CASTLE FREYENTHURN Not far from Klagenfurt, it was once a secret branch office for Hypo bank clients from Croatia and Italy, and is now home to the pricey Club Babylon bordelloA secret branch office of the Hypo bank targeted exclusively to dubious clientele from Croatia and Italy has for years been housed at the mysterious Freyenthurn bordello-castle near Klagenfurt. This castle, now the Babylon Club, a luxury bordello for VIP clients, is situated in a forest near Lake Worther, in the western suburbs of Klagenfurt, ten kilometres from Klagenfurt airport, the chief link in the transfer of laundered money from Croatia to Liechtenstein.

Christian Rauscher, the former head of the financial department at the Hypo bank, i.e. the man who was, as head of the treasury from 1999 to 2005, responsible for all business transactions with Croatian nationals, spoke out about it all a few days ago on the ORF Austrian national TV channel. Besides a number of Croatian businesspeople, who did their banking in the discretion offered by Freyenthurn castle, Rauscher hinted that he might very soon also speak out about the dubious connections of the Hypo bank management with former Croatian Prime Minister Ivo Sanader, and perhaps even about a secret monetary fund that has for years now been brought into connection with Sanader.

MANY DUBIOUS DEALS linked to the Hypo bank and its operations in Croatia took place in Freyenthurn for years. The castle, built in 1541, changed hands many times over the centuries, and in the early 1990s one of its last owners found himself in financial difficulties he did not succeed in extracting himself from even with lines of credit from the Hypo bank. and so after his bankruptcy in 1994 the entire castle passed into the ownership of the Hypo bank, whose top people had very unusual plans for the palace. Within Freyenthurn the management set up a small and secluded branch office of the bank, with everything required for special clients - a teller's counter, consultancy centre and a large treasury from which money was withdrawn, or stored prior to being transfered by special private secret flights to Lichtenstein. And since the castle is surrounded by dense woods and located outside of downtown Klagenfurt, many Hypo bank clients were able to do their business there in complete secrecy, which was clearly the chief goal of the top people at the Hypo bank.

AND WHILE CHRISTIAN RAUSCHER has revealed the previously unknown use of Freyenthurn castle in his TV interview of last week, he did not at the time reveal the names of the Croatian clients who frequented the place, or when the bank branch office was replaced by a high end bordello, or whether the bank and brothel ever shared the premises. It is, as a result, impossible to ascertain whether, for example, Italian Prime Minister Silvio Berlusconi, who some of the Austrian press say also secretly visited castle Freyenturn, came there for banking or other business. Some Nacional sources point out that Freyenturn, because of the discretion it offered, was for years also the favoured destination of some of the more prominent Croatians and the Croatian business elite, and the mayor of one of the larger Croatian cities is alleged to have entertained himself there. Now, however, the offer of the Babylon Club, owned by an Italian, can be found on the Internet - entry costs 130 euro, the use of a room for an hour 250 euro, and "the company of a girl" is offered at the additional charge of 200 euro per hour. In his interview for Austria's ORF TV channel the former head of finances at the Hypo bank, Christian Rauscher, hinted by mentioning castle Freyenthurn that he knew a great deal of the secret dealings of the Hypo bank, and that he was willing to speak out about them. That has surprised many in Austria who knew that up to now Rauscher had on several occasions declined to discuss what he knew of the dubious dealings of the Hypo bank, which was also the stance he adopted at the parliamentary inquiry in 2007. Now, three years later. Raunchier has evidently decided to speak out, and it is believed that he could reveal some of the more controversial details of his own life to the public or investigators. He could, for example, finally shed some light on a never explained event that took place on 17 January 2005, when he appeared, bloodied, at the door to his home.

IVO SANADER The former prime minister's name has been cited for the first time on Austrian national TV in the context of the investigation into the Hypo scandalHE WOULD ONLY TELL THE POLICE that quickly took him to a hospital that some Croatians had beaten him, but refused to show what was in a mysterious black case he anxiously clutched in his hands until two members of Hypo security showed up, to whom he finally relinquished the case. It was not long afterwards that Rauscher withdrew the statement he had initially given to the police, and the new version was that he had inadvertently injured himself, but even then there were rumours that the mysterious case contained jewels and money belonging to a top Croatian military official, and that Rauscher had been beaten by some Croatian clients of the Hypo bank. The next mysterious event linked to Rauscher took place in 2006 when he decided to leave the Hypo bank. He faced numerous threats at the time, which he never officially reported, but it was revealed recently that they too were linked to Croatia. "If you ever get the idea of speaking out about anything, we will know how to react," and this allegedly pertained to his knowledge of the ties between the heads of the Hypo bank with Ivo Sanader and Vladimir Zagreb. In the final tally, Rauscher allegedly knew in detail the also never explained rumour of an alleged Sanader fund at the Hypo bank, i.e. money that Ivo Sanader had at his disposal since the early 1990s. Some have alleged that the fund exceeded 140 million euro and was in fact a combination of money Croatia used to arm itself, but also of funds that were paid out to Sanader as a commission for the Hypo bank's access to the Croatian market and for every major project that the bank launched in Croatia over the years. When an inquiry was launched before an Austrian parliament commission in 2007, Christian Rauscher was an entirely different man from the one he is today - he declined to comment all questions pertaining to the laundering of money and operations in Croatia, and cited his obligation not to divulge trade secrets. Insofar it comes to many as being all the more peculiar that he agreed a few days ago to give an interview to the national TV broadcaster. He was, admittedly filmed from the rear, and his identity was not revealed, but he was surely aware of the fact that journalists, and many others, would grasp very quickly that it was he in fact, the key witness for the Austrian state attorney's office. He spoke very confidently about the former Croatian prime minister on Austrian TV, and given that he was no small-time counter clerk at the bank, but instead a real insider who was privy to a great deal of confidential data, it is clear that he could say much more about many other matters. It has been known that he had for years been responsible for many of the bank's operations in Croatia and that he very likely has knowledge of the never elucidated links between Ivo Sanader and the Hypo bank, its appearance on the Croatian market and its dubious, or at least very risky lines of credit in Croatia, which have resulted in what has now become a very lengthy official investigation in Austria.

