Austrian banker Meinl going rogue
Banker Julius Meinl V, head of an Austrian coffee-roasting dynasty and chairman of Meinl Bank, was arrested late on Wednesday on suspicion of defrauding investors through secretive share buybacks. The arrest follows 18 months of investigations by prosecutors and financial watchdog FMA, and mainly relates to Meinl’s role in the fall of Meinl European Land, a listed real estate firm started by Meinl Bank, Vienna prosecutors said. Among other crimes, British-born Meinl is accused of having orchestrated a buyback in which Meinl Land bought 1.8 billion euros ($2.4 billion) worth of its own shares to prop up the share price before it suddenly fell off a cliff in July 2007. Meinl, Austria’s 12th-richest man, took over his family’s Meinl Bank aged 23 after training at investment bank Bear Stearns in New York. In 2000 he sold the retail chain his family had built since 1862. Apart from the bank, which mainly does wealth management and investment banking, Julius used property acquired when he was still running a retail chain as the starting point for Meinl Land, which became a shopping mall developer in emerging Europe. Meinl Land sold shares to the public in an IPO in 2002 and between 2005 and 2007 raised a total of 4.3 billion euros in several share issues, mostly sold to Austrian retail investors. While Meinl Bank never officially held a stake in Meinl Land while it was listed, the bank owned the company that acquired and managed Meinl Land’s investments for a fee, it handled its capital measures and it acted as its market maker. The share buybacks took place between February and July 2007 and were not authorized by and not disclosed to shareholders until they were concluded. The buybacks boosted Meinl Land’s share price at a time when real estate stocks were falling across the world.
When they eventually became public, Meinl Land’s share price dropped sharply at the end of July 2007. The buybacks overlapped with a period in which a vehicle controlled by Meinl Bank was selling 620 million euros worth of the stock in the market, and with initial public offerings of two similarly structured sister company of Meinl Land. Meinl Bank does not dispute the buybacks, but says it did not need shareholder authorisation and denies it bought back shares directly from Meinl Bank or an affiliate.
Meinl Land was last year taken over by Israeli real estate investment firm Gazit Globe and renamed Atrium European Real Estate. Gazit Globe said it was not connected in any way to Julius Meinl or his bank. The two other companies Meinl started – Meinl International Power and Meinl Airports International – were taken over by rebel shareholders, and last week decided to sell all their assets and pay out the funds to shareholders.
Banker Julius Meinl V left a Vienna jail on a record 100 million euro ($134 million) bail on Friday in a taxi after spending two nights behind bars, dodging photographers waiting for him outside. That, at least for now, kept him from having a spot in the CNBC Rogue Financial Crime slideshow. Or shall we say the Hall of Shame?
http://www.cnbc.com/id/30009939
http://www.forbes.com/feeds/afx/2009/04/03/afx6253620.html
http://www.reuters.com/article/businessNews/idUSTRE5312X220090402?feedType=RSS&feedName=businessNews
