Munich’s state prosecutor is looking into allegations of money laundering at the Signa Group, René Benko’s collapsed luxury property empire. A spokesperson for the prosecutor confirmed to the Financial Times on Thursday that preliminary investigatory proceedings had been initiated.
Several criminal complaints about activities at Signa companies have been received “since the end of last year”, it said. “The facts of the case are being examined in detail from a legal perspective, also with regard to other possible criminal offences.”
The prosecutor’s exact jurisdiction is still being clarified, the spokesperson added.
The investigation is looking at property developments by Signa in Bavaria, a person familiar with the matter said, and the way in which large sums of money were transferred in relation to the developments. Signa’s main holding companies are all domiciled in Austria. It is unclear whether any of them may also be part of the scope of the Munich investigation.
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News of the investigation was first reported by the Austrian Press Agency and Germany’s Bild am Sonntag.
[ Signa company’s failure due to ‘illicit’ transactions, creditors allegeOpens in new window ]
The Financial Times reported on Tuesday how creditors to one arm of the Signa conglomerate – which has fractured into several competing bankruptcy estates since its collapse late last year – believe hundreds of millions of euro were misappropriated from the company.
“We have not been informed of any investigations by the Munich public prosecutor’s office,” Mr Benko’s lawyer said, pointing out that his client’s name had not been mentioned by authorities in connection with any potential proceedings against Signa or related entities.
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Mr Benko intends to fully co-operate with authorities to help with any investigations should they get in touch, he said.
At its height Signa sat atop a sprawling empire of luxury buildings and addresses in Europe and America including New York’s Chrysler Building, London’s Selfridges and Berlin’s KaDeWe. Selfridges in turn owns Irish department stores Brown Thomas and Arnotts.
Behind its glamorous showcase of addresses, however, stood a highly leveraged network of more than 1,000 corporate entities run by Mr Benko and a small loyal team from the company’s headquarters in the alpine city of Innsbruck.
As interest rates rose in the US and Europe in 2022 and 2023, Signa’s financial strength was sapped. Mr Benko has spent much of the past 18 months racing to try and plug widening financial holes in his businesses.
[ Signa creditors push to oust management over property fire sale fearsOpens in new window ]
Mr Benko – a paper billionaire by his early 30s, whose rapid ascent to wealth propelled him to celebrity status in central Europe, with politicians regularly gracing his lavish parties – declared himself personally insolvent last week. It is unclear how much money remains in his opaque family trusts, however, which are held in his mother’s name in Austria and Liechtenstein.
Analysts at JPMorgan last year estimated that Signa owes more than €13 billion of debt, but the total could be considerably higher given the array of different instruments and relationships Mr Benko used to leverage the group. Creditors to the group’s main holding companies were this week told they could expect to recoup a third or less of what they are owed over the next few years.
Among the high-profile victims is Switzerland’s Julius Baer. The private bank’s chief executive, Philipp Rickenbacher, was pushed out at the end of January after the lender wrote off the entirety of a poorly collateralised SFr606 million ($689m) trio of loans it had extended to Signa.
Several civil and criminal complaints against Signa have been filed by aggrieved investors. Last month a large group of creditors alleged criminal behaviour at the company in a complaint to Austria’s anti-fraud prosecutor. The Austrian prosecutor has yet to state whether it intends to open a case. – Copyright The Financial Times Limited 2024
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