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Austrian property tycoon René Benko has been arrested, as Vienna’s criminal prosecutors accused him of making inaccurate statements during the insolvency proceedings of his Signa property holding in an attempt to embezzle assets.
Law enforcement authorities said Benko was arrested on Thursday because he was considered a flight risk and prosecutors were concerned that 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 Benko over alleged improprieties with his business in the South Tyrol region. Viennese criminal prosecutors disclosed on Thursday that they formed a joint investigation team with prosecutors in Berlin and Munich to speed up cross-border investigations.
Benko’s arrest comes more than a year after his Signa conglomerate collapsed, leaving insurance companies, banks and other investors in Austria and Germany facing billions of euros in losses.
Prosecutors allege that Benko has been the ultimate beneficial owner of an Innsbruck-based family foundation that is named after his daughter Laura. The Financial Times last year reported that a Signa Group company transferred more than €300mn to two entities controlled by that foundation before the insolvency.
Austrian prosecutors allege that Benko did not disclose his control over the entity, dubbed Laura Foundation, during his personal insolvency proceedings.
“By doing this, he hid assets and excluded wealth that was kept in the foundation from the law enforcement authorities, the administrator and creditors,” prosecutors said in a statement, pointing to evidence gathered in a multi-month investigation that included telephone surveillance.
Benko is also accused of fabricating evidence by retrospectively producing an invoice to keep three valuable guns out of the authorities’ reach, according to the prosecutors.
Prosecutors also allege that Benko deceived Signa shareholders into taking part in a capital increase by pretending that his family foundation would also put in new funds, adding that he masqueraded external investors’ payments 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 luxurious mansion by Lake Garda in Italy, to a Liechtenstein-based foundation in a fake transaction that prosecutors see as potential embezzlement.
He is also alleged to have duped a foreign sovereign wealth fund which he persuaded to invest in a property project next to Munich’s central railway station. The bulk of the funds were then used illicitly for other purposes, the prosecutors add.
A lawyer for Benko did not immediately respond to an FT request for comment.
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