Wednesday, 17. September 2014 - 23:09
17. 12. 12. - 17:00
The region of Velden in Carinthia is the latest named as having been involved in risky financial investments after losing close to 500,000 Euros of taxpayers money.
If correct it will mean Velden is the latest in a number of local government bodies that has tried to profit from speculative investments.
Now that the tide has turned and the losses became obvious, Velden wants to cancel the investment - which is why it has now become public.
The community currently negotiates with its bank about compensation to minimise its losses.
Carinthian local government representative and former Velden mayor Ferdinand Vouk (SPÖ) said that risky financial endeavours – like in Salzburg or Lower Austria – did not happen in Carinthia in an interview with the state broadcaster ORF a few days ago.
However, recent discoveries reveal that the Carinthian community of Velden finalized a speculative trade exactly five years ago – in Vouk's time as mayor.
A subsidiary of the community has finalized an interest hedge with a maturity of 10 years in 2007. Now, five years later, the accounting loss is estimated at 1 Million Euro while the interest income is only 510,000 Euro. The bottom line is about 490,000 Euro of projected losses which are lost in the gamble. Financial derivatives are very risky investments.
Vouk says that the decision to finalize this deal was supported by all parties in the regional council. The common goal was to minimize the interest burden on the region. Not only did the supervisory committee check and approve the transaction, also the bank never mentioned any risk.
Recently, an external auditor checked the transactions in question. His analysis concludes that the bank did not properly advise their client. Both parties already negotiate about the closing of this transaction since August. According to Vouk, the bank already accepted responsibility for a major part of the loss.
Financial expert Robert Süß from the consultancy Finanzbuddha confirmed that mayor Vouk ordered the transaction to be checked for hidden risks. Experts informed him that contrary to statements of the bank, this transaction is a speculative trade and not a classic hedge. Also, the earnings of the bank weren't market-standard, otherwise the region would have lost a lot less money with this investment.
Recently the bank agreed to cover 80 per cent of the losses which was answered by a counter-offer including 100 per cent coverage. If the bank does not comply, criminal charges will be considered. Whatever the outcome, at least damages of 90,000 Euro will be left to the region to deal with.
Brit Soldier Rescued After Climbing Mountain In T Shirt
A British soldier who tackled the frozen Austrian Alps wearing just shorts and a T-shirt has been rapped by officials after he had to be rescued from the snowy peak.
Jobless Footballers Join Dole Rangers To Showcase Their Talent
Austria's job centres are entering the big league - by creating a football team to allow jobless footballers to showcase their talent and get work.
Good manners guide for Arabs dropped by Salzburg tourism officials
Tourism chiefs in Salzburg have been forced to withdraw a controversial etiquette guide for Arabs that aimed to stop them trying to haggle over prices, cooking in their rooms, and dumping their litter around the region.
Strongman pulls worlds largest twinjet plane out of hanger
A strong man known as the "Austrian Rock" has notched up his 16th endurance world record, this time by pulling a Boeing 777 plane from its hangar at the Vienna International Airport in Schwechat.
Austria receives record visitors from UAE
Austria received a record amount of visitors from the United Arab Emirates in 2013, according to the Austrian National Tourist Office.
Cheetah enclosure rebuilt after run of escapes
After a run of great escapes from the cheetah residents of Salzburg Zoo, the big cat enclosure has been rebuilt in an effort to prevent further breakouts.
Hosting Eurovision 2015 in Austria already complicated
The search for a suitable location for next year's Eurovision Song Contest taking place in Austria is already hitting complications with still 11 months to go until the event.
FIFA extend Taboga ban worldwide
The life time football ban imposed upon player Dominique Taboga by the Austrian Football Association (Ã–FB) in February for match-fixing has been extended by FIFA today to include worldwide activities.
Possible move to Newcastle for Soriano
Football player for Salzburg Jonathan Soriano has been linked to a move to Newcastle United, according to reports in Austrian media.
Refugee house shelved after local resistance
Plans to introduce a controversial refugee home in the State of Salzburg have been put on hold after the owner of an inn withdrew his proposal.
The most popular stories –
last 7 days