VIENNA Dec 11 Austria said it planned stricter
controls over regional finances after a Salzburg civil servant
gambled hundreds of millions of euros of taxpayers' money on
Finance Minister Maria Fekter said on Tuesday she was
preparing new national legislation to impose stricter conditions
on how regional administrations could use money borrowed at
preferential rates from the Federal Financing Agency (BFA).
Salzburg officials said last week they had sacked a finance
director after determining she used doctored documents and false
signatures to hide a trail of losses from deals that started
more than a decade ago, causing a book loss of 340 million euros
The incident has sparked calls for fresh elections in
Salzburg state and for regional financing rules to be reformed.
Austrian states have 8.2 billion euros of debt, or 8.1 percent
of the country's public debt.
"It can't go on that one keeps getting cheap money from the
BFA and then starts gambling with it," Fekter told journalists,
adding that the states could save 150 million euros per year by
using the BFA for all their financing needs.
Fekter said draft legislation would soon be ready and could
be enacted early next year.
The national FMA markets watchdog said it would welcome a
more centralised approach to regional financing even though it
saw no risk at this stage to overall financial stability.
A document presented to ministers by Fekter on Tuesday and
seen by Reuters proposes anchoring rules that govern the terms
of borrowing from the BFA in Austria's federal financing law,
which sets strict conditions for the use of taxpayers' money.
Foreign currency speculation and trading in derivatives
without having underlying assets would be banned, and valuation
of assets on the books would have to be updated every year.
Fekter said: "We will make the standards compulsory for
everyone. How the states then implement the standards will of
course remain a matter of regional autonomy."
The head of the BFA, Martha Oberndorfer, said she would
welcome stricter governance and the BFA would give a more
detailed statement later.
(Reporting by Georgina Prodhan; editing by Andrew Roche)