Vienna - Eight former executives of Austria's BAWAG bank will learn their fate on Friday when a year-long trial in the country's biggest banking scandal draws to a close. The defendants, including former chief executive Helmut Elsner, 73, will hear the verdicts on charges of having misappropriated around 1.4 billion euros (2.2 billion dollars).
The scandal reverberated beyond the financial sector as the losses of Austria's fourth-biggest bank severely weakened one of its former owners, the Austrian Trade Union Federation.
The bank's problems started to unfold in 2005, when it was found that BAWAG had approved a large credit to US commodity broker Refco hours before the broker filed for bankruptcy.
In 2006, the Austrian national bank found that BAWAG had hidden losses of around 1.9 billion euros arising from speculative investments in the Caribbean between 1995 and 2000. The deals were carried out by Wolfgang Floettl, 52, a New York-based Austrian investor with family ties to BAWAG.
Floettl raised eyebrows during the final days of court proceedings when his wife, Anne Eisenhower, offered a deal to the judge: in return for not going to prison, her husband would earn 5 million dollars from new investments in the next three years and use the money to pay for trial costs and damages.
All defendants, including former CEOs, members of the management and the supervisory boards, a former bank auditor and Floettl, face prison sentences of up to 10 years. Most are charged with betrayal of confidence and falsification of balance sheets.
Three of the accused, including Floettl, have pleaded guilty to some of the charges. Elsner, the main defendant, maintained his innocence. He was the only defendant kept in custody during the trial, after fleeing Austria for the south of France in 2006.
In December 2006 the ailing BAWAG was sold off to the US-based hedge fund Cerberus.
The Austrian Trade Union Federation lost some of its economic clout and social standing after it was forced to sell its stake in BAWAG. Its ousted leader, Fritz Verzetnitsch, was criticized for having sanctioned the high-risk investments and living in a luxury flat owned by the bank.
The Social Democrats and the conservative People's Party, currently joined in a contentious coalition government, have accused each other of various forms of wrongdoing in the scandal.
