Corvus
10-11-2013, 07:50 PM
Corruption in Austria
Introduction
The Alps, Mozart, the Sound of Music, Sacher Torte, Wiener Schnitzel – this and morebesides may come to mind when you think of Austria. But what about corruption? AlthoughAustria is a country with a long cultural history, dating back to its empire days, it is littleknown outside the Alpine republic that Austria is also a highly corrupt country. Over the past few years, a growing number of corruption scandals have made it into the international head-lines, among them doubtful payments surrounding the purchase of fighterplanes, construction projects, various privatisation programmes and not to forget theignominious collapse of the regional bank Hypo Alpe Adria. To many Austrians, corrupt practices in their country are nothing new and are present in their daily lives with cash stuffed envelopes exchanging hands in numerous sectors of the economy.Worst of all is the Austria political arena. Hardly a party has been immune from the countless corruption scandals that have bedevilled the country for years and many of which have recently come to light. The latest event to hit international head-lines has been the conviction for corruption of a former government minister, Mr. Ernst Grasser.Apart from severely damaging Austria’s international reputation, the country’s corruptpractices have also left an important mark on its economy. According to a study by FriedrichSchneider of Johannes-Kepler-University in Linz, the annual economic damage caused bycorrupt practices in Austria is estimated at some EUR 27 bn, i.e. some 8% of the country’s GDP or some € 3,200 per capita. The question that inevitably arises is therefore how such a corrupt culture could evolve in thesmall Alpine country and what can be done to address the issue.
The origins of Austria’s corruption
The post-war second Austrian republic has always had a closely knit political landscape, mostly due to its small size and small pool of politicians. As a result, there has only been avery limited turnover in political decision-makers over the years.Since WWII, two political parties (the right of centre ÖVP and the left of centre SPÖ) havedominated the political scene, resulting in what has been called “Proporz”, i.e. a political system in which the spoils of office have traditionally been distributed roughly evenlybetween key members of the two main parties. Over the years, this has led to some outrageous cases of abuse of office and corruption, something that is known in Austria as “Freunderlwirtschaft”, i.e. “friends’ economy”.The resulting high level of corruption is a fact that has been widely known in Austria butdeliberately ignored by most of its citizens. When Jörg Haider’s “liberal” party FPÖ managedto break open the traditional two-party system in 1999, many hoped that this would mean theend of Proporz and would lead to a drop in corruption. Yet instead of breaking up the oldsystem and reducing corrupt practices, the FPÖ’s joining the fry actually meant more of thesame, as FPÖ party officials now tried to secure as many advantages for themselves aspossible, actually leading to a rise in corruption, with some leading FPÖ officials, such asMessrs. Strasser and Grasser, playing particularly infamous roles. The high levels of corruption in Austria are also the result of a lack of political will to addressthe issue. This has resulted in an extremely weak anti-corruption framework,
legislation; an anti-corruption agency that has hardly any means at its disposal; lack transparency in party financing; weak courts; endless legal investigations; powerlessprosecutors (who “forget” to prosecute certain cases) etc. These deficiencies have long beencriticised by the Council of Europe’s anti-corruption committee GRECO, yet seemingly to no avail. This regrettable situation is compounded by a lack of a clear separation of powers, as allof the country’s key institutions are dominated by nominees of the two main political parties SPÖ and ÖVP. This system was allowed to develop partly because of a voting system basedon proportional representation that sees no direct accountability to constituencies.
Austria’s main corruption scandals
Over the past few years, a number of corruption scandals have broken into the open inAustria. Among the most important ones have been the following:
•
Eurofighter scandal This involved the purchase of 18 Eurofighters in 2003, when Austria did not buy the cheaperSwedish Gripen, but the more expensive Eurofighter after an alleged intervention by Mr.Grasser and a number of alleged shady payments.
•
Bank Hypo Alpe Adria This is the infamous story of the Carinthian Bank Hypo Alpe Adria that handed out generouscredits and gifts at the behest of the late regional leader, Jörg Haider, and was sold off to theBavarian state-owned BayernLB bank in 2007 right before its collapse, in a scandalous dealthat is still before German and Austrian courts.
•
Telekom scandal This involves the privatisation of the former state owned telecommunications providerTelekom Austria that is said to have involved two former FPÖ ministers, Hubert Gorbach andMatthias Reichhold.