SILVIO BERLUSCONI The Italian prime minister visited castle Freyenthurn - it is not clear whether he did so for the financial or other services offered thereIT IS IMPORTANT TO RECOGNISE that, in the case as a whole, Rauscher's appearance last week on Austrian national TV was not his own, irrational act, but rather much more likely part of a strategy employed by the Austrian state attorney's office, which is out to send a message with the interview - to the austrian public that the investigation is still ongoing, and that it has of late turned towards very concrete individuals, among others the former Croatian prime minister. Likewise, Rauscher's appearance has sent a message to Wolfgang Kulterer that the state attorney's office has already received a great deal of information from Rauscher that incriminates him, which could induce Kulterer to cooperate. According to some sources it could also be a message to Gunter Striedinger, who is still at large, and in the final tally to all of the other actors of the Hypo scandal who have not to date disclosed all that they know.

IT WAS JUST A FEW HOURS after the show broadcast on national TV that the Austrian press "figured out" the identity of the interviewee and revealed that it was in fact Rauscher, whose statements could prove very damaging to the former Croatian prime minister. Another threat to Sander in Austria, besides Rauscher, is Wolfgang Kulterer. His recent arrest once again opened speculation that he would, in exchange for a more lenient sentence, finally speak out concerning the Hypo bank's dubious dealings in Croatia and finger Ivo Sanader. Simply put, it appears that both Kulterer and Rauscher have found themselves in a situation in which the Austrian authorities have enough evidence against them that it was suggested to them that they could improve their situation only if they helped in shedding light on the Hypo scandal, i.e. if they finger the other participants in the murky operations in the countries of the former Yugoslavia. In the Croatian context the name of the former Croatian prime minister is clearly very high on the investigators list, something Sanader himself is clearly well aware. He penned a statement last week from California, where he is allegedly on his summer vacation, in which he has tried to convince the Austrians of his innocence.

THE SERVICES OF A PROSTITUTE at the Babylon with room rental costs about 500 euro an hour, and it is allegedly frequented by many wealthy CroatiansWOLFGANG KULTERER, the former CEO of the Hypo Group Alpe Adria found himself the target of Austrian investigators back in 2006 after stepping down from the top job at the bank. An indictment was raised against him not long afterward for tampering with the bank's balance sheet, but he struck a plea bargain with the prosecution and in the end avoided going to jail and only had to pay a monetary fine. In return he agreed to help investigators in shedding light on all of the murky transactions at the Hypo bank, although he recently evidently concluded that it was best if he fled Austria for Great Britain. And so over the past few months, at the height of the investigation into the Hypo bank, Kulterer tried to sell his apartment in downtown Klagenfurt and made secret preparations to flee the country, but the police foiled his plans - on Friday 13 August, he was arrested in the garage of the building he lives in, and the police found 140 thousand euro in cash among his possessions with which he allegedly intended to flee Austria. Since being placed in police custody Kulterer has allegedly faced new, additional charges, and there is a growing level of certainty that he will once again try to work out a plea bargain with the state attorney's office, but this time the stakes will surely be much higher - by all accounts he will have to divulge in detail the, up to now, unknown particulars of the Hypo bank's operations in Croatia, and Austrian business people have for some time now speculated that Kulterer could also have much to tell investigators about Ivo Sanader, even concerning some private expenses incurred by Sanader, dutifully covered by the Hypo bank.

WHATEVER THE CASE, it is to be expected in the coming days and weeks that Austrian investigators will shed light on a growing number of the details of the Hypo bank operations in Croatia, where a central role was, judging by all accounts, played by former Croatian Prime Minister Ivo Sanader, who, by an interesting coincidence, is scheduled to appear next Monday at an European forum in Austria's Alpbach. Since Austrian investigators have demonstrated a clear intention of seeing their work out to its end, and given his name has been cited over the past few days on Austrian national television in connection with criminal affairs, it would perhaps not be overly wise of Ivo Sanader to travel to Austria next weekend. Because, perhaps there is some Austrian Mladen Bajic there quicker than the Croatian one.