Fraud, Cronyism, and the Niece of a Russian Oligarch: What’s Going On in Austria? 

Written By: Lara Cathleen Hagen

When you look at what’s happening in world politics, you’ll often look first at large, influential countries like China, Russia, and the United States. Europe also plays an important role in this analysis. But, within the context of global politics, the EU as a whole is more likely to be discussed than are the  individual states that make it up . As a result, political and economic events in smaller member states are often overlooked. 

One of these states, Austria, has recently experienced a great deal of political turbulence. Unsurprisingly, these consequential events have received little press in the United States.

The small  country is relatively insignificant in terms of global politics, but maintains a long and complex history. The political landscape in Austria has lately been characterized by fraud, corruption and political abuses of power. These governmental failures have created an enormous amount of turmoil and instability within both the state and the populace. But, international news outlets have begun to take notice. CNN and the Guardian recently reported about the ongoing issues in Austria, despite its relatively small population..  

The state’s political history is quite eventful. The Republic of Austria was created at the end of World War I after the disintegration of the Austro-Hungarian Empire. The burgeoning state, however, experienced a number of political and economic crises shortly after its conception. In 1938, the Nazi party came to power in Germany, under the leadership of Adolf Hitler. World War II marked a period of fascist rule for Austria. This ended only with the surrender of Germany, an event that brought democracy back to the mountainous country.

After Austria’s liberation in 1945, the first democratically elected government was formed with the country’s two major political parties. These were the Christian-Social Conservative “People’s Party” and the leftist oriented “Social Democratic Party”. The two ruled for 20 odd years in a so-called “grand coalition.” Even today, the parties dominate most elections. 

However, in recent years, the status quo has started to change. The questions of corruption, abuse of office and nepotism are commonplace in political conversations today . The former leader of the Austrian People’s Party, Sebastian Kurz is under investigation for a myriad of claims. He is also a former Chancellor of the state– a fact that only makes these serious charges more alarming.

To add insult to injury, during the Spring of 2019, two German newspapers – “Süddeutsche Zeitung” and the “Spiegel” – published a major expose of the then Vice-Chancellor. Head of the right-wing “Freedom Party Austria” (FPÖ), Heinz-Christian Strache was video recorded a conversation with the niece of an alleged Russian oligarch in a villa on the Spanish island of Ibiza. This was just the tip of the iceberg.  

The relationship between the two turned out to be a quid pro quo. Strache offered the woman lucrative public appearances. In return, she helped Strache  attempt to gain control of Austria’s largest-circulation tabloid newspaper – Kronen Zeitung. Strache wanted to influence  the newspaper to publish favorable stories for the FPÖ.

In the video, Strache also talks about party funding with the alleged oligarch-niece. He explains to her how she could get her money to the FPÖ without having to deal with legal regulations. Donations, he says, could be made through an intermediary association that had the ability to funnel the funds to the party directly. This way, he posited, a report to the Court of Auditors could be avoided.

The video was deliberately recorded. It is suspected that the detective Julian Hessenthaler and a Viennese lawyer are the duo behind the scheme. Hessenthaler was recently sentenced to three years in prison– but not for the consequences of the Ibiza video. Instead, he was charged with cocaine trafficking. Amnesty International Austria has harshly criticized his sentence. The human rights group fears that future whistleblowers are going to be intimidated by his imprisonment. Even so, Hessenthaler’s work wasn’t ignored.

A day after the video was published, HC Strache announced his resignation from the position of Vice-Chancellor. The investigations that came as a result of that video have yet to be concluded. 

Strache’s resignation came as a direct result of the parliament’s “vote of no-confidence.” Chancellor Sebastian Kurz and his government resigned as well. Kurz was 32 at the time, and was the youngest head of state in the EU. However, he was re-elected in the elections for the new government in September 2019. Yet, the story doesn’t end here. 

Though it has been years since the Ibiza affair the political situation in Austria remains precarious. Ex-Chancellor Kurz, was once hailed as a political “Wunderkind,” the Austrian term for [TRANSLATION]. Today, he regularly faces accusations and investigations. Prosecutors accuse Kurz of falsifying polls before his first election in 2017, and complicity in bribes to tabloids in exchange for favorable coverage.. According to prosecutors, Kurz would have institutionalized the scheme during his time as a chancellor. And, more seriously, they say that Kurz would’ve  used taxpayer money to pay for it. As the story begins to unravel itself, investigators have gradually found more skeletons in the closet.

Most recently, Kurz is accused of providing false testimony to an investigative committee in the Austrian Parliament. Chat messages from the ex-Chancellor and Thomas Schmidwere published October 2021. Schmidt formerly acted as a board member of a state holdings company called ÖBAG. He was also an alleged confidant of Kurz.  The conversations in the chat messages deal with manipulated polls in the tabloid media and cronyism, among other things. 

The Prosecutor’s Office of Economics and Corruption found the chats after commissioning a search of his home at the party headquarters.  Those close to Kurz were also investigated. The contents of those chats forced Sebastian Kurz to resign as chancellor right after their publication, though he continues to deny all charges against him.  The Austrian people deserve a more legitimate government. Justice, transparency, and accountability have fallen by the wayside.

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