Floettl's Fall From Grace

Wednesday, August 08, 2007

Seeing numerous search queries for former Austrian investment banker Wolfgang Floettl (very often wrongly spelled Flottl) landing at this blog here is an update about the current lawsuit unfolding in Vienna as no other English language media covers this story. This is a write-up of stories that appeared in Austrian media.
Floettl, the son of former Bawag CEO Walter Floettl, who brought down Austrian Bawag bank with speculations on a falling Yen in the late 1990s that resulted in losses of $640 million, is in court together with former members of Bawag's supervisory board and management. Judge Claudia Bandion-Ortner wants to find out whether Floettl still has assets that could be used to partially plug the holes he caused.
Bawag, formerly majority owned by the Austrian Trade Union Congress, has been sold to private equity fund Cerberus earlier this year who wants to turn it around and cash in afterwards with an IPO. Bawag is Austria's fifth-largest bank.
Floettl jun; once hailed as a financial whiz-kid who started out into the hedge fund world in the early 1990s, now describes himself as without almost any assets since he transferred his private estate to Bawag in order to make up for his losses.
Most of these were in the form of his collection of paintings that had an aquisition value of more than $150 million. In the process Floettl also got rid of his Gulfstream lear jet and prime real estate in Bermuda. But it is believed that he managed to save part of his assets through a divorce and re-marriage with Anne Eisenhower.
Floettl jun. started his ventures with money from Bawag, then run by his father Walter. It is not known whether his former hedge fund company Ross Capital had any other clients.
The relationship between Floettl and Bawag was very cozy. When Floettl admitted the losses in 1999 the bank decided to advance him another $250 million so that he could win back the money lost in his bets on the Yen. Alas, that never happened but Floettl was still allowed to keep his lear jet, an apartment in New York and his house in Bermuda along with paintings valued at $10 to $15 million.
Not bad for a wrong bet.
Floettl said his private fortune peaked out at around $250 to $300 million, but he lost $120 million soon afterwards. He owned "Portrait of Dr. Gachet" by Vincent van Gogh and sold the painting in 1998 at a then-record for a painting of $100 million. This money was used to cover his debts with auction house Sothebys where he was a frequent customer trying to cultivate an image as a major collector.
Court gawkers have been witnessing a wild match of words between Floettl and former Bawag CEO Helmut Elsner who has been stripped of most of his assets by the court. Elsner was certainly the most despotic CEO Austria's banking industry has ever seen. He is infamous for his quick loss of temper and a tendency to mistreat subordinates.
The lawsuit is expected to last until mid-November.


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