Things are not looking good for the department store chain Galeria Karstadt Kaufhof at the moment. The company needs to be saved – again. Corona first forced the company to go to the bankruptcy court. Now the retail giant is asking for rescue again in a protective shield procedure. And that despite the fact that the group has received 680 million euros in state aid since the beginning of the corona pandemic.
The fact that the owner René Benko, Austrian-born, real estate mogul and quite successful entrepreneur, is now pumping the German state again for billions in aid could bring him into an explanation. Because so far, Benko has only offered a 15 percent equity contribution. Will the German state help the retail chain again?
An answer is still pending. In the coalition, however, voices are increasing against a further injection of money and the Ministry of Finance is also critical of this. Rightly so, because the question arises as to why the German taxpayer should step in for something that a multi-billionaire could partly finance himself with his private fortune.
According to the magazine “Trend”, the school dropout from Innsbruck has assets of 4.6 billion euros and is the sixth richest Austrian. According to the business magazine “Forbes”, it was even 5.6 billion euros in 2021. The newspaper “Der Standard” once described him as a “golden boy with a poker face”.
Benko comes from a comparatively humble background, his father a civil servant and his mother a teacher. He would rather devote himself to converting attics into luxury apartments than to graduating from high school. Benko eventually became a multi-billionaire and entered the real estate business. The spotlight in Tyrol: the acquisition of the Tyrol department store in downtown Innsbruck.
Today, Benko owns Signa Holding, the Austrian real estate company with interests across Europe and beyond. In addition, Benko can boast of being the owner of the Alsterhaus in Hamburg, the Upper West on Berlin’s Ku’damm and the KaDeWe in the federal capital. He is currently having a counterpart built in Vienna. In Hamburg, the Elbtower is to be built by 2025, and this year Benko bought the British luxury department store chain Selfridges. He also has a half interest in the Chrysler Building in New York and is a shareholder in the Austrian “Kronen-Zeitung”.
Not to be forgotten: Galeria Karstadt Kaufhof, the big problem child. Nine months after Benko merged Galeria and Karstadt, the corona virus destroyed all further plans of the Austrian. 40 branches had to be closed and around 4,000 jobs had to be cut. A haircut of more than two billion euros should enable the restart. But in vain: according to the current status, at least a third of the remaining department stores are to be closed so that the rest of the group can survive.
Benko has already received accusations from the Verdi union for this. “Our colleagues in the 131 department stores are wondering where the owner is in this existentially extremely threatening situation for 17,400 people and their families,” Verdi board member Stefanie Nutzberger recently complained. Possibly rightly so, because the Signa boss has not yet commented on the situation of his retail giant.
Can Benko even close his eyes at night? Doubtful, but not impossible. Because the retail giant is currently not the entrepreneur’s only problem.
If you want to be successful in business, you need contacts. And Benko has them in abundance. Unfortunately, Thomas Schmid is one of Benko’s closer contacts. Schmid had recently caused an uproar in the public, above all with his explosive statements about Austrian politicians, above all ex-Chancellor Sebastian Kurz. In the conversation with the economic and corruption prosecutor in Austria (WKStA), the former finance minister also unpacked about Benko.
The entrepreneur is said to have offered Schmid a well-paid position at Signa Holding in order to influence a tax audit. The promised annual salary would have been 300,000 euros, plus bonuses and a company car. Sebastian Kurz is said to have known about Schmid’s support. Now the WKStA is investigating bribery and corruption and abuse of office. In mid-October, Signa was searched by the WKStA because of the allegations.
The presumption of innocence still applies – as with everyone who is in the dock in the Kurz affair. Neither Benko nor his spokesman for Signa Holding have commented on the allegations.
The Canon process, which started in November, also weighs heavily. Benko is said to have bribed the former Greens politician from Vienna, Christoph Chorherr, to push ahead with a construction project in the state capital. Benko was also involved in the Ibiza scandal. The former FPÖ politician and Vice Chancellor Heinz-Christian Strache named Benko in a secretly filmed video on Ibiza as a donor for his party, who pays in money through a camouflage association. Benko denied the allegations, Strache apologized.
At least it wouldn’t be the first time that Benko would be legally punished. In 2014 he had already been sentenced to a suspended sentence for attempted bribery.
And now? At least for the involvement in the Kurz affair one can say: If Schmid’s statements are true, then Benko could share his entrepreneurial know-how behind bars with Sebastian Kurz. Austria’s ex-chancellor immersed himself in the start-up scene after his political exit.
For Benko, a prison sentence would be a disaster. Because the entrepreneur still has a lot to do. His Signa still has around 75 development projects on the list for Austria and Switzerland alone. That can cost the holding company 26 billion euros.
In Germany, Benko is controversial because of his criminal history, and at best not welcomed. Local politicians from Berlin, where the Austrian entrepreneur wants to turn half the city upside down, see the latest allegations of corruption as an “alarm signal”. Katalin Gennburg, urban development spokeswoman for the left-wing faction in the House of Representatives, pleads with the “Spiegel” to “end the cooperation with Benko immediately”. She describes his methods as “highly problematic” and fears that Berlin could soon be “a gangster’s hostage.”
The latest investigations at Signa Holding have now also scared off investors. Or so it seems. A $300 million Signa bond lost massively in value after the search notice. In between, the paper was not worth more than 55 cents. It seems as if the accusations alone are to blame for the decline. In fact, the bond was already under pressure before that. The reason for this could also be the uncertain situation on the real estate market.
After all, Benko finally managed to dispel the concerns of investors. After presenting a new project development, he at least gave those present the feeling of being a “really good seller”, as an investor put it. And yet the question remains as to whether Benko’s business model can survive in the years to come.
The example of Galeria Karstadt Kaufhof actually shows that the times of the giant chains in times of pandemics, inflation, war, exploding energy prices and uncertainties on the real estate market are increasingly coming to an end. Or at least have to fight hard. It’s all about money, which doesn’t flow quite so easily in financially tight times.
Sources: Economic and Corruption Prosecutor’s Office (WKStA), Capital.de, “Der Standard”, “Der Spiegel”, “Süddeutsche”, with material from DPA
