Graft probe reaches into the highest levels of Austria’s government

[Syt]

Graft probe reaches into the highest levels of Austria's government

Prosecutors' raid on house of finance minister puts chancellor Sebastian Kurz's party on back foot

For weeks, rumours circulated about who Austrian prosecutors might name next in a sprawling, high-level corruption probe.

Last Thursday morning, the investigation reached the highest levels of government when a squad of fraud police accompanied by forensic experts raided the house of the country's finance minister, Gernot Blümel.

Blümel has now been formally named as a key suspect in a graft inquiry into the deep and complex relationships between Austrian lawmakers, senior officials and the Austrian gambling company Novomatic. 

Blümel is as close as anyone in Austrian politics to chancellor Sebastian Kurz. In the warrant that judges approved to raid Blümel's house, the finance minister's name appeared 23 times. It named Kurz 42 times, signalling where prosecutors may look next.

A political corruption scandal sank Kurz's first government with the far-right in 2019. An equally mettlesome set of allegations — this time against allies in his own party — could prove just as damaging to his second.

The Novomatic case is a challenge to a leader whose political success was built on a promise of youth and reform — and an end to the cosy and sometimes nepotistic politics of Austria's recent past.

Revelations from the probe — and a parallel parliamentary inquiry — have shone an unflattering light on an enduring system of party-political patronage. It is so ingrained in Austrian politics that it has its own vocabulary: Parteibuchwirtschaft, or "party book economy".

In their inquiry into Blümel, prosecutors said they were looking at whether in 2017 he agreed to help Novomatic lobby the Italian government for a €40m tax rebate, in exchange for political support in Austria. At the time, Blümel was a close confidant of Kurz, who was then Austria's foreign minister.

Both Blümel and Novomatic have denied the allegations. However the escalating scandal has caught Kurz on the back foot, political analyst Thomas Hofer notes.

"This investigation has become a huge impediment for the government," he said. "Blümel really is very close [to Kurz]. He's inner circle . . . The last six weeks have been very tough."

The year began for the Kurz's government with the resignation of its labour minister in an embarrassing plagiarism scandal. Data meanwhile has showed the economy to be among the worst hit in Europe by the pandemic. And in early February, a damning official inquiry slated Austrian intelligence for failures that allowed a deadly terror attack to unfold in Vienna in November.

But the chancellor remains popular. Poll ratings for his Austrian People's party have slipped from 40 per cent to 37 per cent over the past two months, but are still comfortably ahead of its nearest rivals.

Kurz's calculation, according to chancellery officials, is that most Austrians see the scandal — widely known as the "Casinos Case" — as he does: politically motivated by partisan officials in law enforcement opposed to his political agenda. The evidence against Blümel, officials say, is flimsy at best.

This week Kurz has gone on the offensive, accusing prosecutors at the WKStA — the prosecuting bureau that ordered the raid on Blümel's home — of over-reach.

"There have been so many lapses that I believe there is an urgent need for change there," he said at a Tuesday press conference.

Of 40,000 named suspects in WKStA investigations in recent years, the chancellor noted, just 400 had been convicted. An abortive raid on Austria's own intelligence agency earlier this year damaged relationships with key allies, he said.

Kurz and his ministers now say they want to create a new Federal Prosecutor's office — akin to that in Switzerland and Germany — and sweep aside the WKStA altogether. Such a change would require a constitutional amendment, but is likely to be widely supported across the political spectrum. Even Kurz's political opponents admit the existing system is prone to politicisation.

But the proposed reforms may not be enough to contain the bad headlines.

Dozens of other WKStA raids have taken place during the past few months on properties owned by former Novomatic employees. Other senior People's party politicians, including former finance minister Hartwig Löger and the head of the country's state holding company, Thomas Schmid, have also been named as suspects.

While Novomatic has denied improperly donating money to the People's party, investigators are also looking at large sums of money the company gave to dozens of small party-affiliated satellite societies, clubs and think tanks.

"They've seized so much now that they basically have the full correspondence of the government — including everything that everyone sent privately on their own phones — over the past two years," said one political consultant closely involved with the Novomatic probe.

In parallel to the WKStA's efforts, a special investigatory committee in the Austrian parliament is also probing the case.

"It's clear that a huge amount of political pressure is now being exerted on the corruption investigators, who are just trying to do their jobs," said Stephanie Krisper, a parliamentarian for the liberal Neos party and a member of the investigatory committee. 

