The Austrian Bank Scandal

From The Brussels Journal, Austrian Bank Scandal: When Socialists Play With Money

A bank owned by the Socialist trade union (which is close to the Socialist Party SPÖ, currently in opposition) loses billions in shady hedge deals while the union strike fund evaporates in the Caribbean and the bank gets implicated in a corruption case in Israel. Meanwhile the bank is financed by the European Investment Bank (EIB), and an Austrian Finance Ministry official (married to the Socialist ex-chief of the bank) ignores a crucial report and is appointed to the Executive Board of the European Central Bank (ECB). The Conservative Finance Minister claims to know nothing – after just having sold the Government-owned Post Office Savings Bank (PSK) to the socialist bank.

That’s BAWAG, in a very, very revealing story by Chris Gillibrand.

We know that there was a $1+ Billion loss in 2000 that was split up in six Carribean hedge funds and wriiten off by BAWAG. Somehow, some $525 Million of fake bonds were involved, but we don’t yet know how. Why was it inportant to conceal this loss. Well, according to Gillibrand, BAWAG was to acquire the Austrian Post Office Savings Bank (PSK) from the Austrian Government in November 2000. Not only did it give BAWAG

a new client base (previously many of its banking products had been sold through the network of trade union branches and membership has been declining) but it gave BAWAG a needed liquidity at that time. The Austrian Government (consisting of the People’s Party ÖVP and Jörg Haider’s party) pocketed the money from the privatisation and all were happy behind the scenes.

Now guess who comes out smelling like a rose and

declared on 23 March 2006 that “the bank’s balance sheet was now ‘clean and solid.’” He assures everyone that there are no more dead bodies in the cellar.

Ewald Nowotny

former socialist politician and vice-President of the European Investment Bank (EIB) from 1999 until 2003. He is now Honorary vice-President of the EIB. At the age of 29, he was appointed Chairman of the Board of Directors of the Austrian Post Office Savings Bank (PSK), a post he held until 1978. (emphasis added)

Just before the Refco scandal broke the EIB made loans of between €100 million and possibly €200 million. Gillibrand asks

Why such big loans so recently? On what basis did the EIB approve this financing? Did they not ask the Austrian Finance Ministry about the state of BAWAG’s finances? Why did not the Finance Ministry inform them? Surely even just the business in Israel and first news of the Caribbean scandal should have sounded alarm bells.

Did I mention Israel?

In Israel, there has been an extraordinary investment (among others) in a casino in Jericho, jointly funded by among others, the Palestine Authority, Casinos Austria and BAWAG. This was burned out during the Intifada but there appear to have been plans for another casino with the same ownership line-up in Southern Gaza! BAWAG is heavily involved in the still open corruption allegations against members of Sharon’s family.

This reads like a Ludlum novel!

BAWAG Austria Palastinian Authority Refco Finance Israel

One Response to “The Austrian Bank Scandal”

  1. Thank you for linking to my story. More news on the scandal still to come.

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