The head of Austria's trade union federation resigned on Monday, embarrassing the opposition of which he was a leading MP, after saying he had helped hide 1 billion euros ($1.2 billion) of losses at a union-owned bank.
Fritz Verzetnitsch, who had led the OeGB for nearly 20 years, stepped down both as union chief and as a Social Democrat parliamentarian following his admission last week that he had helped conceal the losses at union-owned bank BAWAG P.S.K.
"I am not assuming political responsibility for the management mistakes at BAWAG," Verzetnitsch told a news conference in BAWAG's Vienna headquarters after announcing his resignation. "This was a purely personal decision," he added.
Verzetnitsch was seen as a likely cabinet member if the centre-left Social Democrats keep their four to six percentage point opinion poll lead and oust the conservative People's Party in national elections later this year.
But his own dual role, coupled with the party's traditional union ties, make it easy for the People's Party to link the Social Democrats to the BAWAG row and reinforce voters' doubts about their ability to run the economy.
"The People's Party has every chance now to focus the campaign on economic competence rather than social issues," said political analyst Peter Filzmaier. "Currently they are getting their message across: Stability, no economic hazard."
Social Democrat head Alfred Gusenbauer said Verzetnitsch's resignation was noble, and he had not pushed him to quit.
BAWAG, Austria's fourth-biggest bank and serving mainly domestic retail clients, came to international attention last year when it surprisingly emerged as a top creditor in US futures trader Refco Inc's
BAWAG lost nearly 400 million euros after making a hastily arranged loan to Refco just days before the US trader became insolvent last October. But the insolvency proceedings uncovered much bigger losses made by the bank in the late 1990s.
The revelation of the past losses -- which the bank says it quietly wrote down over the past five years -- triggered Weninger's and Verzetnitsch's confession on Friday that they had pledged the OeGB's treasured strike fund to save the bank.
Both Weninger, who stepped down as the union's finance chief, and Verzetnitsch, reiterated that they stood by their decision to protect the bank against a run. They are not accused of having made any personal gains from the arrangement.
Finance Minister Karl-Heinz Grasser ordered the banking watchdog FMA on Monday to investigate BAWAG. It is only a few months since the FMA and the Austrian central bank investigated the union-owned bank as part of their probe into the Refco loan.