In the first of a series of “Quick Takes” about Austrian news, Austrian businessman Rene Benko has been popping up in the news lately.
Benko is the Austrian property tycoon and founder of the SIGNA property and retail group, and has been making headlines recently due to financial troubles.
Once one of Austria’s richest people (#3 in 2022), Benko’s career and reputation has taken a massive nose dive in recent months, ever since SIGNA Holdings shareholders and lenders confirmed that Benko would be stepping down as the Chairman of the SIGNA Holding advisory board last November.
Since then, 46-year-old Benko has filed for sole trader insolvency (March, 2024) and, after an initial investigation, the Liechtenstein, Germany public prosecutor’s office has now opened a criminal investigation against him.
He isn’t just in legal trouble in Germany, however, as the Austrian business man is now also being investigated in Austria and Italy for a fraudulent bankruptcy and money laundering.
In Austria alone, alleged deception causing damages of over 25 million euros is being investigated. According to Kronen Zeitung, under Austrian law, if the loss exceeds 300,000 euros, and Benko is found guilty, there is a risk of a prison sentence of up to 10 years.
Here are key points in just some of the events involving Rene Benko over the last few months:
- Insolvency Proceedings: SIGNA Holding, Benko’s main investment vehicle, filed for insolvency in Austria in November, 2023. The company is Austria’s largest privately-owned real estate company. This move is similar to seeking bankruptcy protection in the U.S. Due to this, the company’s property portfolio, once valued as high as $30 billion, is now facing an uncertain future as it undergoes restructuring.
- Bond Market Impact: Bonds issued by one of Benko’s units have crashed to just a fraction of their face value, reflecting the turmoil within his empire. The debt markets have been closely monitoring this situation, but things do not look good so far.
- Creditor Claims: Around 30 creditors have made claims totaling approximately €2 billion against Benko. However, only €47 million of these claims have been recognized by the insolvency administrator. The remaining €1.95 billion in claims is being disputed. Those creditors can still file separate civil proceedings against Benko, which means legal cases against the real estate investor could possibly drag on for years. Austrian insolvency administrator Andreas Grabenweger has stated Benko has been “very cooperative” during the bankruptcy proceedings.
It is also worth noting, this isn’t Rene Benko’s first time dealing with legal issues as, back in 2013, he was convicted of bribery due to being involved in a tax case in Italy, which was confirmed by the Austrian Supreme Court in 2014.
He received 12 months probation for the conviction.
In summary, the financial challenges faced by Rene Benko and the SIGNA Group have drawn significant attention both in Austria and overseas, leading to the trending news about his insolvency and creditor claims.
Due to much of SIGNA Group’s business being carried out overseas (the company owns three of Germany’s largest retail companies, real estate in Italy, Switzerland, Luxembourg, Belgium and the Czech Republic, and even partially owns the prestigious Chrysler Building in New York and Britain’s Selfridges department store), Rene Benko and SIGNA Group are likely to be in the news for many months/years to come.
Do remember, however, Rene Benko has not been found guilty of anything as of April, 2024 and, as his legal problems could take years to conclude, it is advisable to reserve judgement until then.