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Austrian real estate tycoon René Benko was arrested after Viennese criminal prosecutors accused him of making false statements during the bankruptcy proceedings of his property holding company Signa in an attempt to embezzle assets.
Law enforcement said Benko was arrested on Thursday because it was thought he might flee and prosecutors were concerned he might tamper with evidence. They also accused him of forging a document.
In an unrelated investigation, Italian police in December issued an arrest warrant for Bank over alleged irregularities in his operations in the South Tyrol region. Viennese criminal prosecutors announced Thursday that they have formed a joint investigative team with prosecutors in Berlin and Munich to speed up cross-border investigations.
Benk’s arrest comes more than a year after his conglomerate Signa collapsed, leaving insurance companies, banks and other investors in Austria and Germany facing billions of euros in losses.
Prosecutors claim that Benko was the ultimate beneficial owner of the Innsbruck-based family foundation named after his daughter Laura. The Financial Times reported last year that the Signa Group company transferred more than 300 million euros to two entities under the control of that foundation before bankruptcy.
Austrian prosecutors allege that Benko failed to disclose his control of the entity, called the Laura Foundation, during his personal bankruptcy proceedings.
“In doing so, he hid assets and seized wealth held in the trust from law enforcement, trustees and creditors,” prosecutors said in the statementpointing to evidence gathered in a months-long investigation that included phone surveillance.
Benko was also accused of falsifying evidence by subsequently presenting an invoice to keep three valuable weapons out of the hands of the authorities, according to prosecutors.
Prosecutors also claim that Benko tricked Signa shareholders into participating in the recapitalization by pretending that his family foundation would also invest new funds, adding that he disguised payments from outside investors as his own contributions by setting up a complex chain of money transfers between different legal entities.
Benko is also accused of selling Villa Eden Gardone, a luxury villa on Lake Garda in Italy, to a Liechtenstein-based foundation in a sham transaction that prosecutors see as potential embezzlement.
He is also alleged to have defrauded a foreign sovereign fund that he persuaded to invest in a real estate project near Munich’s main train station. The largest part of the funds was then illegally used for other purposes, prosecutors add.
Bank’s lawyer did not immediately respond to the FT’s request for comment.