"We have quite the culture of corruption and secrecy in Austria. Due to legislation being kept weak, it's very difficult to shed light on the flow of money to parties and organisations close to them." 

Blümel was hauled in front of the committee last July. His testimony made headlines at the time when, in answer to more than 60 questions, the finance minister said he did not know or could not remember. 

"In most other countries I would have said he would have to resign," said Krisper. 

"Not being able to remember over 60 times about events in the last two years paints a pretty bad picture of a finance minister. But perhaps it's still a better picture than the one that would have emerged if he did." 

The article paints a decent picture of Austrian politics as a whole. These kinds of back room arrangements and favors are quite common among the big parties ÖVP (conservatives), SPÖ (social democrats) and FPÖ (right wing populist) who have run the country in varying constellations since 1949 (the Greens being in power with ÖVP is a first); federal politics is heavily centered around Vienna and there's a big network connecting businesses and politics where everybody knows each other personally. (And it's arguably worse on a state level where the lines between business and politics begin to blur.)

Every government has its corruption scandals, some larger, some smaller, and there's been a succession of parliamentary investigations into the events, with the invariable display of memory loss by key witnesses and actors.

Blümel himself, when asked in the current Ibiza investigation about data on his laptop, recently said he doesn't recall ever owning or working on a laptop.






(He's also infamous for getting numbers wrong in the budget proposals several times, i.e. turning millions into thousands, but that's besides the point )

One of his predecessors, Karl-Heinz Grasser, FPÖ finance minister from 2000-2007 was recently sentenced to 8 years in prison following a corruption trial that lasted almost 10 years and took almost 5 years of investigation by prosecutors to sort through a network of embezzlement and corruption.

[The Larch]

Any chances of Kurz getting seriously damaged by this? Is any Austrian political party clean? 

[Syt]

Any chances of Kurz getting seriously damaged by this? Is any Austrian political party clean? 

Well, he's attacking the prosecutors as overreaching and being politically motivated. He still is more popular than the alternatives, and I think he'll be able to weather it, unless he (and not just his trusted inner circle) is shown to be a central figure. The SPÖ has a very low profile under Pamela Rendi-Wagner (she's a medical doctor, and seems competent and smart, but creates almost 0 emotional connection), and FPÖ will have to claw back from losing Strache and suffering from their own corruption.

NEOS (libertarians) and Greens are not particularly hit by scandal at the moment, but their bases are too small.

I'm not even particularly shocked or surprised at the current investigations. More so that there's actually an investigation. A former prosecutor in the Ibiza case (she's now a judge in Graz) recently said in the parliamentary investigation that her work was hindered constantly by political meddling. This was, on the whole, met with a collective shrug. Austrians, overall, are quite apathetic towards their politicians. "They do what they want, anyways" is a pervasive feeling, and you would need a major political earthquake to get people to pay attention and get things cleaned up. Even Ibiza only really effected one party, with the ÖVP brushing everything off, claiming they hadn't realized how bad the FPÖ was and got away with it. You would need a scandal that involves all major political parties and leaders on a level where it's not just the usual favors and payments being traded, but where the braod public would see  amajor moral failure of those in charge. Basically and Ibiza size scandal that involves all parties.

[Syt]

On the plus side, to laud their work, hundreds of people are sending sweets and thank you notes to the Prosecutors of Corruption these days.

[Syt]

Video on Twitter going around ... a Greens minister called an urgent press conference where she reiterated why they think an independent federal prosecutor is so important. A journalist afterwards asked why she called this press conference - she said nothing new, offered no new insights, and just reiterated what was already known. The minister then gave a waffling answer how really important that prosecutor reform is.

[Syt]

In news that surprise no one in Austria:

https://www.euronews.com/2021/03/01/austria-has-failed-in-fight-against-corruption-says-council-of-europe

Austria has failed in fight against corruption, says Council of Europe

Austria has made "overall insufficient" progress in the fight against corruption, according to a new report by the Council of Europe.

The Group of States against Corruption (GRECO) says Austria has failed to implement its recommendations to tackle judicial and political misconduct.

Four years ago, the Council of Europe body had issued recommendations to the EU member state to prevent corruption among members of parliament, judges, and prosecutors.

"[But] Austria has implemented satisfactorily or dealt with in a satisfactory manner only two of 19 recommendations made in 2017," GRECO said on Monday.

After the 2019 parliamentary elections, Austria was urged to "seriously deal" with political corruption by establishing a code of conduct on conflicts of interest or asset declarations. The country was also urged to make its legislative process more transparent.

