René Benko, the founder of Signa, has been arrested amid an extensive investigation by the Economic and Corruption Prosecutor’s Office, which has raised concerns about hidden assets related to his personal bankruptcy. The investigation focuses on the Laura Private Foundation, believed to hold substantial assets. Following the bankruptcy of Signa, which has become Austria’s largest, the future for creditors remains uncertain, with ongoing inquiries spanning multiple countries and expected to take years to resolve.
The unfolding saga surrounding entrepreneur René Benko has reached a significant turning point: The founder of Signa has been arrested, raising questions about the future of creditors seeking to reclaim their investments.
For the past eighteen months, the Economic and Corruption Prosecutor’s Office (WKStA) has been delving into Benko’s affairs, employing tactics such as phone tapping, message analysis, and interviews with employees and business partners. This investigation has led to suspicions that Benko may have hidden assets.
Central to the investigation is a private foundation, reportedly managed by Benko’s family members. According to the current allegations, Benko is believed to be the actual power holder and economic beneficiary of the Laura Private Foundation, which he allegedly concealed during his personal bankruptcy proceedings. Spokesperson Rene Ruprecht explains that this foundation is estimated to hold assets worth hundreds of millions.
Benko, once a prominent real estate investor, has now been arrested following the bankruptcy filing of his Signa Holding at the close of 2023.
A Complex Network of Companies
The outlook for creditors attempting to recover their investments remains uncertain. The exact amount that creditors might recover is also unclear. “Currently, we are navigating through multiple bankruptcy proceedings, which are expected to unfold over several years,” states Karl-Heinz Götze, a representative from the creditors’ protection association KSV 1870.
The extent of the liabilities across various cases is still unknown, reflecting the complexities of the numerous companies involved. Benko constructed an intricate web of over 1,000 companies, and the process of unraveling this network is ongoing.
Götze expresses hope that the ongoing criminal investigation could yield valuable insights for the bankruptcy proceedings, potentially aiding in challenging claims or damage recovery efforts. “Through these challenges, funds that were moved prior to bankruptcy might be reclaimed for the creditors,” he adds.
Amid the Signa bankruptcy, the Vienna prosecutor’s office is also directly investigating Benko himself.
A Historical Bankruptcy in Austria
Benko’s attorney has consistently denied all allegations and has not yet made a statement regarding his client’s arrest. For Benko, this marks a significant downfall. The 47-year-old entrepreneur, who launched Signa in 1999, transformed it into a vast real estate and retail empire, establishing connections within political and business circles.
Many investors had placed their trust in Signa, which ultimately encompassed major assets like the Galeria department store chain and Berlin’s KaDeWe. However, in 2023, the structure began to collapse, likely exacerbated by rising interest rates, resulting in what is now recognized as the largest bankruptcy in Austrian history.
As a result, the resolution of this case is anticipated to be lengthy. Götze predicts, “We believe that these proceedings may span several years, if not decades, given their complexity.” The nature of challenge claims and damage claims historically indicates a protracted timeframe. This particular case involving Benko is deemed even more intricate, suggesting that it will take many years to resolve.
Numerous complaints have been lodged against René Benko and the insolvent Signa group.
Uncertain Future for Pre-Trial Detention
The question of whether Benko will remain in pre-trial detention is still up in the air, as the prosecutor’s office has made a request for this measure. A court in Vienna is expected to make a decision within the next 48 hours. If pre-trial detention is ordered, the option for bail will likely be off the table due to the severity of the allegations.
Investigations into Benko are also proceeding in Germany, with prosecutors in Munich and Berlin collaborating with their Austrian counterparts to facilitate cross-border inquiries. Similar proceedings are taking place in Italy and Liechtenstein.