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Austrian report
by Euro Reporter
2013-09-16 09:42:47
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Austrian far-right party must repay funds

Austria's far-right BZO party must repay nearly 1 million Euros ($1.33 million) it got in illicit financing from Telekom Austria officials, a Vienna court ruled while convicting four people in the influence-peddling case. The court cleared Telekom Austria ex-deputy chief executive Rudolf Fischer of wrongdoing, saying he had authorized payments but did not deliberately take part in the scheme, the Austria Press Agency reported. But a former lobbyist for the company, two BZO officials and an advertising agency employee were sentenced to up to two-and-a-half years for their roles. The verdict early on Saturday came in the fourth in a slew of corruption investigations concerning Telekom Austria, which local media have dubbed the "political ATM".

Corruption remains rife in Austrian public life, where many deals are done on the back of friendships and favours, although a new generation of prosecutors and politicians in the Alpine republic is trying to change this culture. The defendants in this Telekom Austria case were charged with various combinations of breach of trust, money-laundering and falsifying testimony to a parliamentary committee. No current company officials were involved. Prosecutors said the company made 960,000 Euros in payments, which appeared in accounts as fees for reports but in fact were channelled via ad agencies to Joerg Haider's BZO party, then part of a coalition government, to help finance its 2006 election campaign.

A BZO minister then amended a law that relieved telecoms operators of having to provide universal access to "0800" freephone numbers, saving the former state monopoly Telekom Austria an estimated 10 million Euros. The BZO has shrunk to a shadow of its former self since the death of Haider, a charismatic firebrand, in a car crash in 2008. Opinion polls suggest it may not get enough support to return to parliament in a national election on September 29. It has lodged an appeal against being forced to relinquish the money, which it has put in escrow,


Austria's Hypo could need 17 bln Euros capital

Austrian state bank Hypo Alpe Adria could need as much as 17 billion Euros ($23 billion) in additional capital, a newspaper reported on Thursday, citing a central bank report. The bank, which was nationalised in 2009 after over-ambitious expansion in the Balkans, is trying to sell off what it can and wind down its other activities under a plan approved by the European Commission this month. Austria, which has already provided more than 3 billion Euros in state aid to the bank, said earlier this month the sell-off could cost Austrian taxpayers up to 5.4 billion Euros in fresh capital by 2017. But Der Standard newspaper said the bill could be as high as 17 billion Euros in a worst-case scenario, according to an internal Austrian central bank report, and would be at least 6.2 billion Euros if the sell-off was completed next year.

The central bank did not immediately respond to a request for comment. The Austrian government, facing re-election in a Sept. 29 parliamentary vote, aims to balance its budget by 2016 and has said the Hypo disaster would not throw it off course or force it to adopt austerity measures. Finance Minister Maria Fekter has resisted calls for Hypo's toxic assets to be put into a state-owned "bad bank", hoping instead to set up a privately owned vehicle for its non-core assets so its debts do not count as state debt.

Austria has also nationalised one other bank and part-nationalised another, partly because of the heavy exposure of the Alpine's republic's banking system to neighbouring riskier emerging European markets. According to Der Standard, the central bank considered there was a 50 percent chance of Hypo needing between 10 and 11.5 billion Euros in fresh capital - 7.5 to 9 billion between now and 2014 and 2.5 billion afterwards. It rated the worst-case scenario as 40 percent likely. In this case, all of the 14 billion Euros in guarantees provided by the provincial government of Carinthia, the bank's former owner, would fall due and the bank would sell its assets at a loss.


MP accuses Austrian government of Madoff cover up

An Austrian MP has filed a series of Parliamentary questions to make public allegations that senior banking officials and others in the Alpine Republic had actively worked with Bernie Madoff to create his global Pyramid scheme. The Parliamentary questions from Freedom Party MP Hans-Joerg Jenewein were filed to make public the claims in a new book 'Pyramid Games' by British journalist Michael Leidig. The questions were made to the Minister of Finance regarding the ongoing progress in the Madoff Case – including Bank Austria-linked funds like the Primeo Fund, Herald Fund, Alpha Prime Fund and the network of Bank Medici and Unicredit Bank Austria. The questions (translated from German) and which have Parliamentary privilege together with the background are as follows:

"In December 2008, one of the world’s biggest finance scandals was uncovered, namely Bernard L. Madoff’s ‘Pyramid Scheme’.

"According to documents from the appointed liquidator, Irving H. Picard, around 65 billion dollars were lost, which were assets belonging to Madoff’s clients. It became clear that for more than 20 years the existence of this pyramid system relied on the fact that money invested by later investors was used to pay earlier investors. Austria appears to have played a central role in this.
"Within a few months two reports with a total of more than 500 pages (and more than 350 supporting documents) were created in the USA about the failings of the supervisors there. It highlighted massive neglect by the U.S. Securities and Exchange Commission (SEC) in the controlling and monitoring of Madoff, failings that were exposed and made public. Even though Madoff originally claimed to have acted alone, it was clear to all those involved that fraud on this level could not have been carried out by just one single person. It needed IT specialists and administrative workers to maintain the system itself.
"But all of that would have been pointless without people outside his firm whose companies covered him to the outside world and let his activities appear legitimate. People who cashed in personal fortunes to close their eyes, who failed to carry out controls, mislead investors and knowingly and willingly deceived, all in order to keep the system alive for as long as possible.
"In the USA people are still being pursued and in autumn a further five people are to have charges brought against them.
"But despite the efforts of the American authorities and the liquidator in resolving the case and securing the appropriate punishments for those involved, here in Austria it appears everything is being done to successfully delay proceedings and draw them out as long as possible – with the help of those responsible in the UniCredit Bank Austria network and their cunning lawyers.
"Even though the Network mentioned at the start was one of the first and most active in Madoff’s pyramid scheme, and acted as a door opener for European investors, those responsible are being protected by a constant delay in the proceedings. For a constitutional state, which in the question of corruption has continuously fallen to new lows in comparison with other countries, this is an unacceptable situation.
“It is worth noting that the fact that in the company structure of Bank Austria Worldwide Fund Management Ltd., BAWFM, Bank Austria had a 75 % share and the AVZ (a trust of the city of Vienna tied to the SPÖ) a 25% share. The AVZ, the trust brought into being by SPÖ mayor of Vienna Dr Michael Häupl, originally had the aim of hiding the returns of the Zentralsparkasse by putting it into a trust and thus protecting it from controls carried out by the audit courts – together with the support of those responsible at Bank Austria.

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