But the new report says that Austria's "very low level of compliance" with the recommendations "has not evolved".

"[We] regret the persistent lack of progress" that Austria has made in implementing anti-corruption measures relating to MPs, GRECO said.

Meanwhile, regarding judges and prosecutors, the body was also concerned that a "considerable number of measures" envisaged since 2018 "have still not been finalised".

Overall the body said that Austria's level of compliance with the recommendations was "globally unsatisfactory".

However, the report did note that Austrian magistrates are now prohibited from holding political or ethical positions at the same time.

GRECO has asked Austria to submit a progress report on the implementation of its outstanding recommendations "as soon as possible and no later than 30 September this year".

The findings come just two weeks after the home of the Austrian Finance Minister, Gernot Blümel, was searched by authorities.

Courts had suspected Blümel - a close ally of Chancellor Sebastian Kurz - of being involved in the secret financing of the conservative party by the global gambling giant Novomatic. Blümel has denied any wrongdoing.

The Chancellor has also defended his finance minister, accusing prosecutors of politicising the judicial process.

Meanwhile, Kurz's first government, a coalition with the far-right Freedom Party, collapsed in May 2019 after the corruption scandal known as 'Ibizagate'.

Austria's then-Vice-chancellor, Heinz-Christian Strache, was filmed in Ibiza in 2017 soliciting support from a Russian oligarch in return for political favours and resigned after the recordings were released.

GRECO - which brings together the 47 member states of the Council of Europe, as well as Belarus, Kazakhstan, and the United States - says that Austria ranks below Turkey, and just above Serbia in implementing its anti-corruption recommendations.

In a statement to Euronews, Austria's Ministry of Justice confirmed that only two of GRECO's eleven recommendations on preventing corruption among judges and prosecutors had been fully implemented.

"What is gratifying about the latest GRECO report is that the measures taken by the judiciary in the recent past are seen and recognised," a spokesperson said, adding that Austria also preparing to tighten its criminal law on corruption.

"In any case, the Federal Ministry of Justice endeavours to take further implementation steps for its area of competence, insofar as the recommendations are compatible with Austrian legal and constitutional principles."

[Syt]

On finance minister "I never had a laptop" Blümel: turns out he now does own one. However, he shares it with his wife, and during the recent search of his home by police she had it on her while going for a walk with their child. 

In other corruption news: a local producer of face masks that became one of the heroes last spring had to confirm that most of their product was imported from  China and rebranded as Austrian. And since they couldn't get certified in Austria they got their certification in Hungary instead.

Meanwhile, the Red Cross in the state of Vorarlberg is under investigation. Last year they received 100,000 test kits for free from the government to help test the population. Allegedly, however, they instead offered many of these tests to companies and corporations for 10 to 15 EUR a pop.

[The Brain]

In other corruption news: a local producer of face masks that became one of the heroes last spring had to confirm that most of their product was imported from  China and rebranded as Austrian. And since they couldn't get certified in Austria they got their certification in Hungary instead.

Meanwhile, the Red Cross in the state of Vorarlberg is under investigation. Last year they received 100,000 test kits for free from the government to help test the population. Allegedly, however, they instead offered many of these tests to companies and corporations for 10 to 15 EUR a pop.

This kind of corruption is not as cool as corruption by Chaos. Unless... Are these guys part of a large Nurgle cult in Austria?

[Syt]

I'm not certain.

[Syt]

In other news, Karin Kneissl (no party membership), who was foreign minister in Kurz's previous cabinet and who invited Putin to her 2018 wedding during her tenure has been offered a board position at Russian oil company Rosneft.

https://www.themoscowtimes.com/2021/03/03/austria-ex-minister-who-danced-with-putin-gets-rosneft-nomination-a73139

[DGuller]

Hopefully with some Westerners on the board there would be a push for greater corporate accountability at Rosneft.

[Duque de Bragança]

Hopefully with some Westerners on the board there would be a push for greater corporate accountability at Rosneft.

It greatly worked with Schröder at Gazprom, so why not.

