Nine men who allegedly brought down Austria’s fourth-largest bank BAWAG have gone on trial in Vienna. Prosecutors said they took the lender almost to bankruptcy, costing it almost 1.5 billion euros through risky trading on the Japanese yen and then hid the losses by cooking the books. They face charges of improper use of funds, fraud and accounting violations.
The revelation of major problems, dating back to the 1990s, triggered a run on the trade union owned bank in April last year and the Austrian government had to broker a 900 billion euro bailout.
BAWAG’s former chief executive Helmut Elsner is the main character in the scandal. The 72-year-old Elsner lent money to Wolfgang Floettl, the son on the bank’s former boss, for speculative investments through the hedge fund he managed.
When those bets went wrong, they hid the losses, which only came to light several years later when US authorities were checking on deals involving the collapsed futures trader Refco.
All nine defendants deny the charges.