For years René Benko cultivated close political relationships in his native Austria. For his Signa Group, one of Europe’s most prominent property developers, which imploded last month, they proved extremely valuable.
Politicians were not just regulars at Benko’s Viennese society parties. They sat on Signa’s boards, joined its management and were hired to open doors and raise funds.
Among their number: two former chancellors, Sebastian Kurz and Alfred Gusenbauer, a vice-chancellor, Susanne Riess-Hahn, and an interior minister, Ernst Strasser, as well as former MPs, top civil servants and municipal officials.
Benko’s ties to the Austrian political elite have already attracted the attention of anti-corruption prosecutors as part of a wider probe targeting the country’s political circles, launched in 2021. But with Signa Holding’s collapse into administration last month, Benko’s record of dealmaking and political networking is now of heightened interest to the company’s creditors and investors.
Alongside debt, political connections were a key ingredient that elevated Signa to its position as one of Europe’s leading property developers, with a portfolio it claimed was worth €27bn and assets that include Selfridges in London and KaDeWe in Berlin.
“Cheap money and rising property prices propelled Signa’s rise, but Benko was not just playing by the prevailing conditions of the market,” said Marcus How, head of research at the Vienna-based business risk consultancy VE-Insight. “A lot of his success depended on . . . making the right connections. That’s how a lot of business works . . . but Benko took it advocate.”
A review by the Financial Times of documents including land registry and investor materials, prosecutors’ warrants and sworn testimonies relating to three Signa property deals in Vienna shows just how beneficial political relationships have been to Benko’s group.
Signa bought the trio of properties for €250mn. Shortly before the crisis hit last month, the company valued them at €1.2bn.
Signa declined to comment for this article.
Österreichische Postsparkasse
Signa acquired the Österreichische Postsparkasse, the former headquarters of the Austrian postal savings bank and one of Vienna’s most prominent art nouveau landmarks, for €130mn in 2013. Six years later, the group agreed an unusually long rental lease of 99 years with the Bundesimmobiliengesellschaft (BIG), the federal property agency.
Overnight, Signa doubled the value of the building on its books, thanks to the quirks of property auditing in Austria and Germany, where valuations are based on rental income yield, duration and reliability.
BIG said it had no role or insight into Signa’s valuations and that its interest in the Postsparkasse was driven by the need to safeguard central city space for the University of Applied Arts. “The rents are below the usual office rents in the 1st district,” it said in a statement.
According to documents seen by the FT, the Postsparkasse building is now valued by Signa at €391mn, 100 times the building’s current annual rental income. Valuations of 20-30 times rental income are typical for comparable properties in other western markets, experts say.
The long-term rental contract with an agency that carried the implicit credit rating of the Austrian state was crucial in allowing auditors to sign off on the valuation, according to two people with direct knowledge of Signa’s accounting.
Signa’s connections at the top level of BIG and its parent company Öbag, Austria’s state investment fund, facilitated that process.
Well before the deal, it had already hired BIG chief executive Christoph Stadlhuber, the former chief of staff to Austrian economics and labour minister Martin Bartenstein, in 2011. (Stadlhuber, who could not be reached for comment, is now managing director of Signa Holding, the company at the centre of Benko’s property group, and the head of its Austrian operations.)
Benko also had a personal relationship with the head of Öbag at the time of the Postsparkasse deal, Thomas Schmid.
Schmid was a former top civil servant at the ministry of finance and one of chancellor Kurz’s most important lieutenants in government. In both roles, Schmid had been involved in Benko’s Postsparkasse plans.
After emerging as the central figure in the anti-corruption probe started in 2021, he has since turned crown witness. His testimony, as well as tens of thousands of text messages from his phone — both of which the FT has reviewed — show just how important he was to Benko and Signa.
Benko and Schmid met and messaged each other regularly. Two years before the Postsparkasse lease was signed, Benko offered him a €600,000 annual pay package to become a “general representative” for Signa, according to leaked text messages obtained by prosecutors. Benko has insisted the offer was never serious.
