Austrian bank BAWAG's former chief executive, Helmut Elsner, and others gambled away at least 1.4 billion euros ($1.9 billion) in one of the world's biggest speculative failures, a prosecutor said yesterday.
Elsner, hedge fund manager Wolfgang Floettl and seven other men faced Judge Claudia Bandion-Ortner, an accessory judge and two lay judges in a Vienna court yesterday, accused of committing or aiding breach of trust and false accounting.
State prosecutor Georg Krakow said in his initial statement the accused had invested amounts they were not entitled to in financial instruments that were too risky, upping the ante whenever they lost the money, and then hid the losses to evade their responsibility.
"This is a case of financial jugglers who have caused one of the biggest banking losses worldwide ever," Krakow told the court.
The BAWAG case rivals that of Britain's Barings bank in size. Barings lost around 850 million pounds ($1.7 billion) in 1995 due to unauthorized speculation by one of its traders.
"The investments were not just highly risky, their risks were also more or less identical," Krakow said. They were "above the legal levels from the beginning. They were not backed up by appropriate collaterals".
"Elsner was the head of the group," Krakow said. "Elsner threw good money after bad, over and over. He knew that he was not allowed to do what he did."
BAWAG was founded in 1922 as "Workers' Bank" to manage the Austrian trade union federation's funds. The trade union had to sell the bank to buyout fund Cerberus Capital for 3.2 billion euros ($4.35 billion) after the offshore losses became public last year.
Elsner, hedge fund manager Wolfgang Floettl and seven other men faced Judge Claudia Bandion-Ortner, an accessory judge and two lay judges in a Vienna court yesterday, accused of committing or aiding breach of trust and false accounting.
State prosecutor Georg Krakow said in his initial statement the accused had invested amounts they were not entitled to in financial instruments that were too risky, upping the ante whenever they lost the money, and then hid the losses to evade their responsibility.
"This is a case of financial jugglers who have caused one of the biggest banking losses worldwide ever," Krakow told the court.
The BAWAG case rivals that of Britain's Barings bank in size. Barings lost around 850 million pounds ($1.7 billion) in 1995 due to unauthorized speculation by one of its traders.
"The investments were not just highly risky, their risks were also more or less identical," Krakow said. They were "above the legal levels from the beginning. They were not backed up by appropriate collaterals".
"Elsner was the head of the group," Krakow said. "Elsner threw good money after bad, over and over. He knew that he was not allowed to do what he did."
BAWAG was founded in 1922 as "Workers' Bank" to manage the Austrian trade union federation's funds. The trade union had to sell the bank to buyout fund Cerberus Capital for 3.2 billion euros ($4.35 billion) after the offshore losses became public last year.
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