Corruption: The manager, the minister – and a new scandal in Austria

In Wiener Neustadt, a trial began on Tuesday, which acts as a lesson on proximity, influence and state decisions. Before the regional court, the industrialist Siegfried Wolf, the former ÖVP Finance Minister Hans Jörg Schelling and a former tax office head have to answer. The Economic and Corruption Prosecutor’s Office (WKStA) accuses them of processes that essentially touch on an old question: Where does legitimate advocacy end and where does corruption begin? Wolf, in a dark blue suit with an open shirt collar and socket, answered the preliminary question of the presiding judge about his professional activity farmer, entrepreneur, now retiree. For his assets and liabilities, the previously blameless manager and supervisory board of Porsche Holding SE and the car supplier Schaeffler did not provide any information. The representative of the WKStA settled Wolf’s annual income in the high double-digit million range in his opening speech and referred to his excellent contacts in political circles. Wolf feels tax unfairly treated At the center is a presumably corrupt agreement between Wolf and the financial officer. The prosecution relies heavily on news reports. Wolf is said to have promised the civil servant in the summer of 2018, in the Ministry of Finance for her desired appointment to the board of the tax office Baden-Mödling, at the time she was board member in another. For this she should have granted him a tax forbearance in the amount of 630,000 euros. It was about claims from income tax and entitlement interest for the years 2006 to 2011. The lawyer got his desired position. The official issued the favourable decision after presentation of the indictment without the necessary conditions and without the involvement of the competent department in the finance department. She is therefore accused of abuse of office and corruption. Wolf is accused of bribery and misuse of office. Political striking is the political striking of the case. In the sense of the indictment, Wolf is said to have used his contacts in the Ministry of Finance, first to the then General Secretary and head of cabinet Thomas Schmid, later also to Hans Jörg Schelling, who was finance minister until the end of 2017. Schelling is accused of contacting Schmid by telephone and asking him to intervene in Wolf's tax case. The WKStA refers to a friendly relationship between Wolf and Schelling – and to the fact that Wolf was regarded in ÖVP circles as a supporter and advocate of Schelling. Wolf denies the allegations. During the investigation procedure, he argued that there had been no damage to property: The amount in question was not a legitimate tax liability. “He felt deeply unfairly treated by tax law,” Wolf’s defender Norbert Wess told the chats. Wolf was therefore in a rage: “This is the right of every citizen, even a prominent citizen, to try to help his right to break through.” This is not punishable, Wess said. This basically applies to chats. Chats are distorting. Minister with advisory contract for gas pipeline Schelling also rejects the accusation. His defense declares that her client was not involved in any corrupt agreements. There is no connection between Schelling’s behaviour and the allegations of corruption. Even if, after his time as minister, he had lobbied for a tax forbearance in favour of Wolf – which was not proven – this would not have been unlawful or an attempt to do so. “Knowing someone does not prove that you knowingly support something illegal,” argues the legal representation. The prosecution paints a different picture. She sees in Schelling’s behavior immaterial influences and also refers to his professional prospects. Wolf, who is well connected in Russia, is said to have given the former minister a consultancy contract at the project company for the Nord Stream 2 gas pipeline. For the public prosecutor, this fits into a pattern of mutual favors. Test case for dealing with political-economic networks Thus, the process also becomes a test case for the Austrian dealing with political-economic networks. After the final conviction of the former family minister Sophie Karmasin, Schelling is again a former ÖVP government member before a junior senate. The defense is confident: The public prosecutor’s office will have to prove that contacts and interventions have become criminal acts. Judgments are to be expected at the earliest shortly before Christmas. If convicted, Wolf, Schelling and the former tax officer face imprisonment of between one and ten years. The presumption of innocence applies to all defendants. The matter follows on from a series of mismanagement affairs that have occupied and damaged the small country in recent years. This includes the scandal over the sale of federal housing at the beginning of the zeros under the then Finance Minister Grasser, who was later sentenced to four years in prison. Also included is the fiasco around the Hypo-Alpe-Adria-Bank, which cost the Republic billions. In the corruption perception index (CPI) of the non-governmental organization Transparency International, Austria is still in the front third, but has lost places in international and European comparison in recent years.