Former head of Austrian bank BAWAG P.S.K., Helmut Elsner, waits for the announcement of the ruling in a Vienna courtroom July 4, 2008.
(REUTERS/Heinz-Peter Bader)
Austria court convicts bankers over heavy BAWAG losses
Former head of Austrian bank BAWAG P.S.K., Helmut Elsner, waits for the announcement of the ruling in a Vienna courtroom July 4, 2008.
(REUTERS/Heinz-Peter Bader)
VIENNA (Reuters) - A Vienna court sentenced nine people to prison on Friday for their roles in causing losses at Austrian bank BAWAG P.S.K. of as much as 1.7 billion euros ($2.7 billion) through risky investments.
The losses, which surfaced in 2006, were linked to the bankruptcy of U.S. futures trader Refco Inc, a BAWAG affiliate.
Helmut Elsner, BAWAG's former chief executive, was found guilty of breach of trust, fraud and false accounting and was sentenced to nine and a half years in prison by Judge Claudia Bandion-Ortner and her three co-judges.
"Helmut Elsner knowingly misused the authority to dispose of BAWAG's funds entrusted to him and thereby ... caused financial damages of 1.72 billion euros," Bandion-Ortner said in the verdict read out in court.
Fund manager Wolfgang Floettl, who made the investments that went awry, mainly in yen derivatives, was sentenced to two and a half years in prison, with 20 months of his sentence suspended.
The other seven defendants, who include the Austrian trade unions' former finance chief and a KPMG auditor, were convicted of breach of trust or aiding breach of trust, and of false accounting, and received prison sentences of between two and five years, some of which were partly suspended.
Former Refco CEO Phillip Bennett was sentenced to 16 years in prison in New York on Thursday.
Austria's once wealthy trade union federation, which
founded BAWAG in 1922, was forced to sell the bank, to buyout fund Cerberus Capital for 3.2 billion euros. Its president, a popular centre-left lawmaker, resigned.
The four judges heard 104 witnesses in 116 court sessions in almost a year of proceedings, and pored over about 250 ring binders of evidence before reaching their verdicts.
The defendants can appeal against both the guilty verdict and the sentences.
(Reporting by Boris Groendahl; Editing by Quentin Bryar and Sue Thomas)
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