Bavarian bank suspected of Hypo fraud

The Bayerische Landesbank (Bayern LB) of Germany is suspected of having carried out criminal actions which led directly to the forced nationalisation of the bank by Austria in December 2009.

Bavarian bank suspected of Hypo fraud
Hypo Alpe-Adria Bank, Klagenfurt. Photo: APA/BARBARA GINDL

This was alleged in the final report of the special commission by the police on Hypo Alpe Adria in May 2014, which was published this week in the Austrian weekly business magazine Format.

According to Format, it was not only due to bad luck that the Hypo Alpe Adria had to be nationalised. Instead, the Republic of Austria had been "ripped off" by the Bavarian bank.  Former Hypo chief Franz Pinkl – who was appointed by the German bank – had taken an important role in those allegedly illegal actions.

Pinkl and former Bayern LB chief Michael Kemmer are suspected by Austrian police of fraudulent concealment concerning the then-current financial situation of the ailing bank. Pinkl and Kemmer have consistently rejected that allegation. As always in a criminal matter, the presumption of innocence applies.

The Hypo bank has had a turbulent recent history in Austria. In October 2012, a tug of war involving billions of euros broke out between the Bavarian state of Germany and Austria's federal government over the handling of the ailing bank.

Starting in 2008, Hypo's parent company of the time Bayern LB poured three billion euros into the Austrian bank.

In December 2012, experts decided that due to Hypo bank's parlous financial state, the money need not be repaid until the Hypo was properly rehabilitated.

The Bavarian bank said that the Hypo's cancellation of their repayments was "obviously" a breach of law. Later that year, Bayern Landesbank took the case to the EU.

In December, the EU Commission approved state financial aid of about €1.5 billion for the Hypo bank.

The situation around the bank is mired in controversy, with a recent petition urging a parliamentary investigation attracting 49,000 signatures, with an additional 140,000 signatures online.

The Moody's rating agency has downgraded Austrian banks as a result of the recent government decision to penalize creditors of the ailing bank through a "bail-in."

The scandal also led to the imprisonment of Wolfgang Kulterer, former CEO of the Hypo Alpe Adria state bank to a term of six and a half years for embezzlement and fraud.

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Suspected Austria bitcoin fraud sparks Europe-wide probe

Authorities investigating a suspected bitcoin-related scam centred in Austria have asked Interpol to help determine whether there might be perpetrators - and victims - of the scheme across Europe.

Suspected Austria bitcoin fraud sparks Europe-wide probe
“Hundreds” of people across Austria have complained of being defrauded by the “Optioment” scheme dealing in the digital currency, Christina Ratz, spokeswoman for the Vienna public prosecutor's office, told AFP on Thursday. Die Presse, a daily, put the number of possible victims as high as 10,000.
Two Austrians have been identified as being accused of fraud in the case, with more suspects possible as the case progresses, Ratz said.
Investors were promised returns of up to four percent per week for investing bitcoins into the opaque scheme, which initially did offer dividends before suddenly collapsing in November.
In January Austria's financial market watchdog brought Optioment to the attention of prosecutors, saying it suspected fraud, a pyramid scheme or violations of capital markets regulations.
The scheme appears to have used “multi-level marketing” in order to grow, with investors encouraged to find new clients themselves.
“I got my whole family involved. We put around 50 bitcoins in. The money's gone. I'm sure of it,” one young woman told a joint investigation by Die Presse and the public ORF TV station.
Another investor recalled an event promoting the scheme at the Pyramide hotel in Voesendorf, just south of Vienna: “They ran on stage and started running around, they were playing air guitar. It felt like a cult”.
Reports of the number of bitcoins invested in the scheme go as high as 12,000, worth around €95 million at current value, or more than double that at the peak of the boom in the currency.
Lawyers acting for the Austrians identified as the frontmen for the scheme issued a statement saying their clients did not handle any cash or bitcoins themselves, Die Presse reports.
The paper reported the men as saying that they were themselves defrauded by two mysterious figures behind the scheme, a Danish man, Lucas M., and a Latvian, Alex P.