In his testimony Schmid also said Benko invited him on board his yacht, Roma, to his exclusive hotel in Lech, in the Alps, and on weekend breaks to Ibiza, where he promised to get Schmid VIP treatment at venues such as Lío and The Blue Marlin.
Schmid’s lawyer declined to comment on behalf of his client for this article. Benko has previously dismissed Schmid’s testimony as “talk” and has denied offering him any bribes for favours.
Renngasse 2
Renngasse 2 is the home of Austria’s Supreme Court. Since acquiring the property for €60mn in 2010, Signa had more than doubled the valuation to €160mn by 2021, helped by a booming property market.
That year Signa started talking with BIG about a 99-year lease. Benko’s group was seeking “to enter into a contract with BIG for the whole building which would safeguard the borrower a constant income for up to 99 years without any real estate related risks,” according to a loan application made by Signa at the time, a copy of which was seen by the FT. “This would result in a significant valuation enhance,” it stated.
Signa indicated that it was preparing to mark up the asset as being worth €283mn once the lease was secured. Within nine months, Signa then planned to issue €240mn of bonds against the asset, to help fund other projects.
The deal was never completed, however. In June 2021 Schmid was pushed out of Öbag. BIG did not give a reason for abandoning the deal. It has previously stated that it had no intention of signing a 99-year lease.
Mariahilferstrasse
Over Christmas 2017, Benko engineered what was supposed to be his biggest development coup in Vienna yet — with help from the newly installed chancellor Kurz.
On December 24 that year, as Austrian furniture chain Kika/Leiner faced the prospect of bankruptcy on January 1, Benko was offered to buy the company’s flagship store on Mariahilferstrasse, Vienna’s main shopping street, for €60mn.
According to news reports at the time, Kurz and his justice minister ordered a commercial court in Vienna to remain open during the holiday so the transaction could be approved.
For the chancellor, the deal was an example of his type of efficient politics: cutting through bureaucracy to save 5,000 jobs.
In response to the claims it had unduly helped Benko clinch the deal, the chancellery said at the time: “The federal government’s approach is to offer a service-oriented administration. This applies in particular to citizens and of course also to companies when it comes to saving local jobs.”
Benko and Signa have previously denied they received special help.
Since then, Signa has knocked down the Kika/Leiner building and is constructing a luxury department store, which it plans to call Lamarr, after Austrian Hollywood actress Hedy Lamarr. The Rem Koolhaas-designed building is due to be completed next year.
Signa has told investors the property — on which it has spent €190mn in addition to the €60mn purchase price — will be worth over €615mn once completed, according to Signa pitch documents seen by the FT.
Kurz was forced out of the chancellery in 2021, brought down by the same scandal that embroiled Schmid. But he has maintained relations with Benko. This year the former chancellor helped arrange a €100mn fundraising for Signa, for a fee of €2.5mn (of which he is still owed €1.6mn).
A spokesperson for Kurz confirmed Signa owed him significant fees for an investment he helped arrange for Signa, declining to comment advocate.
Innsbruck
In October last year, Austrian police swooped on Signa’s Innsbruck headquarters as part of the wider anti-corruption probe. No charges have been brought against Benko, who has denied wrongdoing.
Signa stressed at the time that it was not the subject of any investigation. According to a copy of the warrant seen by the FT, however, Signa’s assets are. Schmid’s testimony has led the anti-corruption squad to set their sights on Benko and many of his earliest property deals in Vienna.
The focus has been on taxes Benko might have evaded. But the scope of the inquiry also covers the valuations of Signa’s properties — and how Benko came to acquire them.
Although Benko remains Signa’s single largest shareholder, he has not commented publicly since Signa Holding filed for administration.
“As a group of companies we are always in contact with politicians . . . regardless of any political orientation or party affiliation,” he told parliamentarians in 2021. “We are a major employer and, what’s more, economically important and active in sensitive city centre locations. Politicians are always interested.”
