Grasser Found Guilty in a Tale of Insider Bidding and Bags of Cash

The Austrian Republic's longest corruption trial ended sensationally. Ex Finance Minister Karl-Heinz Grasser and close friends have been found guilty and sentenced to prison.

The affair began, as these things often do, with a chance discovery. In 2009 investigators looking into the bankruptcy of the Constantia Privatbank came across unusually high commissions paid to Peter Hochegger, a PR consultant, and Walter Meischberger, a lobbyist. Both were close friends of the previous Federal Minister of Finance, Karl-Heinz Grasser (KHG). The handsome young Minister, then 31, had been the nation’s darling back in 2001, promising null deficit budgets. Part of his strategy involved selling off state holdings and in 2003 the Buwog, owner-manager of public properties, was put up for sale in a closed bid auction. Interest was keen. In 2004 the main contender CA-Immo was over-bid – by a mere 0.1% – at the last moment by another consortium, Immofinanz, for whom Hochegger was a consultant. Strangely close, the suspicion was that KHG had tipped off his friends; they ensured that their company made the better offer, and the three of them split a €9.6 million commission from the grateful Immofinanz. 

Nice work, if you can get away with it.

After a slow start the WKStA (public prosecutor for financial crime) moved into high gear in 2009. Suspect’s homes were searched and telephones were legally tapped. Bit by bit, things came to light. The €9.6 million paid to Hochegger seems to have been funneled away via a complex chain of letter-box companies in Cyprus, Delaware, U.S., Liechtenstein and other dubious places.  Bank accounts were anonymized with fictitious names. The WKStA were particularly interested in the account ‘Karin’, which Meischberger claimed was a personal trust, denied by an ex-employee of the Hypo Investment Bank in Liechtenstein: the accountholder of ‘Karin’ was Karl Plech, a real estate broker close to Immofinanz. So now there were four suspects sharing the honey pot.  Contradictions did little to nothing to allay suspicion. The circumstantial evidence was mounting. Still, innocent until proven guilty.

Serious as it was, the entire Schlammassl was not without moments of humor. A police wiretap in December 2010 recorded a nervous Meischberger consulting his chum KHG. Due to be questioned the next day about his juicy commission, “Meischi’s”  plea in broad Vienna dialect, “Wo woar mei Leistung?” (roughly, “And what did I do for the money?”) was rapidly leaked and became the phrase of the year.  

On another occasion KHG was stopped at the border from Switzerland carrying €500,000 in cash in a paper bag. The explanation? It’s actually my mother in law’s, he told them, to invest for her. Marina Giori-Lhota, matriarch of the Swarovski bling family, flatly denied it. So far, so absurd.

Fast forward to the elegant Vienna State Criminal Court at 10.33, Friday December 4 this year. Presiding Judge Marion Hohenecker began to read her judgment, compressing eleven years of investigation and an eight-month trial into two and a half hours of closely reasoned legal argument. Her stiff sentences surprised the media and shocked the accused: Eight years for ex Finance Minister KHG, seven for his buddy Meischberger and six for bagman Hochegger. Of the several charges, the most important were abuse of office and falsifying evidence. Only KHG could have known the details of the Buwog bids, the Judge said, and passed on the information to Meischberger, who tipped off the Immofinanz consultant Hochegger.  

“Miscarriage of justice,” protested KHG from the courtroom steps. “I know I am innocent” he added, with hang-dog gloom.  Meischberger headed for the moral high ground: “This judgement reminds us of dark times in our country more than 70 years ago,” a questionable comparison with Nazi in-justices. Only PR man Hochegger kept his cool: “I’ve learnt to accept what life throws at you,” he commented. Having filed for personal bankruptcy, there wasn’t much more to lose. The media had few doubts: “Tough but just” headlined the left-liberal weekly Falter. “Our justice system … has exposed KHG’s almost perfect crime.”

Our magisterial German Frankurter Allgemeine declared simply: “Karl Heinz Grasser, the most important minister in … Wolfgang Schüssel’s government, was corrupt.

Of course, all will appeal the sentences. KHG’s main defense is that there is no concrete proof, only circumstantial evidence. This seems correct, but interestingly the Appeals Court is not required or even competent to hear new evidence or call fresh witnesses, only the validity and correctness of the trial procedure and the precise application of the law. Fellow professionals describe Hohenecker as one of the legal system’s most fastidious judges, so the appeals’ chances are not looking good there.

The trump card for the defense is the charge that Judge Hohenecker is compromised. In 2015 her husband, Manfred Hohenecker, also a judge, tweeted that KHG belonged behind bars. At the time he was severely reprimanded, and his wife Marion Hohenecker has strenuously denied that she was in any way influenced – a key point for the higher court to decide. 

However it ends, the longest trial is still not over, with a final decision not expected before 2022. In the meantime the defendants must be presumed innocent, but the stink of rotten money lingers.

Simon Ballam
Simon Ballam
English, studied in NY and worked in London, Düsseldorf, NY, Fankfurt, Prague and Vienna. This covered stints in market research and the film industry, international advertising coordination and strategic planning. Currently business school lecturer and journalist.

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