REAL ESTATE – Michael Koch, the central figure in the 2004 bribery scandal that engulfed German real estate fund provider Deka, was found guilty of corruption by a Frankfurt court but will not go to jail.

Instead, the Frankfurt court sentenced Koch to two years probation. Koch, a former managing director at Deka, also must pay a fine of €32,400 and conduct 200 hours of community service.

Prior to the court ruling, Koch admitted accepting €470,000 worth of bribes in exchange for helping developers and architects win building contracts in the cities of Wiesbaden, Frankfurt and Erfurt.

A spokesman for the court said the fine was not set higher than €32,400 as Koch already had re-paid the €470,000 in bribes to Deka.

Asked why Koch was given probation, the spokesman added: "I don’t exactly know as I wasn’t present at the sentencing. But one can say that in general, if the defendant admits guilt before a German court, that can be to his or her favour during sentencing."

Koch, who joined Deka in 1997, was abruptly fired in August 2004 after Frankfurt’s prosecutor targeted him for an investigation into whether or not he accepted bribes.

The following month, the entire management of Deka Immobilien Investment (DII), which provides open-ended real estate funds, was forced out after it emerged that management lied about the true value of its property holdings.

The gross mismanagement at DII, combined with a dismal performance of DII’s core German property fund, prompted investors to remove more than €3bn from all of Deka’s funds in 2004 and 2005, though the German fund was hit hardest.

Since then, however, DII parent company Deka has largely put an end to the outflows and restructured its core German fund in the hopes of boosting its return.

Deka guarantees investors in its open-ended real estate funds, most of whom are retail clients, a return of 2% per annum. At last count, Deka had €17.8bn invested in its the products.