[MSN] Picasso's 'Le Rêve'

[Museum Security Network Mailing list]

*David Gow in Brussels
Wednesday July 18, 2007
Guardian Unlimited <http://www.guardian.co.uk/>*


He was a serially rich hedge fund manager, a New York socialite married 
to the granddaughter of ex-US president Dwight D. Eisenhower; the owner 
of four dozen works of art by Degas, Renoir and Cézanne, he paid $244m 
(£120m) in 1998 for Van Gogh's "Dr Gachet" and Picasso's "Le Rêve".

This week he is sitting with eight others in the dock in Vienna accused 
of breach of trust and fraud in one of Austria's biggest corporate scandals.

Wolfgang Flöttl, who has sold his art collection to cover his subsequent 
losses, is the son of the ex-head of Bawag, a former union-owned bank 
set up in 1922 for waiters and carpenters that lost €1.4bn (£940m) in 
currency speculation deals in the Caribbean. It was baled out from 
near-bankruptcy by the former government a year ago with a €900m 
underwriting loan. Now Austria's fifth largest bank, it was bought for 
€3.2bn late last year by US fund Cerberus.

In stifling heat the court has heard from prosecutor Georg Krakow how 
"everything has gone" from the €1.4bn Bawag invested in "forbidden 
speculations" and "disastrous clandestine deals" run by a "little 
clique". Krakow, armed with 70,000 pages of documents, is seeking up to 
10 years in jail for the accused, including two ex-CEOs, Helmut Elsner 
and Johann Zwettler.

Elsner, a 72-year-old who fled to his sumptuous villa on the Côte d'Azur 
when the scandal broke but was extradited in February despite heart 
surgery and pleads innocence, was said by his lawyer Wolfgang Schubert 
to be "a loving family man who sits with his granddaughter on his lap 
and reads her stories".

Can't see judge Claudia Bandion-Ortner buying that old chestnut.

Flöttl, meanwhile, had close personal and business links with Phillip 
Bennett, former chief of US commodity brokerage Refco which went broke 
just after Bawag lent it several hundred million dollars - via Flöttl 
who is said to have cost Bawag more than €1bn in bad loans.

But Flöttl, who fell out with Elsner at a meeting in London in late 
2000, has been singing to the authorities, according to his lawyer, 
Herbert Eichenseder, who proclaimed his innocence and said he had 
supplied 70% of the evidence.

The trial, clearly worthy of film treatment, will last until October - 
perhaps just around the time the case against another Austrian banker 
and hedge fund manager, Michael Berger, could begin. He was on the run 
for five years from the "Feds" (FBI) after failing to appear in a 
Manhattan court after pleading guilty to charges that he misled 
investors during the dot.com boom - to the tune of $575m.

Is there something about Viennese bankers? Maybe the smell of the 
ultra-strong local coffee made them lose their heads...

*The French keep the Tube running*

This week's collapse of Metronet, the PPP consortium supposed to deliver 
a £17bn modernisation of three-quarters of London Underground's network, 
will probably provoke a wry smile in Olivier Houssin, head of the 
security solutions and services division at Thales, the French 
electronics group that's also designing Britain's two new aircraft 
carriers.

He's not a great fan of PPPs for strategic infrastructure projects, he 
made plain in a recent interview in Paris, showing a Ken Livingstone 
liking for public funding. Thales is a key supplier of Tube Lines, the 
successful consortium of Amey and Bechtel that is rebuilding the 
Jubilee, Northern and Piccadilly lines on time and under budget.

But it is not a consortium member - unlike the position at Metronet 
which gave lucrative contracts to its supplier shareholders.

"Tube Lines works well and keeps its commitments," he said before the 
Metronet debacle.

Houssin's division, which accounts for a quarter of Thales's business, 
or €3.2bn in sales last year, is growing faster than the defence and 
aerospace units: an expected "mid- to high-single digit" rate this year, 
he says. It has orders worth €1bn in London alone, including a recent 
£160m extension to a contract to provide new computerised signalling for 
the century-old Piccadilly Line by 2014, and views this as a core 
strategic priority.

The French group, run by Anglophile Denis Ranque, is 27% in state hands 
but keen to shake free - eventually. Meanwhile, and despite a recent 
lacklustre share performance, it is expanding its overseas interests in 
railway signalling, air traffic management, congestion management 
(charging), civil security, including at power stations and pipelines, 
airports and even pilot training. Houssin's favourite phrase is "mission 
critical" and he wants Thales to become a global leader.

The division is already second in the world for rail signalling and 
involved in metro systems in Hong Kong, Dubai, Madrid, Beijing, Shanghai 
(now building its 11th line, 120km long), Turin and New York. In May it 
was chosen to supply a "contactless" fare collection system for the new 
Line 3 of Cairo's metro network, including 29 stations.

Somehow, the French - who designed and built the Second Severn Crossing 
but are derided in certain neo-liberal Whitehall circles - do these 
things better than the Brits. Perhaps Ken should give Olivier a call in 
Neuilly-sur-Seine (Sarko's old power base) and ask for his secondment to 
TfL...

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