Ernst Strasser and the ‘Cash-for-Laws‘ scandal: an Austrian tale of political corruption

By Johannes Tropper, Austrian Ambassador to the European Student Think Tank

Most European countries have had their very own political corruption scandal in the past few years. One prominent Austrian politician charged with corruption was Ernst Strasser, Member of the European Parliament until the ‘cash-for-laws’ scandal.

In 2011 the British newspaper Sunday Times reported about their own attempts to bribe Members of the European Parliament in order to have them change specific EU laws, as part of an investigative journalism experiment.[i] One of the politicians who had fallen prey to the newspaper’s unconventional investigative method was the Head of Delegation of the Austrian conservative People’s Party in the European Parliament, Ernst Strasser.

During the course of an eight-month undercover investigation, the journalists contacted approximately 60 MEPs to find out whether it would be possible to bribe them into pushing through amendments concerning EU banking legislation and other sectors. Apart from Ernst Strasser, two other MEPs from the socialist parliamentary group -both former foreign ministers of Slovenia and Romania, respectively- were willing to lobby for amendments in the European Parliament in exchange for money.[ii] A further eleven MEPs had originally expressed interest, but did not pursue the idea further after initial conversation. The rest rejected the offer right from the outset or initiated court proceedings against the illegal practices.[iii]

The ‘cash-for-laws’ scandal sealed the political fate of the former rising stars in the Austrian People’s Party. Working his way up through the ranks in the state of Lower Austria, Strasser was appointed Federal Minister of the Interior of Austria in 2000, but resigned in 2004.[iv] During his time as minister a wide-ranging structural reform of the police was implemented, which the minister allegedly also used to foster party interests. Apparently, he essentially managed to replace civil servants affiliated to the social democratic party and even used his power to nominate ordinary police chiefs which had links to the People’s Party. In 2009 this non-meritocratic selection of loyalists was revealed by e-mails leaked to Austrian newspapers and the public broadcaster ‘ORF’.[v] The potential abuse of authority had never been investigated by state prosecutors as the criminal complaint had become time-barred. During a session of a parliamentary committee of inquiry the state prosecutor tasked with the investigation claimed that he had overlooked the criminal complaint.^{^[vi]}

After his political career as a Federal Minister of Interior Ernst Strasser focused on his career in the private sector and founded his own consulting firm ‘Consulting, Coaching & Educating GesmbH’, while also working in other companies. Moreover, his consulting firm owned shares of four other Austrian companies working in business consultancy.[vii] His extensive business network also included projects for Russian companies as well as Austrian companies intending to operate in the Russian Federation. Given his position as president of the ‘Austrian-Russian Friendship Society’ (2003-2011), he certainly had close contacts to Russian businessmen and politicians.

Strasser was said to be acquainted with the Russian businessman Alexander Yevgenievich Lebedev[viii], who owns shares of the Russian national airline Aeroflot as well as Gazprom and several British newspapers. A more tangible connection to the Russian Federation can be detected in the activities of his company. One third of the shares of the consulting firm ‘Expert Management Beratung Russia GmbH’, which has been focusing on consulting and investment projects in the Russian Federation, belonged to Strasser’s firm.[ix] Another third to the Founder& CEO of the firm Florian Stermann, who has also been co-founder and managing president of the ‘Austrian-Russian Friendship Society’.[x] Strasser’s contacts and insights proved lucrative. According to stories Strasser openly told the undercover reporters of the Sunday Times, he had, for instance, actively supported the Austrian lotteries to gain a foothold in the Russian Republic of Bashkortostan.[xi]

When his party asked him to run for the European Parliament as the head of their team, Strasser clearly did not want to cease all his business activities. His comeback into politics as a frontrunner saw the party successfully beat the Social Democrats during the EP elections in 2009. Ernst Strasser was appointed Head of the Delegation of the Austrian People’s Party in the parliamentary group of the European People’s Party, despite coming second to the Austrian MEP Othmar Karas, who had gained significantly more preference votes during the elections.[xii]

