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Former Chairman of Bankrupt Shipyard Arrested

June 20, 1996

BREMEN, Germany (AP) _ The former chairman of the bankrupt shipbuilder Bremer Vulkan Verbund AG was arrested after police raided his home and company offices as part of a fraud investigation.

Friedrich Hennemann, 60, was detained Wednesday night, said prosecutor Hans Janknecht, and a magistrate approved a formal arrest warrant Thursday.

Janknecht said Hennemann was caught trying to flush paper particles down a toilet at his home. Janknecht said the papers apparently concerned tax information unrelated to the Bremer Vulkan case, but investigators were still checking.

Investigators also believe that Hennemann has ``seven-digit″ sums of money deposited in bank accounts in Switzerland and Luxembourg, the prosecutor said.

Based on that and other confiscated evidence, including tickets booked for the United States, the former Bremer Vulkan executive remains in investigative custody to prevent him from fleeing or destroying evidence, the prosecutor said.

Twenty-nine sites in three north German cities were searched for documents Wednesday, according to authorities in Bremen, headquarters for Bremer Vulkan.

Hennemann, former board chairman of what was Germany’s largest shipbuilder, and other ex-managers are being investigated for the 1993 diversion of millions of German marks in European Union subsidies to the company’s western shipyards instead of to its shipyards in the former East Germany.

Over the past few years, Bremer Vulkan chalked up huge losses because of stiff competition and because of the strong mark, which makes German goods more expensive abroad.

Bankruptcy proceedings were opened in April after Bremer Vulkan failed to reach a settlement with its creditors on a rescue plan. The company said in February it had lost about 1 billion marks ($667 million) in 1995, then in March said its losses could mount to 1.5 billion marks ($1 billion).

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