German police have raided the offices of building giant Philipp Holzmann, investigating allegations of fraud linked to the firm's near-collapse in 1999.

More than 200 police officers and 10 prosecutors conducted the search, which is concentrating on offices in Cologne and Frankfurt, but covers premises across the country. It is expected to last two to three days.

Holzmann welcomed the raids, which were triggered when the company itself filed a legal complaint against unnamed former managers of the firm. In a statement the company said it would support the investigation.

The 150 year-old company is Germany's second-largest builder. Last year it came close to collapse, after the management ran up losses of 2.4bn Deutschmarks ($1.25bn, £770m).

The company was rescued in a government-led 4.3bn Deutschmark ($2.27bn, £1.37bn) deal.

The rescue of Holzmann revived the political fortunes of Chancellor Gerhard Schroeder, but his government came in for sharp criticism elsewhere in Europe as doubts were cast over its commitment to a free market.

The European Commission has said it may investigate the state aid for the company.

Holzmann management under scrutiny

During the financial crisis, Holzmann's chief executive and chief financial officer stepped down, and there are calls for other managers and members of the supervisory board to accept part of the responsibility.

Prosecutors are now investigating charges of alleged fraud and breach of trust against the firm's former management.

Holzmann's troubles shook corporate Germany, with many wondering how the firm's executives had managed to hide the losses from creditors and the supervisory board.

At the same time it cast once again a shadow over Deutsche Bank, Holzmann's main creditor and second-largest shareholder.

The bank's role in the collapse of the building empire of Juergen Schneider five years ago is still a matter of much debate.

It was the most spectacular collapse of a German construction firm so far, with losses of more than 5bn Deutschmarks.