VIENNA, May 28 (Reuters) - Austrian prosecutors are investigating property magnate Rene Benko over payments allegedly made in connection with the construction of a luxury chalet in the Alpine resort of Lech, German newspaper Wirtschaftswoche reported on Thursday.
A company spokesman for Benko, the owner of Karstadt department stores in Germany who a source said this month is eyeing Metro's Kaufhof chain, declined to comment.
No-one at the Lech town council was available for comment.
Citing a confidential memo from a local council meeting, the paper said Benko bought the then run-down property in 2011 and erected his chalet on the site, offering 250,000 euros ($272,750) to Lech council to forego its right of first refusal to buy the property and another 250,000 for quick approval of the project.
A spokeswoman for the white-collar crime unit of Vienna prosecutors said an investigation was under way into a settlement that the municipality of Lech got to forego a right of first refusal to buy a local property.
"It came to a payment in this context and we are reviewing the background of this payment," she said.
However she said privacy considerations prevented her from naming any suspects in the case, which Vienna authorities took over from prosecutors in Feldkirch at the start of this year. ($1 = 0.9166 euros) (Reporting by Angelika Gruber; Writing by Michael Shields; Editing by David Holmes)