Corruption Scandals in Austria A Web of Sleaze in Elegant Vienna


By in Vienna

Part 2: 'Nothing Short of Organized Robbery'

To view the scenes of the crimes and scandals, all it takes is a tour in a horse-drawn cab around Vienna's center. The Weinheber monument is only a stone's throw away from the sites of business and politics. To the right is the office of the aristocratic lobbyist Mensdorff-Pouilly. He is said to have prepared the way for his millions of euros in commissions during lavish hunting parties around his estate in the eastern Austrian state of Burgenland with partners from the world of politics, government and industry.

Straight ahead is the Hotel Sacher, where Peter Hochegger, who is suspected of having committed a wide range of offenses, can occasionally be seen on the café terrace, looking well-tanned and undaunted. Around the corner to the left is the 600 square meter (6,500 sq. ft.) penthouse owned by former Finance Minister Grasser. From there, the tour proceeds to a palace behind the Burgtheater.

This is the headquarters of "the party of the respectable and virtuous," as Peter Pilz, the spokesman for the Green Party, puts it without a hint of irony. For a quarter of a century, Pilz has been raging at Austria's political establishment. "What has happened in this republic is nothing short of organized robbery," he says. "We should clean up this mess and, if necessary, put a few of them behind bars."

Stealing the Coffee Machine Too

Who do the Greens accuse? According to Pilz, Chancellor Faymann and his SPÖ have swindled the republic out of €1.5 million. Former Chancellor Schüssel's ÖVP and the right-wing populists, on the other hand, are responsible for up to €10 billion in pilfered money, he claims. They have taken things to an unprecedented level, he says. "Politicians used to, figuratively speaking, merely nibble at the whipped cream on top of the coffee. But Schüssel und Grasser have taken the mug and the coffee machine as well."

Pilz's fellow party member Gabriela Moser, who has been appointed to lead the investigative committee in Austria's lower house of parliament, the National Council, prefers to use numbers to paint a picture of the extent of the damage. In addition to countless other scandals, she says it is above all the Buwog affair and the irregularities at Telekom Austria, including share-price losses, that have cost taxpayers "billions in losses."

As a prime example of the "moral decay" in the country, Moser recalls a dinner with a high-ranking Telekom manager. She says that she asked him why his company, which is partly state-owned, didn't purchase a Bulgarian mobile phone company directly, but instead opted to pay a price that was €800 million higher via an Austrian middleman. The manager told her bluntly that acquisitions that are "associated with extensive preparation on the ground, such as bribes," cannot unfortunately be concluded by Telekom on its own.

The scandals engulfing Telekom are well documented and provide an indicator of the extent of corruption within Austrian society. Indeed, this company, in which the government still has more than a 25 percent stake, has apparently experienced an entire decade of rampant megalomania at management level. The firm's former top executives, including ex-CEO Heinz Sundt, are suspected of manipulating share prices. They deny all the allegations. Senior staff members reportedly made millions in profits from the deals. In addition, Telekom is accused of paying too much for acquisitions of mobile phone operators in Eastern Europe, and of indirect bribery or covert party funding through millions of euros in payments to consulting firms.

Plastic Bags Full of Cash

Hochegger, for example, received €9.06 million in fees over the years "without any documented services" being provided in return -- all booked under headings such as "government lobbying." This is the conclusion, at any rate, that was reached by the company's own internal task force. For 10 years of "consulting" provided to the Telekom press office, which already had plenty of employees of its own, Hochegger's firm submitted invoices totaling an additional €10 million. Documents reveal subsequent flows of cash from Hochegger to former Vice Chancellor Gorbach and former Minister Reichhold. Was it payment for past favors?

Austria's other top lobbyist, Count Mensdorff-Pouilly, also received transfers from Telekom amounting to €1.1 million for consulting services. The prosecutor's office suspects a connection here with the contract awarded by then-Interior Minister Strasser for a new digital police radio network. In any case, the order ended up going to Telekom, working in a consortium with Motorola and Alcatel. Could it be that this deal was sealed months previously when senior officials from the ÖVP-led Interior Ministry attended a dinner at the count's estate?

Needless to say, in the better circles of Viennese society, where they still have breast-pocket handkerchiefs sewn to match their sports coats, blatant theft is seen as ungustiös ("unappetizing"). Not surprisingly, the public was exceedingly shocked by what has allegedly transpired in recent years, events which the newspapers have been reporting on for months.

The Viennese are dismayed to read about a Telekom manager, for instance, who allegedly personally handed over a plastic bag filled with hundreds of thousands of euros in a back alley of the Naschmarkt, a popular traditional food market. The recipient was allegedly a broker who had earlier manipulated share prices, allowing Telekom managers to rake in €8.7 million in extra income. According to the news magazine Profil, there must have been scenes in Vienna reminiscent of a "tawdry crime thriller."

But not everyone shares this sense of moral outrage. There are also people who like to present themselves as innocents. Take, for instance, the former finance minister who owns a €5 million penthouse and who turned himself in to the authorities because he had forgotten to pay a portion of his taxes. Or the CEO of a publicly traded company who says that he doesn't know what "breach of trust means in legal terms."


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