Deutsche Finance Sues Germany’s BVK in US Court for Defamation

German investment firm Deutsche Finance said it’s suing Bayerische Versorgungskammer in a U.S. court, alleging the pension group unduly interfered in the management of several real estate investments and then blamed it for the resulting losses.

Deutsche Finance Holding and its U.S. subsidiary Deutsche Finance America filed a lawsuit in Delaware State Superior court, accusing BVK among other things of breaching its contractual obligations and making defamatory statements about it, according to a press release. The plaintiffs are seeking unspecified compensatory damages in a jury trial.

BVK said in an emailed statement that while it hasn’t received the lawsuit, it will defend itself “decisively.” The accusations “are another transparent attempt by Deutsche Finance to distract from its own responsibility,” BVK said.

The proceedings are the latest twist in a relationship that soured when BVK, Germany’s largest pension manager under public law, ran up losses that it warned could rise to $1 billion in a fund through which it invested several U.S. properties. The deals, made with the help of Deutsche Finance and U.S. developer Michael Shvo, included landmark properties such as the Transamerica Pyramid in San Francisco and New York’s Coca-Cola office building.

BVK has said it invested in the properties indirectly through a fund structure, with the funds’ managers making investment decisions in cooperation with Deutsche Finance, and Shvo and his companies acting as service providers to the properties.

Deutsche Finance said in January that none of its affiliates had “discretionary decision-making authority with respect to the selection or execution of the investments” and that the role of its U.S. subsidiary was limited to “structuring, coordinating and regulatory functions.”

Deutsche Finance alleges that BVK regularly overstepped its role as passive investor and contributed to the losses by delaying decisions on refinancings, additional budgets and leases when markets soured, according to the press release and a copy of the lawsuit provided by an external spokesperson.

Bloomberg News couldn’t confirm independently that the lawsuit was filed.

BVK, which like Deutsche Finance is based in Munich, has said that it invested about €1.6 billion ($1.9 billion) in U.S. real estate with the help of Deutsche Finance and Shvo. It has warned that, at the fund level, losses could reach €853 million.

It fired its former head of real estate investment management over alleged compliance violations that include what it called “inappropriately close relationships with business partners.” The ex-employee has challenged the dismissal in court.