[Syt]

Excellent summary of the current political situation of Kurz in Austria:

https://twitter.com/Marcus_How89/status/1374728045295251457

*MEANWHILE, IN AUSTRIA..* Next month, it will be the 10-year anniversary of the beginning of Sebastian Kurz's career in the federal government, when, at the age of twenty-four, he assumed the post of state secretary for integration. 1/

Likewise, in the month thereafter, it will be four years since Kurz rode a wave of internal intrigue to become leader of the ÖVP, ending its grand coalition with the SPÖ, and changing its ideological profile perhaps forever. 2/

Today, Kurz remains the dominant personality in Austrian politics, having rescued the ÖVP from the electoral doldrums and forming two governments. But his popularity is, at present, waning. 3/

Currently, the ÖVP is polling at between 35-37%, down from last year, when it enjoyed support that regularly exceeded 40%. It's still without competition for first place, but the party is not as invincible as it previously seemed. 4/

Kurz, meanwhile, was as of January no longer the most popular politician, being overtaken in surveys by SPÖ leader Pamela Rendi-Wagner (PRW). While Kurz has a net approval rating of -10, PRW's is +7 – a reversal of fortunes for both of them. 5/

Equally, polls indicate that Kurz is by far the preferred chancellor candidate, with 47%. But this is significantly down from the highs of 62% he enjoyed in April 2020. The Kurz brand, although secure, is toxic for an increasing number of swing voters. 6/

Given political volatility within Austria and Kurz's visibility on the European stage, there is a lot of noise around the chancellor – which is created as much by him as his opponents. It is worth cutting through this in order to situate the ÖVP at present. 7/

From my perspective, there are four key reasons why the ÖVP are losing support: 1) pandemic management; 2) loss of ideological profile; 3) competence and corruption scandals; and 4) increasingly erratic comms. 8/

All of this, especially (4), reaches to the very essence of how the Kurz ÖVP operates. Some background: Over a decade, Kurz developed his own network as leader of the ÖVP youth wing (JVP), which cultivated his personal brand. 9/

His longstanding (and almost entirely male) team are as young as they are close-knit, and their skill is outmatched only by their loyalty. Kurz cannot be fully understood without his team; they are symbiotic. 10/

Most of the team are consultants & PR professionals who are as religious as they are economically liberal. Most were socialised around the Lower Austrian (NÖ) ÖVP, which is used to absolute majorities and is the most powerful state branch of the party. 11/

This influences Kurz greatly, but more b/c he is an extroverted listener with the few people he trusts, rather than ideological. He also knows & outsources his limits, not least as he was not taken seriously early in his career. 12/

At the centre of the operation is message control. This was centralised both within the ÖVP and the gov't itself when Kurz took over. Comms are carefully choreographed in timing & sequencing. Social media is key. Within the multi-layered ÖVP, handmaidens also act as brokers. 13/

Prior to the pandemic, this operation was highly effective. Core themes, especially migration and border security, were a steady drumbeat, even as they lost some ground to climate change. But met with a sudden cataclysm, it has floundered. 14/

During the first wave, it worked well, reinforced by the goodwill of a nervous public. But overconfidence thereafter led to political games, such as linking the pandemic with border security and issuing briefings that contradicted the Green-led Health Ministry. 15/

Meanwhile, the pandemic was stripping away the ÖVP's ideological profile. On the economy, Kurz's ÖVP represented a right-wing inversion of the Third Way, advocating zero-deficits and targeted deregulation while protecting lower earners & de facto refraining from privatisation.16/

Now the ÖVP is overseeing the largest deficit spending in Austria's post-war history, while small businesses remain shut and low-income voters in jobs disproportionately exposed to the virus. It has a cup of cold sick for most segments of its voter coalition. 17/

In other key policy areas, immigration is on hold, leaving only straws to clutch at, even as the Greens bite the bullet on the deportation of unregistered minors. 18/

Ministerial (in)competence is also a factor. Despite clear failures by the ÖVP-controlled Interior Ministry to prevent the terrorist attack in Vienna in November, Karl Nehammer not only didn't resign, he shifted the blame. So much for the party of law & order. 19/

Elsewhere, Economy Minister Margarete Schramböck was found to have wasted public funds on trying to establish a digital retailer to compete with Amazon, which then fizzled out into failure. 20/

Then, Family and Work Minister Christine Aschbacher resigned in January after it was revealed that she had plagiarised her Master's dissertation. The work brief was shrewdly passed to technocrat Martin Kochner, but much of the damage was already done. 21/

If questionable ethics weren't enough, senior ÖVP officials are the subjects of corruption investigations, including Kurz's right-hand, Finance Minister Gernot Blümel. Kurz's response has been to publicly attack the anticorruption agency (WKStA). 22/

If the various corruption allegations are true, Kurz's ÖVP is far from the only party to be compromised. But given that Kurz had in 2017 marketed his Obama-style "new" ÖVP as being different, such reputational damage will not go unnoticed by swing voters, esp if it worsens. 23/

