Police raid Immofinanz, Immoeast as fraud probe deepens

Austrian police raided the premises of Austrian real estate groups Immofinanz and Immoeast on Tuesday as part of the ongoing investigation into suspicions of fraud and breach of trust at the companies.

They also raided Constantia Privatbank, which set up both companies and is linked to them through a complex web of contracts and affiliated companies, Constantia said in a separate statement.

Immofinanz and its 51% subsidiary Immoeast, which are among the biggest property developers in Central and Eastern Europe, are at the centre of a probe into balance sheet fraud and breach of trust by former CEO Karl Petrikovics, who was forced out at the beginning of October. Petrikovics resigned following a steep decline in the company’s share value and growing concerns over the group’s liquidity. He is suspected of having embezzled EUR 520 mln worth of funds which were provided by Immoeast to Immofinanz Beteiligungs AG as part of a capital-raising exercise.

Immofinanz’ new CEO Thomas Kleibl, who was appointed last month, said in a statement that he welcomed the authorities’ investigations. ‘We guarantee our full support for the investigations,’ Kleibl said. ‘This is the only way the open questions about the companies’ past can be cleared up.’

The liquidity problems at Immofinanz and Immoeast have prompted the companies to scrap EUR 2 bn worth of developments in the pipeline and to embark on an asset disposal programme to improve the group’s cash position.

Shares in Immofinanz have gone into freefall since news of the fraud scandal broke and are now trading at around EUR 0.50 on the Vienna stock exchange compared with a previous high of EUR 15 per share.