Guest Post: Austrian Central Bank Strikes Exotic Deal with PBoC While Entangled in Alleged Kickback Scandal
Submitted by The Prudent Investor
Austrian Central Bank Strikes Exotic Deal with PBoC While Entangled in Alleged Kickback Scandal
Austria's central bank, Oesterreichische Nationalbank (OeNB) delivers headlines ranging from opaque to criminal these days.
Market observers scratch their heads about a secretive agreement between the OeNB and the People's Bank of China (PBoC) that makes Austria the first non-Asian country permitted to engage in Renminbi investments with its Chinese counterpart as the intermediary. Further media inquiries were stonewalled.
A terse press release, obviously born in close cooperation with the big Chinese partners, said,
Based on the excellent long lasting contacts between the People´s Bank of China (PBC) and the Austrian central bank (OeNB), the Governors of the two central banks, Mr. ZHOU Xiaochuan and Mr. NOWOTNY Ewald, today signed an important agreement in Beijing. This agreement enables the OeNB to invest via the PBC in Renminbi-denominated assets.
This is the first agreement of this kind signed by the PBC with a non-Asian central bank, and can be seen as an important step in the good relationship between the PBC and the OeNB.
Like every Eurozone country Austria will pursue every financial help it can get in vain efforts to fend of the inevitable crash of a system laden with unsustainable debts and a hopeless situation in the pension/welfare system, while corrupt politicians only try to secure their own golden handhakes.
Corruption and white collar crime, already widespread in Austria, has reached the central bank's doors too.
Prosecutors currently follow a money trail between Austria, Switzerland and Panama that originated at the - of all places - money printing company OeBS (Oesterreichische Banknoten und Sicherheitsdruck Gesellschaft), a 100% subsidiary of OeNB.
According to latest reports by state TV ORF authorities have taken the 2 former CEOs of OeBS and 2 lawyers into custody. A spokeswoman of the state prosecutor said there are allegations of money laundering and other issues.
Together with other local media reports it appears that the OeBS employees may have developed a kickback system through a Panama shell, Venkoy, that was known to OeNB governor Ewald Nowotny, according to protocols of supervisory board meetings which he led. OeNB had fired the 2 heads of OeSB by October 28 after finding out about the theft and reported the matter to authorities.
Currently the alleged damage is given with €14 million by Austrian media.
Printing Money for Syria
The story gets still juicier. Lawyer Manfred Ainedter, defending one of the detained, threw up more mud and said in a TV interview that the Panama company may have been routinely used as a bribery vehicle. OeBS provides banknotes for countries like Syria and former Soviet republics. The lawyer said further, "that you have to have people on location to secure contracts", suggesting that corruption greases international trade. His argument, that state-owned OeBS only did what private money printers did, does not really help sustain the false hope that money printing is a solution.
As if that were not enough, the central bank of the country - whose "Creditanstalt 1931" 'event' should be a reminder to the exceptions of the 'not possible' situations - threw more light into the lucrative corners of money printing, saying provisions of 20% for deal helpers were a "usual" part of the game. A manager in the Swiss office of Venkoy stated ominously that money was paid, without going into further details.