document, including an inappropriate relationship with certain persons, mainly Michael Shvo. Komenda, however, remains silent about the allegations.
The civil lawsuits against the investment network around Shvo and the BVK, which were temporarily suspended, are expected to be resumed soon. Marc Kasowitz, a lawyer who previously represented Donald Trump, is now representing aggrieved buyers and tenants of Shvo's buildings.
The BVK has already written off €163 million from its funds due to these controversial investments. In response, the BVK's CEO, Axel Uttenreuther, has stated that the fund has initiated changes regarding internal processes and qualified that there is no risk-free capital investment.
The BVK is a superior authority of the Free State and is under the supervision of the Ministry of the Interior. Bavarian Interior Minister Joachim Herrmann spoke with Uttenreuther about personnel changes and internal investigations. Herrmann has stated that the BVK has taken steps to address the issues and ensure the safety of its investments.
The controversy has also led to criticism of the composition of the BVK board, with Pargent stating that key positions are filled with former employees from the Ministry of the Interior. Despite these challenges, the BVK continues to invest pension money from Munich into US projects this year.
As the court hearing scheduled for March 2026 approaches, the focus remains on the BVK and its controversial investments. Turkish business partner Serdar Bilgili warned Komenda in 2020 about Michael Shvo, claiming that €600,000 was spent on private jets for non-project-related locations and €40,000 per month was charged to the projects for Shvo's personal penthouse in Miami.
However, no available search results or information about a person who was quickly dismissed by the Bayerische Versorgungskammer and has since initiated legal proceedings against it for alleged misconduct could be found. As the story unfolds, it remains to be seen how the BVK will navigate these challenges and restore the confidence of its investors.
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