Julius Meinl detained over alleged real estate share fraud

Julius Meinl V, chairman of Austrian family owned Meinl Bank, was detained on Wednesday for questioning in relation to allegedly defrauding shareholders at real estate company Meinl European Land (MEL) and two other companies. Meinl has reportedly denied any wrongdoing.

Meinl Bank established MEL as a shopping centre specialist focused on Central and Eastern Europe. The property company listed on Vienna Stock Exchange in 2002 and built up a market capitalisation of over EUR 4 bn. In mid-2007, the share prices of MEL and two other businesses established by Meinl plummeted after it emerged MEL had earlier carried out an undisclosed share buyback.

MEL then embarked on a restructuring process that led to a buyout of the company, a total change of management and the name of the company. Tel Aviv-listed Gazit Globe and Citi Property Investors completed a EUR 800mln takeover of MEL and changed its name to Atrium European Real Estate in the summer of 2008.

'The allegations under investigation relate to events that occurred at least a year before the current management took over,' a spokesperson for Atrium said. The Meinl family, he added, may have a residual stake in Atrium, but is not involved in the management of the company.

Julius Meinl was scheduled to appear before a judge within 48 hours of his arrest. A prosecution spokesperson told the media that he had been under investigation for some time. Premises connected to him were searched in February. The authorities decided to detain Meinl, who is a British citizen, to ensure he did not leave Austria while the investigation was ongoing.