More Bad News for Goldman

When it rains, it pours:

Here are the events as they unfolded: Goldman Sachs and US-based investment firm Cerberus acquired 66,000 apartments belonging to Berlin's publicly owned real estate company GSW for €2.1 billion ($2.8 billion) in 2004. There was just one catch -- the city stipulated that the company as a whole could only be floated on the stock market prior to 2014 if the city gave its consent. After that date, the investors could do what they pleased with their properties.

But Dibelius wasn't willing to wait that long. In November, he contacted the city. Berlin's Finance Senator Ulrich Nussbaum responded in December, asking for €30 million in return for the necessary approval.

The Goldman Sachs manager didn't want to pay. In initial negotiations with the city, according to the bank, he offered to extend tenants' rights, which were otherwise only guaranteed until 2014, in exchange for the city waiving the €30 million fee.

The city was unwilling to accept the offer, so Dibelius hatched a crafty plan. He commissioned Stuttgart-based attorneys Eisenmann, Wahle and Birk to draw up an expert opinion that was intended to make it difficult for Berlin's city government to make any further demands.

The payment of this "not insignificant sum of money," as the lawyers phrased it, "would create criminal liability for bribery." They urgently recommended "refraining from an offer, promise or payment of a not insignificant sum of money to the city of Berlin."

Absurd Accusations

Armed with his lawyers' 36-page document, Dibelius apparently suggested that Nussbaum dispense with the monetary demand, to avoid opening himself up to the suspicion that he could be bribed.

But Nussbaum brushed the investment banker off. The artificially constructed accusation of crime seemed absurd to him -- and to the city senate's lawyers as well. Some even described it as a shameless attempt at extortion.

Now Dibelius had a problem. If he still wanted the deal, he would have to pay the fee. That in turn would open him up to the suspicion of bribery established by his own lawyers -- and leave no doubt about the original intentions behind his actions.