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Salzburg governor knew about rogue trader claim

The lawyer for the alleged rogue trader at the centre of a scandal that might cost the federal province of Salzburg up to 3 billion has accused the regional governor of not telling the truth when she said she did not know anything about the scandal until 3 of December.

Lawyer Herbert Hübel said that regional Governor Gabi Burgstaller's appearance on local television in which she said she had not known about the scandal before was not true.

The lawyer for the 41-year-old Monika R. said: "What she said on television is from the point of view of my client simply not believable and not realistic. I am asking her to take back the statement."

He handed over email evidence which his client had written to the regional Governor on 21 September in which she asked for support over the fact that her access to information had been cancelled on her return from holiday while the investigation was ongoing. On the email was an earlier email from a financial official reporting a loss of 130 million euros.

Burgstaller however claims that the email was not connected to the scandal that later broke.

The Mozart region of Salzburg is is still assesing the level of damage put in Austrian media as between one billion and 3 billion.

Alleged rogue trader Monika R , 41, was hired in 2001 to speculate with taxpayers money and made massive losses in 2006 after she bought Icelandic sovereign bonds.

The law graduate covered the losses by getting one of her staff to sign them off - then forged his signature after that - and used a complicated system to cover her tracks until 15 October, 2012, when the scandal first came to light, it is alleged.

Salzburg refers to the region of the same name that is one of nine federal provinces that make up modern Austria. The city of Salzburg is the capital of the province. The region is famous as the location for the Sound of Music film, as the birthplace of Mozart and for the Salzburg Festival that is attended by Europe's elite including royals like Prince Charles. It is the province of Salzburg that has lost the money - not the city.

The Salzburg province financial director (SPÖ) David Brenner learned about the scandal on 15 October, but instead of going public with the fact that there were 253 undeclared derivative ventures in addition to the 43 on the books - it was kept secret for six weeks - local media claimed.

In that time they hired an investigator who Austrian media has now revealed was a former business partner of hers at a German bank that had earned around 30 million euros on the speculative deals and who - they allege - spent that time covering her tracks.

The existence of 253 illegal, secret derivative investments in addition to the 43 on the city's books was only discovered when R, who had not taken a holiday for six years, was forced to go on leave so that irregularities could be checked.

She objected so strongly that colleagues suspected she was suffering from burn-out.

Salzburg's governor Gabi Burgstaller has already made a tearful apology to the people of the city, and has not ruled out stepping down.

She said: "I would like to express my sincerest and deepest regret and to apologise to the people of Salzburg for the impression that now exists that we, the regional government, have left Salzburg in grave turmoil.

"We have bought turbulence to what is one of the most wonderful regions of the world.

"I promise that I will do whatever I can to prevent damage to the province, and if it turns out that I did something politically wrong or that I misjudged the situation, I am prepared to step down."

When police arrived to question her mother-of-one R: reportedly said: "Don't take my baby away," and claimed she had only wanted to help the city - but since then her position has hardened and through her lawyer she claims that all of the deals were sanctioned by her superiors.

Her lawyer Herbert Huebel said not only is she innocent of any wrong doing but that her employers knew what she was doing.

He said: "It is always easy to accuse, buy my client is innocent of the charges - of that I am positive. She had complete authority for the business transactions both from her superiors and politically. That authority included complete freedom for the type of business that nobody complained about for years when it all seemed to be going well.

"The Federal Province of Salzburg wanted to get involved in this type of business, and my client carried it out. She did not operate alone, she reported to her managers and political masters. And she never pocketed a single cent - it was all for Salzburg. She has been questioned and has handed over the documents that prove her role, the truth will now come out.

"She herself feels herself 100 per cent not guilty. I believe that she will not be charged as she did not do anything wrong. "

One insider said: "The scandal comes at a bad time, there are early elections taking place. It may be that the real situation only emerges after that." When it was first announced the loss was put at 340 million, today Austrian media have put it at between 1 and 3 billion euros.

It was also warned that Salzburg might be the tip of the iceberg - and that other local authorities might be covering similar bad debts from risky investments. Consultant Gert Edlinger from HLC Communications estimates a potential figure of 8 billion euros in local government losses due to speculation in structured financial products gone wrong in Austria.

Austrian Times





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