Thomas Middlehoff, the former boss of Bertelsmann, has written a book called “Guilty”. Mr Middlehoff who was jailed for three years for tax evasion and breach of trust feels that “he committed the seven deadly sins in a biblical sense, he says, which is why he feels he deserved time behind bars and the loss of his fortune, reputation, health and marriage. He wants the account of his failures to serve as a cautionary tale for businesspeople in Germany and beyond.”
The Economist says that Mr Middlehoff was a very unusual German success story: “He climbed to the top of Bertelsmann through a combination of hard work, unwavering belief in his instincts, showmanship and an Anglo-Saxon appetite for risk. Perhaps his biggest coup was a partnership with Steve Case, who at the time was the virtually unknown boss of a struggling startup called America Online. Then known as “Big T”, Mr Middelhoff made a fortune for Bertelsmann when he sold its stake in aol for close to €7bn ($6.7bn) in 2000, just before the dotcom bubble burst.”
So how did this superstar fall from grace? “Greed, he says, led him to invest in dodgy real-estate funds and tax-avoidance schemes. In 2002 he was forced out of Bertelsmann after clashing with the Mohn family, who own the company, over his plans to take the firm public. Eager for a second act as a German business tycoon, in 2005 he took the helm of KarstadtQuelle, which later became Arcandor, then Germany’s biggest retailer. His efforts to turn around that ailing company led to his humiliating decline. He sold Arcandor’s property portfolio for €4.5bn but saddled its department stores with high rents…By June the retailer had collapsed.
That is when prosecutors began investigating Mr Middelhoff’s conduct at the company. They uncovered his use of Arcandor aircraft for private purposes and company cash to part-finance a book honouring his mentor at Bertelsmann. In 2014 a court in Essen found him guilty. He was arrested in the courtroom in front of his family. A year later he declared personal bankruptcy.”
Mr Middelhoff’s tale of hubris should resonate in India’s boardrooms.
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