"The vacuum cleaner is back": how Signa is said to have financed itself

The Munich prosecutors have launched an investigation into René Benko and seven former managers of the Signa Group, focusing on alleged financial misconduct. The case centers on accusations of fraud, breach of trust, and credit fraud between June 2022 and January 2023, during which Signa Holding, Prime, and Development filed for bankruptcy. This marks the latest thread in a complex web of legal proceedings involving 18 separate investigations surrounding the largest corporate insolvency in Austria’s history. Benko, currently under arrest, denies all charges, and all defendants benefit from the presumption of innocence. The investigation has uncovered internal financial flows within the Signa Group, particularly concerning two projects in Munich's city center. The focus is on how large sums of money were moved through the company structure, with one project being the renovation of the historic building at Munich’s main train station. According to documents obtained by the Standard, the funds for these project companies typically came from both equity and external financing. However, when the full amount was not required, part of the disbursement was redirected back to the parent company, usually Signa Prime or Development. This practice, referred to internally as “Upstream Loans,” allowed the group to maintain liquidity while keeping funds flowing upward through its hierarchy. Internal communications reveal the term “Staubsauger”, German for “vacuum cleaner”, used to describe this method of transferring funds. Emails show employees using the phrase in a literal sense, instructing colleagues to “launch the vacuum cleaner” or to ensure the “vacuum cleaner’s battery is charged and ready.” One manager wrote, “The vacuum cleaner is back,” suggesting a recurring process. Another directed subordinates to check whether their companies had more than 20,000 euros in liquid assets that could be transferred upwards. A former manager described the process as “manual cash pooling,” noting that each transaction required specific contracts, making the system highly intricate. According to investigators, the flow of funds around the train station project was especially notable. A German businessman sought to purchase the property, and on August 1, 2022, he transferred 120 million euros. Prosecutors allege that Signa did not intend to sell the asset but instead planned to redirect the entire sum to its parent company, Signa Prime. Benko played a key role in these negotiations, according to the reports. Investigators suggest that he exerted high pressure during discussions, possibly due to liquidity issues and the need for funding within the parent company. An Austrian lawyer noted at the time that there was “mad pressure from Signa.” The transfer of the funds occurred swiftly, with the money reaching Signa Prime by August 2, 2022. Ultimately, approximately 110 million euros of the total amount ended up at Signa Holding, the holding company of the group. These transactions highlight the complexity of the financial structures within the Signa Group and raise serious questions about the transparency and legality of the internal transfers. As the investigation continues, further details are expected to emerge regarding the broader implications of these practices and their impact on the company’s collapse.