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07. 04. 09. - 13:00

‘Sunny Boy’ Grasser pockets €1.2mn for a smile

Former Finance Minister Karl-Heinz Grasser reportedly pocketed 1.2 million Euros in 2008 for his services at Meinl Power Management (MPM), it has been revealed.

The Vienna newspaper Kronen Zeitung said in today’s (Tues) report on Grasser, who has been given the moniker "Sunny Boy" by some Austrian journalists, that MPM was the "external manager" of Meinl International Power (MIP) based in Jersey. MIP has since become Power International (PI).

The newspaper said MPM had received eight million Euros for its services last year, with half of that covering a variety of costs and the other half paid to its managers. Meinl Bank received two-thirds of the second half, with Grasser pocketing one-third of it - six times the amount a federal minister makes annually.

Kronen Zeitung also reported that Grasser wanted to leave MPM. If true, it may be because the former finance minister does not want to be perceived as guilty by association because of his business and, perhaps, personal relationship with Meinl Bank head Julius Meinl V.

Meinl has a big problem because of his role in the case of Meinl European Land (MEL), which allegedly engaged in fraud.

Vienna police detained the banker last week after questioning by prosecutors investigating allegations of fraud at MEL, a quoted property group formerly managed by Meinl Bank, which is closely held by the Meinl family.

Austrian public prosecutors approved Meinl’s release the next day in return for surrender of his passport and record bail of 100 million Euros because of the risk he might try to abscond.

Vienna public-prosecution office spokesman Gerhard Jarosch said last week: "Julius Meinl is a British citizen, and it was feared, on the basis of previous investigations and new evidence, that he might try to flee from justice."

The arrest followed raids on Meinl's home and offices in February and came amid deepening anger among retail investors about the performance of investment funds associated with the millionaire banker.

Meinl was charged with breach of trust, the charging of excessive fees and fraud in relation to MEL.

MEL shares soared after flotation in Vienna in 2002, and the company undertook several secondary offerings marketed aggressively to retail investors. MEL's advertising campaign suggested its investment certificates (MEL shares were actually listed in Jersey) were as safe as savings accounts.

However, in summer 2007 it emerged that MEL had just completed a massive share buy-back to support its share price amid tumbling property values and falling shares for quoted real-estate groups. The transaction had not been disclosed until after its completion.

MEL was the first in a family of three investment funds launched by the bank, including Meinl Airports International and Meinl International Power. The support operation for MEL coincided roughly with the flotation of MIP - a fund created to invest in utilities in Central and Eastern Europe.

The news of the support scheme triggered fall in MEL shares and closer scrutiny in the media of Meinl's businesses. It emerged MEL had placed partly-paid shares with unknown institutional investors, diluting the stakes of shareholders who had paid fully, and had authorised high management fees at Meinl Bank.

The investigations also revealed the share buy-backs had not been publicised in Austria, breaching domestic stock-exchange rules.

Meinl said at the time all the steps had been legal and the support operation had not breached local regulations because MEL's stock was listed in Jersey. However, angry investors argued the support operation had been tantamount to price manipulation.

Austrian Times

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