Updated: 9/6/2010

http://news.malaysia.msn.com/business/article.aspx?cp-documentid=4318915

Police have launched a probe into local branches of scandal-plagued Austrian bank HGAA which is suspected of laundering money for a Balkan drugs kingpin, a Serbian minister said Monday.

Serbia's Interior Minister Ivica Dacic said his police was investigating certain branches of Hypo Group Alpe Adria (HGAA) in Serbia that Austrian police have pointed to as suspicious, Beta news agency reported.

Last month Dacic met Austria's chief of police Franz Lang and vowed Serbia's cooperation into the probe of HGAA.

The meeting followed a report that Serbian Darko Saric, dubbed "the Balkan cocaine king," laundered nearly 100 million euros (125 million dollars) between 2007 and 2009 in the troubled Austrian bank, which was nationalised in 2009 to avoid collapse.

According to the report, which quoted investigators, the nature of the laundering would have required participation of senior management at the bank.

Dacic said Serbia's part of the probe has just started and no evidence was found "so far" that Saric used HGAA in Serbia for money laundering.

"That does not mean that further investigation will not come to such documents" that would confirm allegations, Dacic said.

Dacic earlier said there were "several million pages of documents that needed to be searched through."

Saric was indicted by Serbian prosecutors in April on drug trafficking charges and is on the run.

HGAA (Hypo Group Alpe Adria) is at the centre of a number of scandals.

Its former chief executive Wolfgang Kulterer was arrested in mid-August, and it is being investigated by Austrian authorities for conspiracy, fraud, embezzlement, money laundering and false accounting.

HGAA's reckless expansion in the Balkans in the 1990s has been particularly costly, with a quarter of its total loans in the region -- around 8.3 billion euros -- in default.