Signa Bankruptcy: WKO Oversight Committee to Re-examine Controversial Real Estate Deals
The past is catching up with Walter Ruck, president of the Vienna Chamber of Commerce. Four opposition factions are calling for an extraordinary audit of the multimillion-euro deals in which the Chamber sold prestigious properties to René Benko’s now-bankrupt Signa Group in 2017. There are suspicions of massive financial losses for the Chamber’s members.
Seven years ago, the Vienna Chamber of Commerce sold two buildings to the Signa Group, which then resold them for a profit, allowing the Chamber to acquire its new headquarters at Praterstern. / Picture: © WKW Wirtschaftskammer Wien - Vienna Chamber of Commerce
Seven years ago, the Vienna Chamber of Commerce sold two buildings to the Signa Group, which subsequently resold them at a profit, according to a report in the latest issue of the weekly magazine “Profil.” In December 2017, the Vienna Chamber of Commerce (WKW) and the Signa Group agreed on a special barter deal, finalized in March 2019: The Chamber was seeking a new, modern headquarters at Praterstern, the “House of Vienna Business.” In return, René Benko’s Signa Group wanted to acquire two historic Chamber properties: Palais Festetics in Vienna’s 9th district and the Gewerbehaus on Rudolf-Sallinger-Platz in the 3rd district, which today houses the “Hoxton” hotel.
At the time, ÖRAG appraised the buildings at 18.159 million euros for Palais Festetics and 17.504 million euros for the Gewerbehaus. The purchase price for the new WKW headquarters was set at around 121.5 million euros.
A golden deal for Signa, a loss for the Chamber?
The controversy that has reignited debate about the deals years later stems from Signa’s rapid resale of the properties. Shortly after the official takeover, Benko’s conglomerate sold the two former Chamber of Commerce buildings to the Hallmann Group, owned by real estate entrepreneur Klemens Hallmann, for a whopping 50 million euros, according to insider reports in the news magazine profil. A hefty profit of around 15 million euros at the expense of the Chamber of Commerce, critics allege. Since the deal was structured as a so-called “share deal” (sale of company shares rather than the property itself), the contracts remained invisible in the land registry.
The opposition within the Chamber is up in arms. The parliamentary groups of UNOS (Neos), the Green Economy, the Freedom Party Economy (FPÖ), and the Social Democratic Economic Association (SWV) have now jointly submitted a motion for an extraordinary audit.
“We want to investigate whether the Chamber of Commerce and its members suffered financial damage as a result of the actions taken in connection with this deal,” explains Katharina Ehrenfellner (UNOS). Specifically, she is calling for clarification on why no value protection clauses were included in the contracts with Signa and whether the Chamber of Commerce headquarters was acquired at a price significantly above market value in return. For FPÖ economic spokesperson Udo Guggenbichler, one thing is clear: important control mechanisms may have failed here. UNOS also underscores these points in recent statements, along with further details and vehement demands for transparency.
Ruck defends the deal – Chamber calls it a “tactic”
WKW President Walter Ruck rejected the allegations as reported by ORF. He argues that the move to Praterstern has brought significant efficiency gains and cost savings, allowing the chamber fee to be reduced by 25 percent, which saves Viennese businesses 22 million euros annually. As early as 2017, the move was promoted as a strategic milestone to consolidate 10 Chamber locations, with a focus on annual savings in the millions.
In addition, the chamber relies on a legal opinion stating that the transactions were properly and legally soundly supported by the expert opinions obtained. The decision-makers are not liable, even in the event of a subsequent increase in market value. The WKW dismisses the opposition’s latest initiative as “partisan political tactics,” since the deal had already been reviewed and finalized by the Control Committee in the past.
Showdown on June 22
Whether the contracts and Signa’s dubious million-euro profits will be reexamined will be decided at the next regular meeting of the Control Committee on June 22, as reported by ORF. A majority of 8 out of 15 votes is required for the motion to pass. Since the ÖVP-aligned Economic Association led by Walter Ruck, as well as other parliamentary groups, have not endorsed the motion, the outcome of the vote is considered completely open. Gerald Zmuegg, chairman of the Control Committee, describes the upcoming meeting as a fundamental “dress rehearsal” for how serious the Chamber of Commerce actually is about its announced reform and transparency process.