A dead man signed – the New Bank paid

Financial scandal in Liechtenstein

An embezzlement scandal has once again rocked the Liechtenstein financial center. The accused is an old acquaintance.

The curtains are drawn, the outdoor tables are covered with tarpaulins, and the plants are already wilting: Bar Esquire, for many years a Vaduz hotspot and a meeting place for the local high society, is closed forever. The bankruptcy of the trendy bar is collateral damage from a financial scandal currently rocking Liechtenstein. Its tenant, 53-year-old trustee Mario Staggl, is in custody.

"There is strong suspicion of crimes of breach of trust, embezzlement, and serious fraud," Chief Public Prosecutor Robert Wallner confirms BILANZ's research. He estimates the damage at CHF 15 million.

Damage of 20 to 25 million

Documents obtained by BILANZ, however, indicate a figure of 20 to 25 million. Around 60 investors are affected. The main victims are a Canadian mine owner with approximately 10 million Swiss francs, as well as an Israeli construction contractor and a British businessman.

Staggl runs two trust companies, the Salamander Trust in Zurich and the New Haven Trust in Schaan (now also bankrupt). He registered the trust accounts with the Neue Bank in Vaduz, the fourth-largest bank in the country with 5.46 billion Swiss francs in assets under management.

Private bills paid from escrow accounts

For years, according to the allegation, Staggl is said to have misused the trust assets for his private lifestyle - initially he is said to have transferred funds entrusted to him to his own account, later paying his private bills directly from the trust accounts: around 262,000 francs to Amag for a new Bentley, school fees for the children, catering for parties or the maintenance costs for his properties in Dubai, Portugal and Montafon.

Every year on December 23, Staggl is said to have withdrawn between 50,000 and 110,000 Swiss francs, presumably for Christmas gifts. Instead of bank statements, he sent his clients only Excel spreadsheets he created himself.

Leaving a stack of blank forms

It's surprising that Neue Bank carried out such transactions from a trust intended for long-term wealth creation. "It's not necessarily unusual for a wealthy account holder to occasionally purchase a car," says Pietro Leone, a member of Neue Bank's management board. "To date, including recent developments, the bank is not aware of any criticism of its control system."

But it gets even worse: Mario Staggl's partner Klaus Biedermann provided the necessary second signature for the transactions. Even after his death in April 2016, his signature still appeared on the bank instructions – presumably, he had left Staggl a stack of blank forms.

Neue Bank didn't notice the posthumous signatures: "The bank immediately deletes signature authorizations upon learning of the death of the person in question. Of course, that's assuming they know about it," Leone said. Now the bank is facing money laundering proceedings.

Ten years imprisonment is threatened

Particularly controversial: Staggl's mother, Gertrud Frick, is allegedly a minority shareholder in the Neue Bank. Former Austrian Foreign Minister Ernst Walch is a board member of the bank and also serves as Staggl's defense attorney. And the bank's lawyer, former Prime Minister Mario Frick, is a board member of Staggl's family foundation. The trustee has secured his real estate there to protect him from legal proceedings.

"We thought Liechtenstein was one of the safest places in the world," says Ian Burns, protector of the damaged Aspasia Trust. "Unfortunately, the opposite is the case."

Staggl now faces ten years in prison. "The accused is cooperative and has largely confessed," says Wallner. Staggl has already attracted attention once: Ten years ago, he was charged with aiding and abetting tax evasion along with UBS banker Bradley Birkenfeld. Since then, he has been considered a fugitive by the US justice system. Nevertheless, the Liechtenstein Financial Market Authority issued him the "fit and proper" certificate required to practice as a trustee.