The future of an idyllic Tucker?s Town estate now owned by Austrian financier Wolfgang Flottl is in question after a secret agreement to hand over the property to a bank he is indebted to was unearthed.

The pact, hatched in 2000 and only now coming to light, gives Austrian Bank for Arbeit und Wirtschaft (Bawag) the right to recoup some of its losses stemming from investments made with Mr. Flottl more than a decade ago.

Under the agreement, Bawag was handed the right to Mr. Flottl?s Bermuda estate, and another in the Bahamas. Other valuables, including paintings by the likes of Picasso and Cezanne, were also included in the list of goods to be handed over.

The deal was sealed in a secret London meeting between Mr. Flottl and then Bawag chief executive Helmut Elsner, and only yesterday revealed in Austrian weekly newsmagazine Profil.

At the London meeting, under pressure from Mr. Elsner, Mr. Flottl signed a confession admitting he ran up losses for Bawag of more than $1 billion. He also agreed to hand over property and valuables worth several hundred million dollars, Profil reported, citing sources within Bawag.

Amongst the valuables Mr. Flottl agreed to hand over ? Castlepoint, a property valued at in excess of $22 million, that sits on the end of the peninsula that makes up the elite, gated community of Tucker?s Town.

A review of Bermuda land valuation records last week showed that Mr. Flottl still owns Castlepoint. And there is no known attempt by the Austrian trade union federation ? the owners of Bawag ? to seize the estate.

Under Bermuda law, a foreigner can only own property if it exceeds a certain value threshold, and also is granted a licence to do so by Government. While foreign institutions are rarely afforded the privilege of owning residential property, Government might issue a short-term licence to allow for the sale of the property, real estate and legal professionals said. Otherwise the property would have to be fought for through the Bermuda court, it is understood.

An adjacent Tucker?s Town property, Sounion West, is also reportedly listed in Bawag?s agreement with Mr. Flottl. The property is currently valued at about $15 million, according to the Profil report, citing Bawag assessments. Bermuda records list the Sounion property as being owned by a Julie Jones, while Profil reported that Mr. Flottl has the full right-of-use of the property, and that he and his guests frequent it.

Attempts to reach Mr. Flott?s New York lawyer, Martin Goldenberg, were yesterday unsuccessful. Mr. Flottl, who is understood to spend much of his time in Manhattan, does not have a published telephone number.

Last week Austrian prosecutors requested arrest warrants for former Refco chief executive Philip Bennett and Mr. Flottl, as part of an investigation into alleged fraud. The warrants had not been issued as of Friday. And Mr. Goldenberg last week told his client isn?t guilty of any wrongdoing.

The revelation that Bawag has the right to some of Mr. Flottl?s property comes a week after the bank admitted to hiding the loss, stemming from investments in several funds run by Mr. Flottl.

The losses were brought to light in an ongoing investigation of Refco Inc., a commodities broker that went into a death spiral last year after its then chief executive admitted to hiding losses. Although the losses that Bawag sustained from its investments with Mr. Flottl date back to the period between 1995 and 2000, they are now coming to light as part of Refco?s investigation because the losses were reportedly hidden in offshore shell companies as well as accounts of the collapsed brokerage.

The Bawag controversy has pushed the Austrian trade union to oust the bank?s board as well as to announce its intent to put Bawag up on the sales block.