•
Vienna airport The third terminal of Vienna airport was opened in 2012 after a lengthy 15 years‘ construction time and a cost overrun of close to 250%, partly because of corruption. As a result, acorruption investigation was opened against almost the entire Board under Messrs. GerhardSchmid and Ernest Gabemann, both political nominees of the two big political parties.
•
Kurier advertising scandal This involves the close links between the Austrian pleb sheet “Kurier” and the Austrianchancellor Werner Faymann. He has been accused of benefiting from reporting skewed in his favour during his campaign for chancellor in 2007.Other scandals include the privatisation of the state owned housing enterprise BUWOG, legislative easing on gambling companies, both said to involve former Finance Minister Karl-Heinz Grasser, the introduction of a new radio system for the Austrian police, said to involveMr. Ernst Strasser and numerous others.
Addressing corruption in Austria
After the above mentioned scandals broke into the open, the Austrian National Assembly setup a Parliamentary Committee in 2011 with the aim of shedding light on the above stories, yetthe working of the Committee has been marred by scandal almost since its very beginning,involving its structure, agenda and powers. Most infamously, when Chancellor Faymann was
invited to testify before the Committee in September 2012, he declined to appear. The Committee is soon due to be wound up and its results so far have been less than impressive.This is highly regrettable, as a genuinely transparent Committee could have gone some way inreconciling sceptical Austrians with their political class as most Austrians are more than fedup with their politicians and their countless corruption scandals.The most immediate risk of this inability to address abuse of office and corrupt deals is afurther drifting of the electorate towards the extremist fringes of the political establishment, inparticular towards the extreme right, for whom already some 30% of Austrians have voted in recent elections.In the absence of a clear political will to address corruption in Austria, it is hard to expect anychanges to this profoundly broken political system in the foreseeable future, not quite unlikethe current situation in Greece that has been much publicised over the past two years. Only genuine outside pressure could possibly provoke any significant change in both countries. Yet due to Austria’s international insignificance, this is hardly to happen any time soon.
Source: http://www.academia.edu/2432598/Austria_-_the_Alpine_corruption_paradise
Introduction
The Alps, Mozart, the Sound of Music, Sacher Torte, Wiener Schnitzel – this and morebesides may come to mind when you think of Austria. But what about corruption? AlthoughAustria is a country with a long cultural history, dating back to its empire days, it is littleknown outside the Alpine republic that Austria is also a highly corrupt country. Over the past few years, a growing number of corruption scandals have made it into the international head-lines, among them doubtful payments surrounding the purchase of fighterplanes, construction projects, various privatisation programmes and not to forget theignominious collapse of the regional bank Hypo Alpe Adria. To many Austrians, corrupt practices in their country are nothing new and are present in their daily lives with cash stuffed envelopes exchanging hands in numerous sectors of the economy.Worst of all is the Austria political arena. Hardly a party has been immune from the countless corruption scandals that have bedevilled the country for years and many of which have recently come to light. The latest event to hit international head-lines has been the conviction for corruption of a former government minister, Mr. Ernst Grasser.Apart from severely damaging Austria’s international reputation, the country’s corruptpractices have also left an important mark on its economy. According to a study by FriedrichSchneider of Johannes-Kepler-University in Linz, the annual economic damage caused bycorrupt practices in Austria is estimated at some EUR 27 bn, i.e. some 8% of the country’s GDP or some € 3,200 per capita. The question that inevitably arises is therefore how such a corrupt culture could evolve in thesmall Alpine country and what can be done to address the issue.
