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At the peak of its popularity in the 1920s, the Wertheim department store on Leipziger Platz in central Berlin boasted of being the biggest in Europe, the place shoppers could find "everything under one roof," from French goat cheese to Wagner opera scores. One contemporary writer even hailed the emporium, with its statues and marble columns, as the Berlin Louvre. Like so much else in Berlin, Wertheim fell victim first to the Nazis and then to the postwar communist rulers of East Germany. Most of the Jewish Wertheim family members fled Germany or were killed at Auschwitz, and the property was nationalized after the war. Another retail chain, Hertie, long ago swallowed up the firm's remaining assets in West Germany. And today, the spot where Wertheim's flagship store once stood is an empty wasteland directly opposite the Bundesrat, the upper house of parliament.
But Wertheim hasn't disappeared into the history book — far from it. For more than a decade, the Leipziger Platz site — and a patchwork of other prime real estate in the heart of Berlin that belonged to Wertheim — has been the object of one of the biggest restitution battles in post-reunification Germany. Four groups are involved in a tangled legal fight over approximately 65,000 sq m of Berlin's best locations: the German government; German retailer KarstadtQuelle, which acquired Hertie in 1999 and claims to be the corporate successor to Wertheim; the Jewish Claims Conference, an official body that acts on behalf of Jewish Holocaust survivors and the heirs of victims; and some descendants of the Wertheim family led by Barbara Principe, who allege in U.S. federal court that they were swindled out of their inheritance in the 1950s.
More than 2 million claims for property restitution in eastern Germany were filed after the fall of the Berlin Wall, and hundreds of cases are still pending. But the Wertheim case is highly unusual for two reasons: it has become the subject of intense diplomatic exchanges between Germany and the U.S., and it has highlighted some peculiar German government business practices.
The litigation began within months of the reunification of Germany, when Hertie and the Jewish Claims Conference filed competing claims for a clutch of Wertheim properties. From the beginning, Hertie was at a disadvantage because Wertheim property was confiscated by the Soviet authorities immediately after World War II. According to the terms of Germany's reunification treaty, such property was not required to be returned to its former owner. In 2001, a Berlin court handed down the most authoritative ruling to date, awarding all the property to the Claims Conference, saying that it, rather than Karstadt, represented the former Wertheim owners. That decision prompted appeals by both Karstadt and the government; three rounds of settlement negotiations last fall broke down and have yet to resume.
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- Berlin authorities gave a triangle of land in central Berlin next to Potsdamer Platz to the retailer for free, on the understanding that it would build a corporate headquarters on it. The company promptly sold the land for about €150 million.
- The federal government allowed Karstadt to keep for almost a decade about €30 million in proceeds from the sale of one building on Rosenthaler Strasse, even though the Berlin State Property Office had already ruled that Karstadt didn't own the property. Karstadt says it has since paid back the money.
- TLG, a branch of the German restitution agency, is trying to develop Leipziger Platz and has set up a series of dummy corporations — all based at its own address, but apparently with no assets or funds — to do so. In the process, it has turned down at least one cash offer for the property that was substantially higher than its own valuation.
- The Finance Ministry paid a total of €16 million for rights to a strip of Wertheim land near Leipziger Platz that housed the postal service before the war. Oddly, the real estate was already officially registered as belonging to the government — so the Finance Ministry wrote a check for rights to property it already owned. The Ministry subsequently sold some of the property to a Berlin utility for twice the price per square meter that it had paid.
The dealmaking worked both ways. In the case of a big new Bundesrat office building on Schiffbauerdamm, another Wertheim property, Hertie assigned its rights to the government for just j700,000, a fraction of the estimated €20 million that the government would have had to pay at market prices. "Governments the world over give sweetheart deals," says Gary Osen, a U.S. lawyer whose suit in a New Jersey court on behalf of the Wertheim family helped to unearth some of these details. "What you don't see a lot of — and what makes this alarming — is that the government is writing checks."
If the government isn't talking, Osen and his client Barbara Principe are. She's a 70-year-old mother of seven children who grew up on a chicken farm in New Jersey, barely aware that her grandfather Franz Wertheim was co-owner of a German retail legend. In 1951 a German lawyer named Arthur Lindgens, a distant relative by marriage of the Wertheim family, bought out Principe's father's and uncle's share for the equivalent of about $5,100 at the time. That enabled Lindgens to get majority control of Wertheim, and he promptly sold it to Hertie. "My father was told there was nothing left. It was a total lie," Principe says.
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Indeed, the German ambassador in Washington, Wolfgang Ischinger, in January wrote to the New Jersey judge who is considering Principe's suit in the U.S., urging him to dismiss that case. It should, according to the ambassador, be subsumed by the 2000 agreement. Principe's lawyers filed an angry rebuttal, saying the ambassador's letter "inexcusably" failed to disclose the German government's own "substantial pecuniary interest" in the case. Behind the scenes, the German Foreign Ministry has been trying to convince the Bush Administration to intervene to dismiss the case, so far to no avail, according to letters to the U.S. State Department obtained by TIME. Significantly, Stuart E. Eizenstat, the former Deputy U.S. Treasury Secretary who negotiated the 2000 accord, believes it doesn't cover the Wertheim case. Eizenstat accepts the argument by Principe's lawyers that her family was defrauded after the war's end. "It speaks volumes that the U.S. government has not intervened," Eizenstat tells TIME.
Perhaps none of this would have emerged had it not been for 38-year-old German former law student Simone Ladwig-Winters. In the early 1990s, she started working on a doctoral thesis about the way the Wertheim empire was "Aryanized" by the Nazis. Among other things, she discovered that Hitler's lieutenant Hermann Göring in December 1937 personally ordered the firm's name to be changed, and all Jewish shareholders and employees to be ousted. Winters is now working with another writer on a historical novel about the family, and seems taken aback by the legal avalanche she helped to set off. Her research is being used by all the claimants and the courts. "When I started looking into this, people didn't seem very interested," she recalls. They are now.
The next legal steps are uncertain. Germany's supreme court is expected to settle once and for all the ownership question, although not for another couple of years at the earliest. The federal judge in the New Jersey case is expected to rule much sooner, probably in early fall, whether to admit Principe's suit. And it's possible that the government will try to restart the settlement talks that broke down last year. In the meantime, on the spot in Leipziger Platz where Berliners once flocked to buy their hats, silverware and sausage, the weeds continue to grow.
- PETER GUMBEL | Berlin
- A battle rages over who holds title to some of the German capital's prime real estate