Austrian banker Julius Meinl V released on 100 Million EUR bail

[Syt]

NYT: Austrian Bank Scion Is Accused of Fraud

PARIS — Julius Meinl V, the scion of a Viennese business dynasty whose name has been synonymous since the days of the Hapsburgs with luxuries like exotic coffee, handmade tortes and discreet private banking, has been jailed on suspicion of fraud at a company linked to the family.

Prosecutors accused Mr. Meinl of artificially bolstering shares of the real estate company Meinl European Land on the Vienna stock exchange, even as its investments in real estate across Eastern and Central Europe cratered.

Mr. Meinl was able to raise bail of 100 million euros ($135 million), and was expected to be released Friday morning. Although formal charges have not yet been brought, prosecutors feared Mr. Meinl might flee because he holds dual Austrian and British citizenship and because he owns a Falcon jet that he flies himself.

A lawyer for Mr. Meinl, Herbert Eichenseder, said his client "rejects all the accusations." The suspected $3 billion euro fraud ($4 billion) could also ensnare a former finance minister of Austria, Karl-Heinz Grasser, who has worked with Mr. Meinl in the past.

The news sent a shiver through the top management of Vienna's biggest companies, already on edge over rising losses at subsidiaries in Hungary, Slovakia, the Czech Republic and other former outposts of the Austro-Hungarian Empire.

Like such far larger, publicly traded Austrian financial giants as Erste Bank and Raiffeisen, Meinl Bank is heavily involved in Eastern Europe. In February, the credit rating agency Moody's Investors Service warned that Austria's banks were vulnerable as currencies collapsed and bad debts spread farther to the east.

"It's a huge case for Austria," said Gerhard Jarosch, a spokesman for the Austrian state prosecutor's office. "It's a highly complex case with many companies involved and several accused."

The case also caps a personal and financial history that tarnishes one of the best-known families in Central Europe. In an interview, Franz Vranitzky, the former chancellor of Austria, called the arrest "a pity for the family — the Meinls have been renowned in Austria, especially when it comes to food."

The Meinls got their start as purveyors of coffee and other delicacies during the Hapsburg era, and the brand remains an emblem at the coffeehouses that still dot Vienna. Julius Meinl opened the family's first coffee roasting shop and grocery in Vienna in 1862.

Mr. Meinl's grandfather, Julius Meinl III, rebuilt the franchise after World War II, and Julius Meinl V, 49, has been chairman since 1983.

Meinl European Land was a publicly listed offshoot of Meinl Bank, and Mr. Meinl is accused of using the bank to help the real estate firm secretly buy back shares.

Mr. Meinl was jailed late Wednesday after five hours of questioning, investigators said. According to Mr. Jarosch, Mr. Meinl was arrested "after a string of searches in his home and office and because of a suspicion that he could flee the country since he also has British citizenship."

The main accusations, Mr. Jarosch added, are that Mr. Meinl used money to prop up Meinl European Land's share price, portrayed it as a safer company than it really was to reassure nervous investors and overpaid firms and individuals for services like the sale of options.

Shares of Meinl European Land, which leaped as high as 21 euros ($27.77) in spring 2007, plunged after the 1.8 billion euro ($2.38 billion) buyback was revealed that summer.

Since then, a major stake in the company has been bought by an Israeli firm, and it is now known as Atrium European Real Estate and is under new management. Shares of Atrium now trade at 2.65 euros ($3.50).

Though officially separate, deals with Meinl European Land provided 30 percent to 40 percent of Meinl Bank's profit of $135 million in 2007.

Meinl Bank has roughly 2.5 billion euros ($3.3 billion) in assets under management, according to a spokesman for the company.

Bank executives insisted that Meinl Bank was safe despite Mr. Meinl's arrest. "We are stable, and this does not affect the bank at all," said Peter Weinzierl, a member of Meinl Bank's management board. "We think the charges are baseless."

Though the bank dates from 1923, it was only under Julius Meinl V that the focus of the family business shifted from food and coffee to the more elite, profitable world of banking.

In the late 1990s, he persuaded the rest of the family to sell off the grocery stores they owned and build up operations in real estate and banking. The family retains a flagship delicatessen in the heart of central Vienna as well as the coffee business. Mr. Meinl's sister, Jeanette, is known for personally tasting and choosing the blends.

Like the real estate company, Meinl Bank is focused on Eastern European markets that were among the fastest-growing on the Continent until the global financial crisis.

"We don't have any loan exposure, and our clients are high net worth individuals and corporations, especially in Russia, Slovakia, and all of the former Yugoslavia," Mr. Weinzierl said.

On Friday morning, Mr. Meinl is expected to be released from the 170-year old Josefstadt Prison, where the Nazis once kept captives and where in 2005 and 2006 the Austrians held David Irving, the British historian who was convicted of Holocaust denial.

The style of Mr. Meinl, who owns a black Bentley in addition to the jet, rubbed some members of the Austrian establishment the wrong way, as did his decision to wager the family's future on risky bets in Eastern Europe.

"This family was extremely famous and had a high standing, and this guy destroyed it," said Hannes Androsch, a former Austrian finance minister and veteran of the Vienna banking world who is now a private consultant.

"He was not able to run the business successfully," Mr. Androsch said. "He used the liquidity of the food business to feed the small bank. Initially, he ran it successfully. But like Wall Street and the rest of the financial system, he got greedy."

Mr. Androsch added, "I knew his grandfather and he was a gentleman."

Yes, the name reads Julius Meinl the 5th. Meinl is known here to most people for his fine delicatessen stores, coffee and rather exclusive restaurants.

Re: the bail - Ouch.

[jimmy olsen]

Man that's crazy.

[Syt]

Man that's crazy.

What is?

[Valmy]

Man that's crazy.

That there were four other guys named Julius Meinl?