The origins of Austria’s corruption
The post-war second Austrian republic has always had a closely knit political landscape, mostly due to its small size and small pool of politicians. As a result, there has only been avery limited turnover in political decision-makers over the years.Since WWII, two political parties (the right of centre ÖVP and the left of centre SPÖ) havedominated the political scene, resulting in what has been called “Proporz”, i.e. a political system in which the spoils of office have traditionally been distributed roughly evenlybetween key members of the two main parties. Over the years, this has led to some outrageous cases of abuse of office and corruption, something that is known in Austria as “Freunderlwirtschaft”, i.e. “friends’ economy”.The resulting high level of corruption is a fact that has been widely known in Austria butdeliberately ignored by most of its citizens. When Jörg Haider’s “liberal” party FPÖ managedto break open the traditional two-party system in 1999, many hoped that this would mean theend of Proporz and would lead to a drop in corruption. Yet instead of breaking up the oldsystem and reducing corrupt practices, the FPÖ’s joining the fry actually meant more of thesame, as FPÖ party officials now tried to secure as many advantages for themselves aspossible, actually leading to a rise in corruption, with some leading FPÖ officials, such asMessrs. Strasser and Grasser, playing particularly infamous roles. The high levels of corruption in Austria are also the result of a lack of political will to addressthe issue. This has resulted in an extremely weak anti-corruption framework,
legislation; an anti-corruption agency that has hardly any means at its disposal; lack transparency in party financing; weak courts; endless legal investigations; powerlessprosecutors (who “forget” to prosecute certain cases) etc. These deficiencies have long beencriticised by the Council of Europe’s anti-corruption committee GRECO, yet seemingly to no avail. This regrettable situation is compounded by a lack of a clear separation of powers, as allof the country’s key institutions are dominated by nominees of the two main political parties SPÖ and ÖVP. This system was allowed to develop partly because of a voting system basedon proportional representation that sees no direct accountability to constituencies.
Austria’s main corruption scandals
Over the past few years, a number of corruption scandals have broken into the open inAustria. Among the most important ones have been the following:
•
Eurofighter scandal This involved the purchase of 18 Eurofighters in 2003, when Austria did not buy the cheaperSwedish Gripen, but the more expensive Eurofighter after an alleged intervention by Mr.Grasser and a number of alleged shady payments.
•
Bank Hypo Alpe Adria This is the infamous story of the Carinthian Bank Hypo Alpe Adria that handed out generouscredits and gifts at the behest of the late regional leader, Jörg Haider, and was sold off to theBavarian state-owned BayernLB bank in 2007 right before its collapse, in a scandalous dealthat is still before German and Austrian courts.
•
Telekom scandal This involves the privatisation of the former state owned telecommunications providerTelekom Austria that is said to have involved two former FPÖ ministers, Hubert Gorbach andMatthias Reichhold.
•
Vienna airport The third terminal of Vienna airport was opened in 2012 after a lengthy 15 years‘ construction time and a cost overrun of close to 250%, partly because of corruption. As a result, acorruption investigation was opened against almost the entire Board under Messrs. GerhardSchmid and Ernest Gabemann, both political nominees of the two big political parties.
•
Kurier advertising scandal This involves the close links between the Austrian pleb sheet “Kurier” and the Austrianchancellor Werner Faymann. He has been accused of benefiting from reporting skewed in his favour during his campaign for chancellor in 2007.Other scandals include the privatisation of the state owned housing enterprise BUWOG, legislative easing on gambling companies, both said to involve former Finance Minister Karl-Heinz Grasser, the introduction of a new radio system for the Austrian police, said to involveMr. Ernst Strasser and numerous others.
Addressing corruption in Austria
After the above mentioned scandals broke into the open, the Austrian National Assembly setup a Parliamentary Committee in 2011 with the aim of shedding light on the above stories, yetthe working of the Committee has been marred by scandal almost since its very beginning,involving its structure, agenda and powers. Most infamously, when Chancellor Faymann was
invited to testify before the Committee in September 2012, he declined to appear. The Committee is soon due to be wound up and its results so far have been less than impressive.This is highly regrettable, as a genuinely transparent Committee could have gone some way inreconciling sceptical Austrians with their political class as most Austrians are more than fedup with their politicians and their countless corruption scandals.The most immediate risk of this inability to address abuse of office and corrupt deals is afurther drifting of the electorate towards the extremist fringes of the political establishment, inparticular towards the extreme right, for whom already some 30% of Austrians have voted in recent elections.In the absence of a clear political will to address corruption in Austria, it is hard to expect anychanges to this profoundly broken political system in the foreseeable future, not quite unlikethe current situation in Greece that has been much publicised over the past two years. Only genuine outside pressure could possibly provoke any significant change in both countries. Yet due to Austria’s international insignificance, this is hardly to happen any time soon.
Source: http://www.academia.edu/2432598/Austria_-_the_Alpine_corruption_paradise