Fallen Austrian property tycoon Benko pleads not guilty at third fraud trial

Austrian Tycoon Rene Benko Faces Third Fraud Trial Over Signa Collapse

Overview of Rene Benko's Legal Troubles and the Signa Group Collapse

Background of the Case

VIENNA, Nov 4 (Reuters) - Fallen Austrian property tycoon Rene Benko pleaded not guilty to charges of aggravated fraud and insolvency-related fraud as his third criminal trial opened on Wednesday.

Benko, 49, has been convicted of insolvency-related fraud in two previous trials, the first cases stemming from an ongoing investigation into potential crimes committed in relation to the collapse of the Signa group he founded.

Prosecutors estimate the total damage caused by those suspected crimes at €1.5 billion ($1.7 billion).

Signa Group's Rise and Fall

Signa's Peak and Assets

At its peak, Signa controlled all or part of luxury properties including five-star hotels in Venice and Vienna and the Chrysler Building in New York, as well as high-end department-store chains such as Britain's Selfridges and Switzerland's Globus. Benko became a self-made billionaire.

Collapse and Impact

Signa's collapse, which began with insolvency filings in late 2023, is the biggest bankruptcy in Austria's history and burned investors including wealthy individuals and blue-chip companies in neighbouring Germany and Switzerland.

Details of the Third Trial

The €5 Million Guarantee

This week's trial, which is due to last until Thursday evening, centres on a €5 million notarised guarantee Benko gave Austrian industrialist Hans Peter Haselsteiner and Haselsteiner's family trust in relation to an investment in Signa in November 2023.

Additional Fraud Allegations

Benko is also accused of insolvency-related fraud over an €80,000 hunting rifle that prosecutors say he hid from creditors trying to recoup the money they had invested.

Potential Sentencing

If convicted, Benko, who was transferred to house arrest last month after serving two-thirds of a 30-month prison sentence, faces up to 10 years in prison.

Courtroom Testimonies and Proceedings

Benko's Defense

"You cannot imagine how much pressure he (Haselsteiner) applied," Austrian media quoted Benko as telling the court in his home city of Innsbruck, describing tense discussions over the investment in Signa in early November 2023, when he said Signa's sporting goods retailer SportScheck needed money. 

SportScheck filed for insolvency less than a month later, and the prosecution argued that the guarantee was meant to deceive Haselsteiner and his family trust.

Judge and Witness Statements

Judge's Inquiry

Asked by presiding judge Norbert Hofer if Benko could have afforded to pay Haselsteiner €5 million at the time, Benko said: "No, but it was unimaginable to me that the situation would arise in which the guarantee would have to be executed."

Haselsteiner's Statement

Addressing the court, Haselsteiner summarised his agreement with Benko as: "I will get this 5 million back from you." He added of Benko: "He solemnly swore."

Additional Information

($1 = 0.8905 euros)

(Reporting by Francois Murphy; Editing by Kirsten Donovan)