Kirch denies tax wrongdoings

By MIRIAM HILS

BERLIN --- Media mogul Leo Kirch, under investigation for tax evasion by Munich public prosecutors, denied the accusations against him on Wednesday.

On Aug. 20, Swiss investigators raided 12 offices and private residences owned by billionaire Otto Beisheim, looking for evidence connecting Kirch to Beisheim's MH Medien-Handels AG, located in the Swiss canton of Zug.

Munich prosecutors suspect Kirch avoided paying DM400 million ($220 million) to German tax authorities by transferring profits to MH Medien-Handels and other firms owned by Beisheim.

Since December 1995, the Munich prosecuting attorney's office has been investigating a series of transactions amounting to more than $1 billion which took place between 1989 and 1995.

At the center of the suspicions against Kirch are two deals made some seven years ago. In 1990, Kirch's Taurus Films sold the rights to 2,500 films to MH Medien-Handels for $291 million. Shortly after the sale, German commercial stations SAT1 and ProSieben --- both of which are controlled by members of the Kirch family --- acquired the films for an estimated $880 million from MH Medien-Handels.

In a statement, the Kirch Group denied the accusations of tax evasion, saying a financial crisis led to the unorthodox sale to Beisheim.

Due to a legal conflict with publishing house Springer (a partner in SAT1), the Kirch Group was unable to sell its programming to several German webs for more than a year.

"As a result, the Kirch Group ran into threatening problems with its banks," the Kirch statement said. It added that the sale of the films to MH Medien-Handels was an emergency measure undertaken to cover the group's pressing financial commitments.

The Kirch Group also announced that Leo Kirch is pressing charges of slander against Bavarian state representative Georg Kronawitter. A member of opposition party SPD, Kronawitter publicly asked on Tuesday why the Bavarian attorney general had not ordered Kirch's arrest pending trial for tax evasion.

Alluding to Kirch's friendly relationship with members of the conservative Bavarian CSU governing party, Kronawitter demanded the government dispel the suspicion that it is "closing both eyes to the sins of large-scale tax dodgers with connections to high-level CSU politicians."

The Munich prosecuting attorney's office denied Wednesday that Kirch is receiving "special treatment for political reasons."