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When Rene Benko was talking to a Saudi investor, he learned that the headquarters of his sprawling real estate empire deep in the Alps had been raided by Austrian police forces.
Benko, 45, may not be a world-famous name, but many of his buildings are.
The real estate conglomerate he manages is co-owner of London luxury department store Selfridges. He owns half of the Chrysler Building in New York. Germany has department stores KaDeWe and Galeria Karstadt Kaufhof, the country’s largest chain of stores, employing more than 24,000 people.
In addition to these dozens of buildings, luxury hotels, resorts and offices. Based in Munich, Venice, Vienna and Zurich, Benko’s portfolio of his Signa Group and its hundreds of subsidiaries, trust companies and holding companies is worth nearly €30 billion on paper.
He likes to joke that only two British monarchs and the Pope have control over the more prestigious estates in Europe.
But this week, the sense of invulnerability that has long overshadowed Benko, who is also one of Europe’s most politically connected billionaires, was disrespectfully pitted.
Signa’s offices in sleepy Innsbruck, Benko’s hometown, were in a state of panic, one insider said. Police downloaded years of email inboxes and hauled out piles of papers on the orders of the Austrian State Prosecutor for Economic Crime and Corruption (WKStA). .
Benko is the latest Austrian elite to be embroiled in a massive multi-year probe into corruption at the heart of government by the WKStA. The probe is the one that last year overthrew the government of Benko’s former ally, the conservative young prime minister.
For Signa and Benko, it is an unwelcome distraction.
As many retail and hospitality companies across Europe struggle to recover from the pandemic and must contend with a looming recession, long-standing suspicions about the complex financial engineering underpinning Cigna’s rapid expansion may ease. is becoming more difficult.
Signa and Benko declined to comment for this article. But Cigna’s answers to questions about the sustainability of her model of business have been consistent over the years. And there is no better real estate portfolio than Signa.
“Rene Benco is very good at telling stories,” said Leonhard Dobusch, professor of management at the University of Innsbruck. “And those stories — about why his fortune is so valuable, and [why] His business model is very successful and compelling. He is definitely a very good real estate investor. But Signa also has a highly financially engineered model. . . it is very difficult for an outsider to understand what is happening. ”
Benko was born in 1977 into a modest family. His native Tyrol, with Innsbruck as the state capital, is quintessentially Austrian, all towering Alps and low cows.
His father is a member of the city council, and his mother is a kindergarten teacher. Their son did not excel in school. He retired at 17 and got a job at a local construction company. He went independent four years after he made a bold development plan that set the pattern for his career.
Cigna owns half of New York’s Chrysler Building © AP
He offered to convert a series of attics in a local tenement into a luxury penthouse apartment and install an elevator at his expense, persuading the lower floor residents to agree to his plans. He fended off opposition by making sure the deal worked for all stakeholders.
The final factor that fueled Benko’s rise quickly followed: capital. A billionaire friend of the new penthouse resident entrusted Benko with a small fortune to help boost his foray into real estate development.
Five years later, after a series of favorable turnarounds, Benko, then 27, bought the historic Kaufhaus Tyrol, a quiet shopping center in Innsbruck. He demolished it and British architect Sir David Chipperfield was brought in to redesign it. For someone so young, especially in conservative Austria, it seemed a breathtakingly daring step.
A booming year followed, with Cigna acquiring prime locations not only in Austria, but throughout Germany, including in KaDeWe. The complexity of Signa’s business model has also increased. It was an investment banker’s dream, one Swiss banker said, adding that Benko and her Signa preferred to maximize their financial potential with a nearly limitless amount of money to earn commissions in a clever structure. reminded me of the possibility of
2013 saw the first serious problem for Benko. An Austrian court has ruled that Cigna paid former Croatian Prime Minister Ivo Sanader money to intervene with Italian Prime Minister Silvio Berlusconi to void a tax bill he was responsible for in Milan. He was found guilty of bribery.
This conviction forced Benko to officially withdraw from Signa’s day-to-day operations. But behind the scenes, he remains responsible.
As Signa’s portfolio grew and its founder became a billionaire, so did Benko’s contact book.
“Benko has become known for maintaining close ties with politicians from the main parties,” said Stephanie Crisper, Austria’s liberal Neos parliamentarian. “He took ex-Chancellor Alfred Gusenbauer [social democrats] on board,” she said.[and] He formed a relationship with Sebastian Kurz. ”
Kurz, who, like Benko, was an icon-breaking young man, became Chancellor of Austria in 2017 at the age of 31.
Benko also accompanied him on trips abroad, including to Moscow and the Middle East, where he established new business relationships.
In recent years, funds have flowed into Cigna from such sources, in some cases even through Benko’s own private foundation in Liechtenstein. This made tracking difficult, if not impossible.
Cigna points out that it is a private company and has fulfilled all reporting obligations. The lender and its investors say they are conducting their own extensive due diligence.
UK-based department store chain Selfridges has been acquired by Cigna and Thai conglomerate Central Group for £4 billion © AFP via Getty Images
Benko’s last big deal — the £4 billion acquisition of Selfridges — is a perfect example. Signa has partnered with Thailand’s Central Group, a real estate mega-investor known for choosing its partners carefully.
How the WKStA’s move against him will play out remains to be seen.
“He used to be called ‘Austrogark,'” said Markus Howe, head of analytics at Vienna-based risk consulting firm VE Insight. His reputation has declined, and there is a sense that he may be going astray.”
Benko’s annual event TorgelenPrime Ministers and politicians join him in Vienna’s ultra-luxury Park Hyatt owned by Signa I started taking pictures.
But it hasn’t been held since 2019. Even if the Covid-19 crisis is over, there doesn’t seem to be any plans for the next anytime soon.
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