Salzburg Probe Finds $1.8 Billion Hidden Funds, No Losses

Austria’s Salzburg province owns undisclosed investments worth 1.35 billion euros ($1.8 billion) that were accrued through bypassing the province’s government and hidden from auditors and supervisors.

The investments, which include funds, shares and bonds, come on top of interest rate swaps and other derivatives that had been known by the government and have a market value of 451 million euros, Salzburg’s Finance Chief David Brenner told regional lawmakers today. The investments were made with 1.7 billion euros of loans and the province’s net investment position is positive, according to Brenner, who presented a probe into the funds by auditors and investment analysts.

“They were made over years, hidden from all controlling bodies and eventually caused a political crisis and an understandable anger and confusion in the population,” Brenner said in a presentation broadcast via the Internet. Brenner last month announced he would resign next week following the presentation of the investigation.

Salzburg initially put the losses at 340 million euros when Brenner announced Dec. 6 that he fired a civil servant accused of having run up and hidden the investments. The probe into the province’s finances then found new and previously unknown investments made over more than a decade.

Salzburg, the region whose capital is the western Austrian town of the same name, is one of Austria’s nine provinces. It has a population of 534,000. Its official debt is 874 million euros, or about half the size of its investment portfolio.

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