All of this has led to erratic behaviour by Kurz and his team. Hence the attribution of the blame for the slow rate of vaccination to the EU's allocation mechanism. Or Kurz's recent visit to Israel to discuss w/ Netanyahu the opening of a vaccination centre in Austria. 24/

Since the Kurz II gov't was formed, the chancellor has been losing friends. The Greens are unhappy. The NEOS have terse relations with Kurz. Herbert Kickl, the co-leader of the FPÖ and former interior minister, hates Kurz possibly above all else. 25/

The hate is such that Kurz currently only has constructive relations with PRW, which is an astounding turnaround given that a raison d'etre of the Kurz ÖVP had been to bury the SPÖ in opposition for good. 26/

There are rumblings of an anti-Kurz coalition being formed, which would incl. the Greens and be enabled by the FPÖ(!), but this would likely only happen if corruption investigations mount. Kurz looks set to hang on for the foreseeable future, even as his brand becomes tired. 27/

Finally, Kurz's position in the ÖVP remains unassailable, cemented as it is by the NÖ-ÖVP and the structural centralisation of party management. But his position isn't completely watertight. The governor barons are quiet for now, but their loyalty is not unconditional. 28/

Indeed, Günther Platter's Tirolean ÖVP put up unprecedented resistance to the demands of the federal gov't in Feb to impose restrictions as lax attitudes to winter sports were resulting in the spread of new virus mutations. Such indicators are ones to watch. 29/END

[Syt]

https://www.politico.eu/article/house-of-sebastian-kurz/

Sebastian Kurz: From political wunderkind to rogue operator

A sweeping corruption investigation has destroyed the Austrian leader's fresh-faced image.

Sebastian Kurz, a political wunderkind who became Austria's leader at just 31, rose to power by cultivating a youthful, do-gooder image that endeared him to young and old alike.

And then he went rogue.

A cache of private text messages between the center-right chancellor and his deputies and other correspondence uncovered by Austrian authorities as part of a sweeping investigation into political corruption portrays Kurz not as the well-mannered "favorite son-in-law of the nation" who captured the heart of his compatriots and much of the EU, but rather as a shrewd behind-the-scenes operator willing to do whatever it takes to push through his agenda, whether dealing with the Catholic Church, doling out political favors or taking on rivals.

Kurz's metamorphosis might sound like a familiar coming-of-age political tale, but at a time when much of Central Europe has slipped into a form of soft authoritarianism, his transformation and the larger corruption scandal engulfing Austria's political class suggest that the erosion of democratic norms in the region threatens to spread into Western Europe.

That would mark a substantial setback for the European Union, which is already struggling to handle recalcitrant governments in Hungary and Poland over steps they've taken to undermine both the independent judiciary and the media. Like the leaders of those countries, Kurz has not shied away from attacking the EU to deflect from his domestic woes. Just last week, he led an unsuccessful attempt, joined by the Czech Republic and Slovenia, to win a larger allotment of vaccines from the EU, a quixotic effort widely dismissed as a political stunt.

It wasn't long ago that many in Brussels saw Kurz not as a threat, but as conservative Europe's future. Europe's center-right, the dominant political bloc in the European parliament, was enamored by the brash young Austrian, whose tough stance on migration many viewed as a model for conservative parties across the Continent. He was particularly popular in Germany, where Kurz wooed the media, in particular the influential Bild tabloid. Some even saw in Kurz the standard bearer for the post-Merkel era.

No more.

While the exchanges offer a rare, unfiltered glimpse at how politicians operate behind the scenes, what they also reveal (aside from Kurz's penchant for heart emojis and exclamation marks) is what veteran Austrian political commentator Peter Filzmaier described as the "unbelievable banality of the people who lead our republic."

"Don't worry! You're family," Finance Minister Gernot Blümel, one of Kurz's closest deputies, texted a fellow loyalist in an effort to reassure the man that he would be taken care of with a plum job.

Such tactics, even if they evoke a bad mafia film, are hardly surprising in political circles. But Kurz, who refashioned Austria's staid conservative party root and branch after taking it over in 2017, changing everything from its name to its color (from black to turquoise), was supposed to be different. He didn't just promise to revolutionize the country's politics: He convinced Austrians he was serious.

Kurz, who leads the Austrian People's Party, is not a direct subject of the corruption investigations, which encompass allegations of everything from bribery to violating official secrecy laws, but they have touched his inner circle. Perhaps even more damaging to Kurz in the long term, however, is that the text exchanges have all but destroyed the public persona he built as a fresh-faced millennial politician who would put an end to the clubby machine-style politics that dominated Austria's postwar history.

