May 24 (Bloomberg) -- Wolfgang Kulterer, a former head of Hypo Alpe-Adria-Bank International AG, was found guilty by an Austrian court of misusing funds by lending investors the money to buy preference shares in a unit of the bank.
Kulterer and a fellow board member, Guenter Striedinger, were sentenced to three-and-a-half and four years in jail, respectively, by the court based in Klagenfurt in southern Austria, today, spokesman judge Christian Liebhauser-Karl said. A lawyer and a tax consultant were also convicted for abetting the crime in 2004, he said.
“It was shown that the accused tried to generate funds because the bank was short of capital,” Liebhauser-Karl said by telephone about the reasons for the verdict. “In an economic sense it wasn’t capital that was created,” he said.
Kulterer and Striedinger were found guilty of having arranged loans by the bank to companies in Liechtenstein who used it to buy stakes in Hypo Alpe’s leasing subsidiary. That was a misuse of their authority to manage Hypo Alpe’s funds as well as violating capital rules in Austrian banking law, according to the court’s findings.
Kulterer’s lawyer Ferdinand Lanker and Striedinger’s lawyer Norbert Wess didn’t immediately return calls seeking comment. The defendants will all appeal today’s rulings at Austria’s highest court, Austria Press Agency reported.
When Kulterer was in charge, the Klagenfurt-based bank was controlled by the southern Austrian province of Carinthia, governed by the late populist politician Joerg Haider. The bank’s balance sheet ballooned to 30 billion euros ($38 billion) under Kulterer’s watch. He has already pleaded guilty in 2008 of false accounting to hide losses Hypo Alpe made with swaps while he was CEO.
Carinthia sold a majority stake in Hypo Alpe to Bayerische Landesbank in 2007. The investment in Hypo led to writedowns at BayernLB of about 3.7 billion euros. When BayernLB withdrew its support in 2009, Hypo Alpe was rescued and nationalized by Austria, which has since sought to bring those responsible for the near-collapse to court.
Kulterer and two other Hypo Alpe managers were acquitted in a separate criminal case last year, which will be retried this year. A similar share deal to the one that was ruled on today happened in 2006 and may be brought to court as well, prosecutors have said.
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