Ex-Hypo Alpe CEO Sentenced to 30 Months in Jail Over Fund MisuseBoris Groendahl
Wolfgang Kulterer, the former head of Hypo Alpe-Adria-Bank International AG, was sentenced to two-and-a-half years in prison by an Austrian court after he was found guilty of approving bad loans before the lender’s near-collapse.
The court in Klagenfurt, Austria, ruled that Kulterer and another executive acted improperly when they agreed to lend 2 million euros ($2.7 million) to a regional airline that later went bankrupt, said Bernd Lutschounig, the court spokesman. The other banker received a two-year sentence.
Austria nationalized Hypo Alpe in 2009 to avert its collapse after losses piled up and its then majority owner, Germany’s Bayerische Landesbank, pulled its support. The government installed a task force of lawyers, police, prosecutors and central bank auditors to find out who was responsible for the losses that forced the bailout.
“The court found that the accused knowingly misused their authority and knowingly caused the damage to the bank,” Lutschounig said in a telephone interview.
The bankers’ lawyers, who had pleaded not guilty in court, appealed the verdict immediately, Lutschounig said. Kulterer’s lawyer, Ferdinand Lanker, wasn’t immediately available to comment.
The ruling came after Austria’s highest court overturned an earlier acquittal by a different Klagenfurt judge and ordered a retrial. Kulterer was convicted in May of misuse of funds in a separate case, where an appeal is pending.
When Kulterer was in charge, Hypo Alpe was controlled by the southern Austrian province of Carinthia, then governed by the late populist politician Joerg Haider. Haider had asked that the bank make the disputed airline loans, Kulterer said during the proceedings.
Carinthia sold a majority stake in Hypo Alpe to BayernLB in 2007. Austria nationalized Hypo Alpe in 2009 when BayernLB pulled its support. The investment in Hypo led to writedowns at BayernLB of about 3.7 billion euros, and the bailout has cost Austrian taxpayers 1.85 billion euros so far.
Hypo Alpe’s near collapse has led to several legal battles. BayernLB is suing a former Hypo Alpe shareholder for duping it into its purchase of the bank. Austrian prosecutors have charged Kulterer and others with misuse of funds, false accounting and other crimes in several other cases. Hypo Alpe in December said it wouldn’t repay loans from BayernLB.