Vienna - The head of one of Austria's oldest business dynasties, Julius Meinl V, was detained on charges of defrauding up to 150,000 investors through his Meinl Bank AG, Vienna prosecutors confirmed Thursday. Meinl, 49, was detained Wednesday evening after being interviewed by prosecutors over irregularities regarding three companies set up by the bank, according to a report by the business magazine Format.
Prosecutors suspect Meinl of fraud and breach of trust over fund share certificates of Meinl European Land (MEL), a real-estate portfolio set up by the bank where Meinl chairs the supervisory board.
"One issue is that MEL shares were bought back with money provided by MEL's investors to prop up the price artificially," prosecution spokesperson Gerhard Jarosch told the German Press Agency dpa.
The banker and businessman, however, maintained that he has never been involved in MEL's business decisions.
Investors have lost several billion euros since MEL went public in 2002 with an issue price of 11.1 euros (14.8 dollars). The certificates traded below 3 euros on Thursday.
Charges against Meinl are also related to promotional material which touted MEL as a gilt-edged investment. In addition, the prosecution alleges that the bank received "extremely high fees" for issuing the certificates.
Jersey-based MEL was sold to the Citibank group and Israeli investor Gazit Globe Ltd., last year and was renamed Atrium European Real Estate Ltd.
Meinl Bank released a statement saying the arrest had "no effect on business operations," Austrian press agency APA reported. Its deposits were secure, the private bank said.
The Meinl group made its fortune with trade in coffee and food. Julius Meinl V., who holds a British passport, has sought to put the focus of the family business on banking.
