Commerzialbank – A Tale of Criminal Generosity and Incompetent Oversight

A financial pillar of Burgenland had been running on fictional business for years. The inevitable came in August, as the fraudster confessed. Now, auditors and authorities are busy pointing fingers.

Reality set in August 15th “at an ungodly hour” for Burgenland’s governor Peter Doskozil: A telephone call warned him that the Commerzialbank Mattersburg was in trouble, along with a €1.2 million in state agency deposits. Doskozil immediately ordered the money withdrawn. But it was too late. The bank’s long time director Martin Pucher had closed the business down just hours earlier. 

By morning, the bank was revealed to be some €528 million short, most of it probably unrecoverable. Private deposits  up to €100,000 are insured by a federal guarantee program, but dozens of local businesses and neighboring communities who had parked their reserves with the bank are not.  

System Failure

As the experts picked their way through the financial wreckage, it seemed the bank was already effectively bankrupt in 2005. How could no one have noticed? How could Austria’s notoriously intrusive bureaucratic controls have failed? 

The real scandal is perhaps less the dishonesty of the bank’s senior managers than it is the apparent incompetence of those charged with the oversight – the auditors TPA, the BFA (Bank Control Authority), the Austrian Nationalbank and the WKStA, the public prosecutor’s office responsible for economic criminal activities.  There were plenty of warning signs for those who should have been paying attention. Claus Raidl, ex-governor of Austria’s Nationalbank injected a note of common sense on Ö1 radio: “If I pay 4% interest on savings accounts, but only charge 2% for bank loans, any auditor must see that that is not going to work.”

A Football Addiction

The central player in the disaster is more tragic than villainous. Martin Pucher is a quiet unassuming man who enjoyed the role of everybody’s favorite uncle, offering favorable conditions to local businesses and dispensing generously to good causes.  And he loved football – perhaps too much.  He was never happier than in the stands cheering on the local team, his beloved SV Mattersburg. He was the club’s financial lifeline, organizing events and arranging sponsoring contracts that enabled the team establish itself in the national league alongside the big city clubs. 

But what is now clear that most of these contracts never existed: The deals Pucher claimed to have signed with major companies like Wustenrot (insurance) and Energie Burgenland (the local power company), were pure fabrications.  The money was actually siphoned off from the bank, usually with untraceable cash withdrawals that Pucher alone could authorize. How much of other people’s money went to support Pucher’s football passion over the years is unclear; It certainly runs into millions of Euros.

Loyal Lady Forger

The Pucher system for plundering the bank was disarmingly simple. The Commerzialbank had a management board that never met and a supervisory board of aging amateurs, specifically (as Hanna Kordik reported in Die Presse): five farmers, two pensioners, a publican, a butcher and a roofer. Pucher (who never mastered basic computer skills) had one loyal accomplice, his financial director and employee of over 30 years, Franziska Klikovits, who made all the necessary fictional entries in the system – most importantly, some €426 mio. in deposits allegedly at six other Austrian banks.  The actual total of these deposits was about €6 mio. When investigators went through the files, they found neat stacks of blank stationery and deposit slips from the institutions concerned, the raw material of forgery.

As most observers have pointed out, this crude financial fabrication should have been noticed long ago, and fingers are now pointing at the official watchdogs charged with financial oversight. Each of these, in turn, is blaming colleagues further down the supervisory food chain, with not one of them admitting liability. Common sense suggests that this is mainly humbug and Burgenland’s no-nonsense Governor Doskozil is having none of it. He has initiated legal action charging official liability. His lead counsel, Johannes Zink, is optimistic: “Our chances are good” he told Kamil Kowalcze (Die Presse 29.7.20)

Taxpayers Pay

With so much money at stake, teams of lawyers are gearing up for action.  If federal oversight agencies have been negligent, then the Republik (meaning us, the taxpayers) could be liable for the losses.  At the same time, the Commerzialbank could claim refunds on taxes paid on the fictitious business transactions; under the law, a taxpayer cannot be held liable for business that never took place. As Kowalcze commented in Die Presse: “The deeper you dig into the decades of fraudulent bookkeeping, the more confusing it becomes.”  

The only certainty: Tax payers will be poorer and lawyers richer.

Simon Ballam
English, studied in NY and worked in London, Düsseldorf, NY, Fankfurt, Prague and Vienna. This covered stints in market research and the film industry, international advertising coordination and strategic planning. Currently business school lecturer and journalist.

Help us help you

“Strong media and independent journalism are built on the shoulders of subscribers. Your support means the world to us.

Benjamin Wolf
COO & Managing Editor

The coronavirus outbreak affects and challenges your life in big and small ways. Metropole is here for you and we are proud to be your news source during this crisis.

But just as the coronavirus has increased the need for independent journalism, it has also undercut a major revenue source of media companies, ours included – advertising.

We need your support to keep it up – donate or subscribe and #helpushelpyou!

Support Metropole!

RECENT Articles

Coronavirus in Austria | Schools, Shops to Reopen Dec. 7; Restaurants, Culture o...

COVID-19 is shaping our daily lives. Here’s all you need to know about current measures, including where to get help, information and tips – updated regularly.

The Path to Ending Our Global Chaos Is Through the UN

A century after the founding of the League of Nations, international cooperation is still the answer to our “descent into cynicism, chaos and crisis”—in the UN Charter and the Universal Declaration of Human Rights.

Europe Is Bending the Curve, Cases Going Up in the US, Vaccines Ahead

Every Sunday, Metropole brings you a COVID-19 update from Prof. Dr. Florian Krammer, an Austrian virologist who works and teaches at the Icahn School of Medicine at Mount Sinai, New York City.

5 Places to Stroll During Lockdown

Walls closing in? These places offer blessed respite and relaxation.

How Vienna Plans to Mass Test the Population for COVID-19

The city plans to test 1.2 million people from December 4-13 with rapid antigen tests. Here’s how it is supposed to work

Fucking, Austria, Wants Now to Be Called Fugging

The Upper Austrian village has had people steal their name sign and Pornhub giving them premium access due to its peculiar name. Now, the city council voted to change it once and for all.

METROPOLE NEWSLETTER

Join over 5,000 Metropolitans, who already get monthly news updates and event invitations.

  
>

X
X
X