• Austria's news in English
Banking scandal
Former banking boss in prison

Former banking boss in prison

Staff reporter · 11 May 2014, 16:58

Published: 11 May 2014 16:58 GMT+02:00

Facebook Twitter Google+ reddit
Wolfgang Kulterer, the former CEO of the Hypo Alpe Adria state bank, is in prison for six and a half years for embezzlement and fraud. 
His sentence was supposed to start last September in Klagenfurt. However a shoulder operation (after a horse riding accident) meant he could apply for a postponement.
In spring, he and his lawyer tried to postpone the sentence again, but judges appeared to have lost their patience and rejected his request. 
The jail in Klagenfurt, Carinthia is starting to become something of a 'celebrity prison'. Kulterer has joined Hans-Jörg Megymorez, the former CEO of Carinthian Holding (KLH) and Josef Martinz, the former Carinthian chairman of the conservative Austrian People’s Party (ÖVP), both of whom were jailed for their respective roles in the Hypo scandal. 
The Österreich tabloid noted that Kulterer has had to swap his champagne and caviar lifestyle for a menu of noodles and mushroom sauce, a thin mattress and a wash-basin, rather than a luxury en-suite bathroom. 
The Hypo bank has become a national bogeyman for a country fed up with the government's failure to resolve the issue.
And its problems have leaked beyond Austria's borders. It's a story that sounds a little like a detective movie from the 1970s - involving money laundering, connections to various mafia groups in south-east Europe, secret party funds, and a chronic lack of accountability.
It all goes back to Jörg Haider, Carinthia's former governor and leader of the far-right Freedom Party of Austria (FPÖ), who died in a car crash in 2008. 
The bank was literally his 'personal wallet' and the most successful tool for illegally financing the FPÖ until Haider's death. 
Wolfgang Kulterer told Kurier newspaper: "My condemnation in public has been very controlled: I'm guilty because Haider is no longer here". 
Many of the bank's hidden transactions were designed and implemented via a “triangle of friends” which included Haider, Kulterer and the former Croatian Prime Minister Ivo Sanader. 
The politicians and the bank manager had created the perfect scheme to launder money.
In 2007 the German Bayerische Landesbank (BayernLB) bought a majority share in Hypo and began investing fresh capital. But two years later it was forced to sell Hypo back to the Austrian government to prevent financial collapse. The Austrian government has continued to inject huge amounts of money to save the crumbling institution. 
Story continues below…
It is expected that between 12 and 19 billion euros of outstanding loans will never be paid back.
To avoid bankruptcy, Austrian taxpayers have had to cover these losses, and the backlash from being told they will foot most, if not all, of the bill for winding down the ailing bank while bearing the brunt of spending cuts has been swift. 

A Facebook campaign by a parents' group against school spending cuts shows a hippo - the bank's symbol - flattening a pupil.

Observers, financial experts and politicians have concluded that the affair threatens not only Hypo's creditors, but also Austria's credit rating. Furthermore the close ties Austrian banks appear to have with the country's political parties have been shown to be some of the most opaque in the EU.
More than four years after the state's emergency takeover, Hypo has become a lightning rod for grass-roots criticism of both banks and the government ahead of European elections on May 22nd.
It's an issue which is not going to go away in a hurry. 

Staff reporter (news@thelocal.com)

Facebook Twitter Google+ reddit

Your comments about this article

Today's headlines
Verdict on swimming pool rape case overturned
The Theresienbad swimming pool in Vienna. Photo: Wikimedia

An Iraqi refugee who was jailed after claiming it was a sexual emergency when he raped a boy in a swimming pool has had the sentence overturned.

Vienna Comic Con promises to be 'bigger and more galactic'
Cosplay star Yaya Han. Copyright: Yaya Han/Bryan Humphrey

Comic Con returns to the Austrian capital on November 19th-20th at the Messe Wien.

Three refugees arrested on drugs charges
Cannabis plants. Photo: J. Patrick Bedell/Wikimedia

A gang of three Afghani drug dealers has been busted in Vienna.

Hungarian woman crushed by snowcat piste machine
Snowcat machine. Photo: Melensdad/Wikimedia

A young Hungarian woman has died after being crushed by a snowcat piste machine on the Dobratsch mountain in Carinthia.

Austrian policeman sentenced over 'Heil Hitler' salute
Photo: Flickr

A policeman in Austria was sentenced on Thursday for shouting "Heil Hitler" at a driver during a traffic check at the Hungarian border in April.

Scary clown craze endangers crucial work of clown 'doctors'
Photo: Bojan Tavcar

Within the last couple weeks, disturbing events involving masked individuals has caught public attention in Austria.

Chimney sweep rescues lost mushroom picker
Photo: James Lindsey/Wikimedia

A 76-year-old Austrian man who went out mushroom picking almost froze to death after getting lost and spending the night in the forest.

Refugees sold into forced prostitution
File photo: UNHCR

Female refugees are being sold into forced prostitution in Austria, a police investigation into human trafficking has found.

Driverless bus takes a spin around Salzburg's old town
The Arma driverless shuttle bus. Photo: Navya

A driverless minibus has made a test journey in the city of Salzburg.

No jail time for asylum seeker who dumped baby in road
Photo: Paul Gillingwater

A man who grabbed his own child and dumped her in the middle of a busy road has been given a nine-month suspended sentence.

Sponsored Article
How to vote absentee from abroad in the US elections
12 brilliant German words you won't find in English
Sponsored Article
Last chance to vote absentee in the US elections
Five films which will change your mind about Austrian cinema
Those surprising Austrians!
Sponsored Article
How to vote absentee from abroad in the US elections
100 years since the last emperor's death
Afghani family's new home in Austria
Der you learn Deutsch?
Delighted by the light
Beware these passport scams
Of course we skipped Oarsch
Foodies rejoice at the choice!
Travel & Tourism
10 years after her escape from captivity
Surviving the Brexit for British expats
Day 2 of the World Bodypainting Festival 2016
Is Islam hostile to Western society?
Bodypainting festival in southern Austria
Europe's ice cream capital
Best Austrian beauty spots
Travel & Tourism
Three days in Vienna as a tourist
How to make friends in Austria
jobs available