Austria Jail terms for nine over BAWAG bank scandal 04/07/08 13:46 CET

A court in Vienna has given jail sentences to nine people over Austria’s biggest ever banking scandal. The group, including the former chief executive of the BAWAG bank, were found guilty of causing losses of 1.7 billion euros through speculative investments. Prosecutors had charged the nine with breach of trust, false accounting and fraud over a series of risky derivatives trades that began in the late 1990s.

The losses, which surfaced in 2006, were linked to the bankruptcy of US futures trader Refco Inc, a BAWAG affiliate. The defendents were given sentences, some partly suspended, ranging from two to nine years.

The scandal had an impact beyond the financial sector as the losses severely undermined Austria’s trade union federation, a former co-owner of BAWAG.