Udo Reiter, the head of broadcaster MDR, which is responsible for the children's channel known by its shortened name Kika, admitted in an interview with daily Tagesspigel that there were serious flaws in the way the network monitored its accounting.
Former production manager Marco K. is being held on remand and investigated over 72 cases of embezzlement and breach of confidence. Kika, which supplies content to public broadcasters ARD and ZDF, has lost at least €4 million and as much as €7 million, according to various media reports.
Amazingly, the fraud appears to have netted about €1 million a year since 2005 from an overall budget of about €32 million without anyone having noticed.
Marco K. is supposed to have paid bogus invoices to the now-insolvent Berlin production company Kopp Film.
“The man concerned ... knew every corner of the station and was regarded as trustworthy and responsible. He therefore had a key position,” Reiter told Tagesspiegel. “And he apparently took advantage of that (trust) ruthlessly and with great criminal energy. Otherwise the whole incident cannot be explained.
“In hindsight, there were various rumours, for example that the man had been a gambler and had often been seen in a certain casino. It was also said that he had an inheritance, so people left it alone. There was never anything concrete.”
Reiter has previously announced “wider security for the monitoring of accounting.”
There had been internal checks, which had been monitored by regional broadcaster Hessischer Rundfunk as well as parent ZDF. There were recommendations for internal improvements but no clues that the embezzlement had been going on, Reiter said.
The bogus bills were so detailed and specific that an outsider who was not directly involved in production could not, without great difficultly, see that they were false, Reiter said.
The weak point in the accounting that allowed the fraud to happen was that orders, accounts and final payments to production contractors of Kika were not kept as strictly separate as they normally were – for example at the parent broadcaster. But this had been tightened, he said.
“That apparently was the gateway to the money,” Reiter said.
He vowed that Kika would try to recover the money that had been lost.
“We don't know whether it's still all at the casino. If not, that we will pay it back ourselves, I can promise you that.”