Sunday, July 20, 2008

Try Illness First, then Children

Le Rêve ownership trail

It is fascinating how research on the World Wide Web can throw up amazing things from different corners of the globe.

When I tried to look up who owned Picasso’s Le Rêve before Steve Wynn, something interesting showed up. From the Guardian (July 2007):

“He was a serially rich hedge fund manager, a New York socialite married to the granddaughter of ex-US president Dwight D. Eisenhower; the owner of four dozen works of art by Degas, Renoir and Cézanne, he paid $244m (£120m) in 1998 for Van Gogh's ‘Dr Gachet’ and Picasso's ‘Le Rêve’.

This week he is sitting with eight others in the dock in Vienna accused of breach of trust and fraud in one of Austria's biggest corporate scandals.”

Wolfgang Flöttl is his name. The scandal broke in 2006 and he was alleged to have carried out speculative dealings, sparking Bawag losses of almost 1bn euros (£690m). Interestingly Flöttl is the son of the Bawag’s former head, and Bawag, which used to be owned by the Austrian Labour Federation, is a bank set up in 1922 in Austria for waiters and carpenters.

For waiters and carpenters, indeed there is money to be made everywhere!!!

Flöttl also had close personal and business association with the ex-chief of Refco, Phillip Bennett, a British citizen. Refco, a major US commodities brokerage firm and one of the world’s largest, went public in August 2005 and filed for bankruptcy protection just weeks later – after disclosing that a $430 million debt owed to Refco by a firm controlled by Mr. Bennett had been concealed, and after securing a $350million loan from Bawag only a few days earlier, via Flöttl.

“In stifling heat the court has heard from prosecutor Georg Krakow how ‘everything has gone’ from the €1.4bn Bawag invested in ‘forbidden speculations’ and ‘disastrous clandestine deals’ run by a ‘little clique’. Krakow, armed with 70,000 pages of documents, is seeking up to 10 years in jail for the accused, including two ex-CEOs, Helmut Elsner and Johann Zwettler….

Elsner, a 72-year-old who fled to his sumptuous villa on the Côte d'Azur when the scandal broke but was extradited in February despite heart surgery and pleads innocence, was said by his lawyer Wolfgang Schubert to be ‘a loving family man who sits with his granddaughter on his lap and reads her stories’”.

To get sympathy, always try illness first, and then for character reference, add children for good measure.

In Austria Elsner was known for his lavish lifestyle, passion for sports cars and penchant for smoking large, expensive cigars while walking his dog.

But the Guardian did not think that judge Claudia Bandion-Ortner would be buying into that old chestnut.

The report continued:

“But Flöttl, who fell out with Elsner at a meeting in London in late 2000, has been singing to the authorities, according to his lawyer, Herbert Eichenseder, who proclaimed his innocence and said he had supplied 70% of the evidence.”

In times like this you sure know who your friends are.

Was justice done in the end?

Earlier this month, all nine defendants were found guilty and sentenced by Judge Claudia: Elsner to nearly 10 years behind bars and Flöttl two and half years, most of that suspended.

Bennett, the ex Refco chief, was sentenced in US to 16 years in prison.

The judge commented: Mr. Bennett and others like him who break the law in their zeal to be among the world’s richest people are “staggeringly arrogant.”

The Refco lawyer was also indicted. From WSJ (December 2007):

“In a rare case of a lawyer being charged in connection with the alleged wrongs of a client, Chicago lawyer Joseph Collins was indicted today on fraud and other charges in connection with the 2005 collapse of Refco.”

What an intriguing web of corporate greed and fraud, and yet we owe it the story of Le Rêve!

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3 comments:

Amelia said...

I am reading your chapter about Bipolar. Do you think people using that name to have the excuse to behave badly.

Am Ang Zhang said...

People do not need an excuse nowadays but often parents like a label for other reasons.

Amelia said...

That is very cruel of the parents to label their own kids. Are they after the State benefit? I cannot image one can do such horrible thing to his own flesh and blood. But having said that I remember reading an article about the parent who faked their child's cancer to get charity money from their community. And that poor kid (I think it is in America) had to shave her hair in order to make it believable. I just cannot understand it. What sort of life it would be for that little girl? Will she be a liar when she grows up? I just wonder. Parenting is so hard and we should set good example to our children.