Big T's fall

Thomas Middelhoff pays price for excess

Thomas Middelhoff pays a high price for private excesses on corporate expenses. A court in Essen has sentenced the former Bertelsmann chief executive to a three-year jail term for the misuse of corporate funds at now-defunct retailer Arcandor. The flamboyant manager stumbled over his bling-bling lifestyle. Narcissism among corporate executives, common when Middelhoff was riding the new media wave at the turn of the century, is definitely out of fashion.

Middelhoff, nick-named "Big T" after the supposed size of his ego, was once a poster child for the media industry's exuberance. As chief executive of Bertelsmann, he turned the family owned media group inside out between 1998 and 2002. His biggest success at the time was a joint venture with AOL Europe and the later sale of Bertelsmann's stake in the venture for a hefty profit. The 1998 takeover of US publishing group Random House also turned Bertelsmann into the world's largest publisher of English-language books. But Middelhoff eventually fell out with the group's patriarch Reinhard Mohn, who later bemoaned that "vain managers are selfish and difficult to sway."

Middelhoff's conviction, though, is related to his post-Bertelsmann career. In 2005, he became chief executive of KarstadtQuelle, then a tradition-rich but struggling department-store chain. Rebranding the group as Arcandor and a tough restructuring programme failed to stop the decline. The company filed for bankruptcy in June 2009 - six months after Middelhoff's exit. While pushing through wage cuts for Arcandor's staff, he hired private jets for flights to New York and London, and helicopters for his 95-mile journeys from his hometown Bielefeld to Arcandor's headquarters in Essen.

According to prosecutors, total costs for the company added up to ^800,000 between 2005 and 2009. Arcandor also picked up a ^180,000-bill for a birthday present to Middelhoff's mentor Mark Woessner. A criminal court in Essen has now ruled that this was a misuse of corporate funds - an offence called "Untreue" (breach of trust) in German law. Middelhoff will probably appeal against the verdict.

He is also embroiled in a number of civil lawsuits with former business partners. In August, a bailiff seized his luxury watch from his wrist and auctioned it on the internet. Middelhoff's fall from grace is a throwback to past excesses - and a warning that new times call for more sobriety.