How 'beyond the grave' cash row could seal Aldi reunification

They are one of Germany's - and the world's - wealthiest families.

But the secretive clan behind one half of the Aldi discount supermarket chain has found itself under attack for its ostentatious lifestyle.

Worse still, the attack has been delivered from beyond the grave by the widow of one of the brothers that built up the grocery chain.

Aldi was founded in 1913 in Essen, in the heart of the industrial and mining heartlands of the Ruhr in north-western Germany, by Anna Albrecht.

Yet its breakneck expansion only began when, in 1948 in the ruins of post-war Germany, her two sons Karl and Theo took over the running of the business.

The pair eventually fell out over whether Aldi - the name comes from an abbreviation of the words 'Albrecht Diskont (Discount)' - should sell cigarettes, with Karl arguing against, on the grounds that it would attract shoplifters.

The upshot was that the business was split in half in 1960. Karl and his family took control of Aldi Sud, the arm of the business operating in southern Germany, the UK, Australia and Ireland and which trades under the Aldi name in the US.

Theo and his family took control of Aldi Nord, the part of the business that operates in northern Germany, Belgium, the Netherlands, France and Spain and which also runs the Trader Joe's chain in the US.

It is this half of the family, the side behind Aldi Nord, that now finds itself attracting unwanted attention.

When Theo died in 2010, at the age of 88, a majority 61% stake in Aldi Nord was left in the hands of the Markus Foundation.

Two smaller foundations were each left with a further 19.5% stake - Lukas and Jakobus, which were respectively run by Theo's sons, Theo Junior and Berthold.

The arrangement is supposed to protect Aldi Nord from a takeover but has instead led to countless conflicts, particularly after Berthold's death in 2012.

These have now exploded very publicly with the death of Theo's widow, Cilly, in November last year at the age of 92.

In her will, which was heard in court in February but which was only made public last weekend in the newspaper Bild, Cilly attacked Berthold's five children and their mother, Babette, for their extravagance.

Both Karl and Theo, who were brought up in poverty after their father - a miner - was forced to retire due to emphysema, were notoriously frugal.

That showed itself in the way both arms of Aldi operate to this day, with no flashy displays and customers picking products out of boxes, while the brothers themselves lived simple lives and eschewed the trappings of wealth.

Theo, in particular, preferred to live a secretive life after he was kidnapped at gunpoint in 1971. A devout Catholic who attended mass every Sunday, he avoided being photographed, while taking a different route to work each day in an armoured car.

In her will, Cilly accuses Babette and her children of abandoning that frugality, even accusing them of siphoning €100m from the foundations.

She said: "With this document, I undertake to ensure the preservation of the philosophy of our family, which is to serve…Aldi Nord and to foster this, at the same time as setting aside self-interests and practicing a modest and abstemious way of life."

Most explosively, in her will, Cilly also suggests her son felt that none of his children were equipped to take over the running of the business.

She went on: "Berthold himself said when he was alive that he had considerable doubts as to the suitability of his children to respect the life's work of my husband who, with my support, built…Aldi Nord and to serve it with respect and with responsibility towards its thousands of employees."

It is not the first time Babette and her children have been attacked publicly by other members of the family. Berthold's brother, Theo Junior, said in 2014 that "the Albrecht name requires a modest lifestyle" and accused his sister-in-law of hurting the company with her lifestyle.

He followed that two years later by appealing against a court decision that enabled Babette to install two of her daughters on the board of the Jakobus Foundation.

He told the German newspaper Handelsblatt at the time: "My sister-in-law's behaviour in public, which is sometimes embarrassing, as well as the many lawsuits she is involved in are a burden for our company. My brother [Berthold] would be turning in his grave if he knew what was happening here."

Not that Babette is likely to be too concerned at the latest criticism. Her relationship with her mother-in-law had got so venomous that, when Berthold died in 2012, neither his mother or his brother were able to attend his funeral.

Babette, it has been reported, subsequently refused to disclose to them the location of the urn containing Berthold's remains. In response, neither Babette nor her children were allowed to attend Cilly's funeral last year.

Babette's public profile could not be more different from that of her late mother and father-in-law. She flaunts her wealth regularly at society events where her wealth is flaunted ostentatiously, while she has also appeared on 'Let's Dance', the German equivalent of Strictly Come Dancing.

She also fought a high profile court case some years ago after a former friend, Dorothee Achenbach, wrote a novel called 'Now Everyone Knows My Laundry' in which, Babette claimed, the main character - a greedy individual who indulged in an extra-marital affair - was based on her.

The in-fighting appears to be harming how Aldi Nord is trading. While the German courts found for Theo Junior at the end of 2017, depriving Babette and her children of influencing strategic decisions at the firm, the case is still rumbling on.

And, in her will, Cilly alleges that the firm's strategy has been hobbled for years by interference by Babette and her children. This is because, whenever a significant investment is made by the business, all three foundations have to approve it. Babette and her daughters deny having ever blocked any major decisions by the company.

There are other cultural factors that have also contributed to the relative fortunes of the two branches. Aldi Sud, under Karl, was always prepared to experiment with new concepts and was quicker to innovate.

Aldi Nord, firstly under Theo and then later under Berthold, remained closer to the original discount concept and was legendarily stingy about investing money. Theo Junior has frequently pointed out how much more profitable Aldi Sud is compared with Aldi Nord and how much more it appears to spend in renovating and maintaining its stores than Aldi Nord.

It certainly seems to be no coincidence that the more successful Aldi Sud has brought in more management professionals from outside the family than Aldi Nord.

Perhaps the only way out of this will ultimately be for Babette and her children to be bought out and for the two branches of the business to be reunified.

That would unwind a near 60-year old arrangement and would be tantamount to a revolution.

In the face of tough competition in Germany, particularly from Lidl, the pair now co-operate in some procurement, advertising, logistics and in running the mobile phone service Aldi Talk.

Non-family members in the management of both are said to be keen on a closer tie-up while the competition authorities, it is suggested, would be relaxed about it because one family already stands behind both businesses. The two themselves last year ruled out a merger.

However, as the founding family and its various branches becomes bigger and ever more fragmented, some members will inevitably want to sell.