A Long, Hard Look At Management Oversight

Michael Hedges September 29, 2011 Follow on Twitter

Scandals at media organizations have a way of lingering on and on. Revelations trigger investigations, which lead to recriminations, a resignation or two, then more investigations and revelations. Getting to the bottom of it all can be illuminating.

Long serving German public broadcasting executive Udo Reiter resigned last May. “Twenty years is enough,” he said to Der Spiegel (May 29 2011). “My old companions…are now all gone. Others have died. I need not be the last public service dinosaur to roam the landscape.” Herr Reiter said he’d stay on until the end of October, normally sufficient time for the MDR Broadcasting council to choose a successor.

Mitteldeutsche Rundfunk (MDR – Central German Broadcasting) is the public broadcaster serving the German Federal States of Saxony, Saxony-Anhalt and Thuringia, länder restored in the 1990 reunification. MDR is one of nine regional public broadcasters. It was formed in 1991. Udo Reiter has been its only General Director.

Herr Reiter resigned just days before the trial of an MDR production manager commenced charged of fraud and embezzlement in what in has became known as the Ki.Ka scandal. “I wanted to announce my resignation earlier this year,” he said to Der Spiegel (May 29 2011). “I did not jump ship because the Ki.Ka thing was at its peak.”

Allegedly, the MDR production manager, who cannot be named in German media because of privacy rules, issued dozens of false invoices to a Berlin production house between November 2005 and September 2010, amounting to about €8 million. The fraud centered around ARD/ZDF children’s channel Ki.Ka, which MDR produces. ARD is the umbrella public broadcasting organization, which produces television content, largely through affiliate regional public broadcasters. ZDF is the second public television network, separate from ARD.

The MDR production manager was arrested in December 2010 by German authorities. He was immediately suspended by MDR. A production manager at the Berlin production house had been arrested in October 2010. Other MDR employees have been implicated

The now former MDR production manager admitted complicity in court (June 6) saying the money fueled a gambling habit. In July he was sentenced to more than five years in prison. The court indicated in its decision that investigations are continuing.

In March MDR director of administration Holger Tanhäuser abruptly resigned. Two others directly responsible for the Ki.Ka channel received official reprimands. At the end of August, Herr Reiter fired MDR television production director Udo Foht for financial irregularities. Days later (September 15) authorities raided locations in several cities, extracting evidence of yet more bribery, fraud and embezzlement. Herr Foht and four others, unnamed, allegedly demanded “production advances” from suppliers. As many as five different production houses may have been involved.

Understandably, questions have been raised about financial oversight at MDR, not simply concerning children’s channel Ki.Ka. MDR had accumulated about €500 million in surplus between 2001 and 2005. In theory the money was set aside for leaner years, a rainy day so to speak. An internal audit showed that some of that surplus had been invested in stocks and bonds, some considered “risky.” There was no indication that these investments lost money but questions were raised about the propriety of using license fee revenue for bond trading, bond traders having dreadful reputations these days.

As revelations continued to drip, some among German public broadcasting became irritable. In April, ZDF general director Markus Schächter charged that “well-founded rumors” had to be investigated and MDR management had “underestimated the significance” of the fraud.

Herr Reiter’s designated successor, Bernd Hilder, supposedly had sufficient support to pass the MDR Broadcasting Council. He had the support of the Saxony CDU politician Johannes Beermann. And coming from the newspaper business he was seen as untainted by the MDR scandals. Two candidates from public broadcasting were rejected in the selection process.

It turned out not to be enough. In voting (September 26) he received only twelve of 29 members votes, far short of the necessary two-thirds majority.

“It’s too bad,” said Hilder to agency dpa (September 26).  “I would have gladly helped the MDR to get out of its crisis.” Currently editor-in-chief of Leipziger Volkszeitung, Hilder’s media career began in broadcasting, first with Sender Freies Berlin then becoming Washington DC and Mexico City correspondent for ARD radio. He left broadcasting for the newspaper business in 1995.

Herr Hilder’s candidacy wasn’t helped by media reports a few days earlier (September 24) of, perhaps, a negative attitude toward the radio and TV license fee. On the license fee collection agency GEZ registration form he’d correctly ticked the “yes” box but, it seems, added by hand “leider (unfortunately),” which Hilder later said was forged. GEZ registration information indicated Hilder has only been paying the compulsory license fee since 2005.

The MDR Broadcasting Council is scheduled to select new director general candidates in early October then have yet another vote by the end of the month.

All of this comes at a precarious moment for German public broadcasting. Time has come to ask for more money and they’ve asked for €1.47 billion more for 2013 through 2016. If approved, the household license fee could be raised. Timing, of course, is everything.

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