It is understood that Holzmann uncovered the potential losses from construction and property deals made before the old management board was ousted in 1996-97 and Heinrich Binder was made chief executive.
Binder has put in sweeping controls to crack down on fraud, but the enormity of the problem has only just emerged because of what appears to have been a concerted cover-up by some employees. Frankfurt state prosecutors are investigating allegations against numerous individuals who are believed to have knowingly signed off loss-making deals while taking and giving bribes.
"We feel absolutely desperate 鈥� we have been caught up by a very dubious past," said Gerhard Semar, spokesman for the 拢4bn-turnover firm.
Holzmann is waiting for a decision by the banks over a restructuring package involving at least 3000 redundancies. If an agreement is reached with the banks it must be approved by shareholders.
Alastair Stewart, analyst at investment bank Robert Fleming, said the revelations would undermine investor confidence in the German construction sector. "There will be a shake-out of German construction. A lot of subcontractors will go bust on the back of this and clients are going to be very careful who they do business with from now on."
