Inside Bawag's Refco Role

The Austrian bank Bawag was a partner in crime with former Refco(RFXCQ Quote) CEO Phillip Bennett in the nearly $1 billion accounting fraud that led to the collapse of the New York-based commodities brokerage, prosecutors said Monday.

Over the past six months, the obscure Austrian bank has emerged as a key player in the Refco scandal. In fact, prosecutors contend in a settlement reached Monday that Bawag once controlled 47% of the brokerage through a secret deal with Bennett.

By agreeing to pay a minimum of $675 million in a complicated settlement hammered out by federal prosecutors, Bawag won't face any criminal charges over its role in Bennett's alleged debt-hiding scheme. The total amount shelled out by Bawag eventually could exceed $700 million. ...