Police raid Austrian HQ of Brown Thomas owner Signa

Austrian police have raided the headquarters of René Benko’s Signa Group, one of Europe’s biggest luxury real estate investors.

Innsbruck-based Signa has a €24 billion property portfolio that includes Arnotts and Brown Thomas in Dublin as well as high end departments stores Selfridges in London and KaDeWe in Berlin. It also owns prime hotels and property in Zurich, Vienna and Munich and New York’s Chrysler Building.

Police searched Signa headquarters on Tuesday, confiscating laptops, hard drives, documents and mobile phones, in a swoop connected to a sprawling investigation by Austria’s state prosecutor into corruption at the top of the government.

Benko, the billionaire owner of Signa, has cut a distinctive figure for years, mingling with powerful politicians across central Europe.

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In his native Austria, where he is a regular fixture in the tabloid press thanks to his reputation for extravagant parties, often combining champagne and Lederhosen, he was seen as particularly close to former chancellor Sebastian Kurz.

Kurz was forced to resign last October amid allegations of corruption.

Tuesday’s raid follows an announcement on Tuesday from the Austrian prosecutor for economic crime and corruption (WKStA) that one of Kurz’s closest political confidants, Thomas Schmid, a top finance ministry official, had turned state witness earlier this year and had provided investigators with more than 15 full days of testimony.

The WKStA warrant details dealings between Schmid and Benko, and alleges Benko sought to use aggressive accounting to avoid paying millions in taxes.

The warrant says prosecutors have reason to suspect Benko of bribery and incitement to abuse of office. It alleges he offered Schmid a lucrative job at Signa if he could use his influence, before he left government, to settle an investigation by tax authorities into his accounting methods.

Signa and Benko did not respond to a request for comment.

Bonds issued by the group dropped to their lowest level on record on Tuesday. A €300 million bond due in 2026 fell to just under 56 cents on the euro.

Though well-known in the German-speaking business world, Benko began a bold expansion into other real estate markets — using his trademark approach of political savvy, leverage and complex financial engineering — just as the pandemic hit the high-end retail, luxury and travel sectors upon which his property empire is built.

Signa has insisted that the high quality of his assets, which are typically in prominent city-centre locations, makes his business more resilient.

The company has struggled to raise new capital through public bond offerings in recent years, but it has continued to attract wealthy families and other co-investors, such as Thailand’s Central Group, to inject new money. — Copyright The Financial Times Limited 2022