‘Offshore Leaks’ Revelations Force Resignation of Top European Banker

Herbert Stepic Offshore Leaks
Former Raiffeisen Bank chief executive Herbert Stepic. Photo: AP

Raiffeisen Bank’s Herbert Stepic says he’s stepping down to shield the Austrian financial giant from a media firestorm over his offshore holdings.

One of Europe’s most famed bankers offered his resignation today in the face of reports that he secretly owned offshore companies in the Caribbean and Asia.

Raiffeisen Bank International chief executive Herbert Stepic said he was stepping aside to save the Vienna-headquartered bank from fallout over the latest revelations in the International Consortium of Investigative Journalists’ “Offshore Leaks” probe.

His resignation comes one day after two ICIJ media partners -- German newspaper Süddeutsche Zeitung and the Austrian magazine News – broke the news that Stepic controlled two secrecy-cloaked companies in Hong Kong and the British Virgin Islands.

Stepic denies wrongdoing, but said at a quickly arranged news conference in Vienna that he wanted to spare the bank from media reports that “threatened to do massive harm to my company.”

His resignation marks a dramatic fall for a man who has been honored by financial journalists as Europe’s top corporate executive and “Banker of the Year.” Reuters describes Stepic as “large-than-life figure” who built Raiffeisen into central and eastern Europe's second-biggest lender, a behemoth with 60,000 employees in 17 countries.

Reuters reported that Raiffeisen’s supervisory board hasn’t formally decided yet to accept his resignation, but said “his fate seems sealed.” Other top officials at the bank called his decision “a sign of great loyalty” that will help “avert reputational damage” to the bank.

Both Raiffeisen and Austrian financial regulators are now conducting inquiries into Stepic’s offshore investments.

Stepic said he set up overseas companies in 2006 and 2008 in order to invest in real estate in Singapore. He said that “all the investments were carried out with income that had been taxed in Austria.”

He asserted that the firms “are no offshore constructions” and that Swiss bank UBS was simply setting him up with a “standard product” when it helped him create the companies.

Secret records obtained by ICIJ show, however, that the companies were shielded by secretive structures that are common in the world’s tax havens. Stepic’s ownership is obscured behind the names of “nominee” directors and shareholders who served as the public fronts for the entities.

Since publication of the “Offshore Leaks” series began, Austria has been under growing pressure to join the fight against offshore secrecy and international tax dodging. Finance Minister Maria Fekter has announced the creation of a panel – called Special Commission Offshore-Leaks – that will collaborate with tax authorities in the United States, the UK and other countries.

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