We spoke to the company, the public prosecutor’s office, the Bavarian Ministry of Economic Affairs and the insolvency administrator. That’s what they told us.
There is a lot going on at the Munich robotics startup and former model company: Franka Emika only announced in August that she had filed for bankruptcy, and now Bayerischer Rundfunk (BR) is reporting that the startup is also suspected of subsidy fraud to have committed.
Accordingly, the company is said to have applied for short-time work benefits in spring 2020 – at the start of the first Corona lockdowns – but some employees are said to have continued to work full time. What gives the story an additional flavor: According to BR research, both the employment agency and the Bavarian Ministry of Economic Affairs could have known about it.
Nevertheless, Franka Emika received around 15 million euros in funding from the so-called Bayern Fund in 2021. This is a funding pot for companies “whose existence would be threatened by a significant impact on the economy, technological or economic sovereignty, security of supply, critical infrastructure or the labor market in Bavaria,” as it says on the website of the Ministry of Economic Affairs. The minimum requirements to receive the funding are: total assets of more than ten million euros, more than ten million euros in sales revenue, and at least 50 employees.
When asked by Gründerszene, a spokesman for the ministry confirmed that Franka Emika “received funds from the Bavaria Fund totaling 15.1 million euros in several tranches in 2021 and the beginning of 2022 with the approval of the Bavarian Fund Parliamentary Control Commission.” The spokesman also states that the ministry “did not have any information about ongoing investigations” involving Franka Emika “at the time of approving the stabilization measure and disbursing the funds.”
A Bavarian golden boy – until now?
In fact, Franka Emika has been considered a model Bavarian company to date. The startup, founded in 2016 by Dirk Engelmann, Philipp Zimmermann and the brothers and robotics scientists Sami and Simon Haddadin, develops and builds (among other things) robot arms with a human sense of touch that can be used both in small craft businesses and in industry. According to the company, it currently has almost 100 employees.
The technology is considered easy to use and comparatively inexpensive. In the past, Franka Emika has won numerous awards – in November 2017, Federal President Frank-Walter Steinmeier even awarded the company the German Future Prize. In 2018, the then managing director Philipp Zimmermann announced that the company was expanding into the USA. In the same year, the renowned US magazine “Time” included one of Franka Emika’s robot arms in its list of the best inventions of 2018. According to BR, the Bavarian Ministry of Economic Affairs also long counted Franka Emika among other medium-sized and large companies among the Free State’s “success ambassadors” on the “Invest in Bavaria” website.
However, the startup can no longer be found there.
Employees are said to have given information
As the BR claims to have found out, the employment agency in Munich is said to have received indications as early as 2020 that there was possible subsidy fraud at Franka Emika. Accordingly, the authority received emails in which it was described that “a not insignificant number” of employees continued to work full-time even though the company had applied for short-time work. “In some cases weeks, in others months,” the BR quotes from this email. In addition, documents were attached to the email. It was signed “The Franka Emika employees”. In 2021, these information should also have been received by the Bavarian Minister for Economic Affairs, Hubert Aiwanger – including warnings “against an investment”.
The Employment Agency (AfA) does not comment on what happened next “for data protection reasons” – but when asked by Gründerszene, it explained that it would always follow up on leads. And: “If an initial suspicion is confirmed, this case is usually referred to the responsible law enforcement authorities.”
According to BR information, that is exactly what happened in this case. And at least the Munich public prosecutor’s office confirmed that “investigations are being conducted into the initial suspicion of subsidy fraud,” as a spokeswoman said. These are therefore directed against “former responsible parties” – but the presumption of innocence still applies.
What and whether there is anything behind the allegations is still unclear. When Gründerszene asked Franka Emika about the supposed emails from Franka employees to the AfA and the Economics Minister, managing director Patrick Pfaff at least said: “Nothing is known in the company about the tipster.” And: “Franka Emika and his employees are cooperating the public prosecutor’s office and support a complete investigation of the matter.” However, the “affected managing directors who were responsible at the time” left the company and no longer work for Franka Emika.
What’s next for Franka Emika?
The company is currently “still in the preliminary insolvency administration stage,” as insolvency administrator Matthias Hofmann has told Gründerszene. This usually means that assets are examined and confiscated so that any debtors can, in the best case scenario, be paid. At Franka Emika, however, the current focus is on looking for investors. “There are now several offers from potential investors that will be negotiated in detail in the coming weeks,” said Hofmann.
In August, Franka Emika announced that the company had had to file for bankruptcy due to “differences at the shareholder level”. Accordingly, the company was unable to conclude discussions with potential investors. “Our order books are full,” Managing Director Pfaff is quoted as saying in the insolvency notice.
The company declined to comment on what exactly happened. When asked by Gründerszene, insolvency administrator Hofmann said, “that there is no connection between the public prosecutor’s investigation and the developments that led to the bankruptcy filing in August.” He was also “very confident that it will be possible to find a good solution for to find the future of Franka Emika”.
When looking for investors, the current negative headlines – at least according to Hofmann – don’t play a role. Insolvency law makes it possible to “implement a future solution without a future investor having to deal in depth with such problems from the past. In particular, a future investor will not be liable for issues from the past, which makes finding a solution in the event of insolvency much easier,” says the lawyer.