Strasser’s decline started when he got involved with the undercover journalists from the Sunday Times, Claire Newell and Jonathan Calvert, who secretly videotaped the conversations. [xiii] During one of their meetings in a restaurant he openly admitted to the undercover journalists that his role as an MEP was a great opportunity to work as a lobbyist in Brussels and build up a network of business contacts. He elaborated how it would be more effective to approach the European Commission before a legislative proposal was made and how his role as an MEP opened certain doors to him. During the informal meetings he was quite frank and talked extensively about previous lobbying activities and how he once pretended to represent political interests to a Commissioner when in fact representing business interests. The Sunday Times stated that three MEPs, including Strasser, were willing to propose amendments or ask colleagues to table amendments in exchange for 100,000 euros. With regards to the registry of the EP, Ernst Strasser informed his potential new clients that he would declare nothing related to this deal and that they would already be his seventh clients.

When the Sunday Times ran the story and released the videos, politician remained adamant that he was fully aware of the fake identity of the lobbyists and wanted to uncover the true background and motives of his two counterparts. According to his version of the story his private investigations, which he eventually wanted to take to the law enforcement agencies, were only interrupted by the release of the stories.[xiv]

Due to the mounting pressure and a loss of support among his party, Ernst Strasser resigned from EP and the People’s Party. The European Parliament and European Anti-Fraud Office started investigations into the scandal as did the Austrian anti-corruption prosecutors, who decided to take the matter to court after a 15-month investigation.

During the subsequent court proceedings Strasser claimed that he had suspected the two ‘lobbyists’ to be US agents, who he wanted to expose. Furthermore, he pointed out that he had never actually taken money and therefore not acted illegally. However, the Court did not regard his defense as credible, especially since the politician had actively lobbied for the amendment amongst his colleagues. Strasser was sentenced to four years jail because of bribery.[xv] After his appeal against the verdict and new proceedings, the Supreme Court ruled in 2014 that the former politician is to spend three years in prison (with the option of being released earlier with an electronic tag).[xvi]

The case of Ernst Strasser is exemplary for the grey areas where potential conflict of interests and lack of integrity can lead people to ignore laws and ethical standards because of their misbelief that nothing could ever go wrong. Self-interest got the better of Mr. Strasser, who failed to live up to the high standards expected from a member of parliament, causing a loss of credibility to the EU institutions. Where rules of conduct are vague and toothless, politicians might be more susceptible to bribery. Hence the extrinsic motivation to obey the rules of procedure in the European Parliament and the laws in general needs to be increased.

In a democratic political system the individual and collective respect for the rule of law and mutual checks and balances among the executive, legislative and judicial branches as well as the actors of civil society are inevitable if corruption is to be kept to a minimum.

[i] http://blog.the-webring.at/wp-content/uploads/2011/03/%E2%80%98I-must-be-careful_-there-is-a-_br_smell-to-lobbying%E2%80%99__br_-_-The-Sunday-Times.pdf

[ii] http://www.politico.eu/article/inquiries-into-scandal-of-influence-for-cash/

[iii] http://blog.the-webring.at/wp-content/uploads/2011/03/%E2%80%98I-must-be-careful_-there-is-a-_br_smell-to-lobbying%E2%80%99__br_-_-The-Sunday-Times.pdf

[iv] https://www.parlament.gv.at/WWER/PAD_08657/

[v] http://derstandard.at/3246430/Strasser-Mails-Politik-der-Umfaerbung

[vi] https://www.parlament.gv.at/PAKT/VHG/XXIV/KOMM/KOMM_00036/imfname_168856.pdf (page 20-23)
[vii] http://wirtschaftsblatt.at/home/nachrichten/oesterreich/1176674/index

[viii] http://diepresse.com/home/politik/eu/643887/Ernst-Strassers-RusslandConnection

[ix] http://wirtschaftsblatt.at/home/nachrichten/oesterreich/1176674/index

[x] http://www.embr.at/de/unternehmen/management

[xi]http://diepresse.com/home/politik/innenpolitik/1275745/StrasserProtokoll_Die-Lotterien-mussten-viel-zahlen

[xii]http://www.wienerzeitung.at/nachrichten/english_news/47208_Karas-set-to-take-over-from-Strasser.html

[xiii]https://www.youtube.com/watch?v=w3G0HCb2jxU