Far from drawing a line under that era, Kurz has erected what critics have dubbed the "House of Kurz," a close-knit network of the chancellor's loyalists in the government, private sector and media who quietly collaborate to their mutual benefit.

Instead of the "new style" Kurz promised, commentator Ruth Wodak wrote this week, Austrians are learning that "anything goes."

The corruption probes that uncovered the private text traffic were triggered by the so-called Ibiza Affair, a scandal that exploded in 2019 after the release of a video showing the far-right leader who became Kurz's coalition partner offering to trade political favors for cash during a boozy session with a woman he believed to be the niece of a Russian oligarch. Kurz survived the immediate scandal unscathed, though it felled his coalition partner, forcing a new election that resulted in his current coalition with Austria's Greens. In the meantime, the authorities' original Ibiza investigation has led them to the chancellor's inner circle.

Casino royale

At the center of the corruption investigation is the relationship between Austrian casino operators and public officials. Former Vice Chancellor Heinz-Christian Strache, the man featured in the infamous Ibiza footage, claimed on the tape that one of the companies, Novomatic, "pays everyone." In other words, he alleged that the company funnels money to all of the country's political parties in return for favors, an accusation the company and the political parties strenuously deny.

In the course of investigating that claim, however, investigators stumbled on a text sent in 2017 by the former head of Novomatic to Kurz ally Blümel, the current finance minister. The Novomatic executive, Harald Neumann, told Blümel he needed a meeting with Kurz, then still Austria's foreign minister, to discuss "for one, a donation and for another a problem we have in Italy."

Blümel and Kurz say the meeting never took place and no donation was ever made. (The Italy reference was in connection with a tax dispute Novomatic faced there.)

Kurz portrayed the investigation, led by Austria's financial crimes prosecutor, as deeply flawed.

"So many mistakes have been made that I think there's an urgent need for change there," Kurz said in February, drawing the ire of Austria's judges and prosecutors, who accused him of making an unprecedented assault on the judiciary's independence.

If Kurz hoped his interventions would cause prosecutors to step back, he was disappointed. If anything, they increased the pressure, exploring accusations — denied by those involved — that a senior justice official loyal to Kurz secretly funneled Blümel's camp information about the investigation.

Prosecutors have named Blümel a suspect in their bribery investigation, sparking opposition cries for his resignation, which he has rejected. He denies any wrongdoing.

As often happens in broad investigations into politicians' dealings, the Austrian probe has taken authorities in unexpected directions.

'I love my chancellor'

One involves a man named Thomas Schmid, the head of a state holding company that manages Austria's stakes in former state-owned enterprises including Telekom Austria and OMV, the oil and gas company. Together with Blümel, Schmid belongs to a close-knit group of devoted Kurz lieutenants who have worked with the chancellor since his early days in politics.

In analyzing the texts on Schmid's phone, authorities discovered how the executive won his top position at Austria's state holding company, ÖBAG, where he earns, depending on the portfolio's performance, up to €600,000 per year.

Not only did Schmid — until 2018 a senior official in Austria's finance ministry — have a hand in writing the job description for the post, he also hand-picked the board that would hire him. Schmid had never worked as a corporate executive and had no international experience, factors that might, under other circumstances, have dashed his chances of heading a holding company overseeing corporate investments totaling €26 billion. But Schmid had something else: a powerful ally named Sebastian Kurz.

After months of engineering his move, Schmid sought assurances from Kurz that his new job would carry real power and not just be ceremonial.

"You're getting everything you want 😘😘😘," Kurz reassured Schmid in a text message in March of 2019.

"🙂🙂🙂 I'm so happy...I love my chancellor ," Schmid responded.

Following public outcry over the affair, Schmid said on Tuesday that he would resign from the state holding company when his contract expires next year and not exercise an option to extend it by two years.

Austria's opposition is demanding an investigation into whether Schmid broke any laws in securing the job. Both he and Kurz, who declined to comment for this article, deny any wrongdoing.

"What we can see is that the 'Kurz System' was designed from the beginning to take control of state institutions and to create a state within the state," said Kai Jan Krainer, the parliamentary leader of the opposition Social Democrats.

Church and state

It seems more likely that Kurz was simply rewarding an ally for his loyalty. Over the years, Schmid had taken on any number of off-the-books assignments for Kurz, people who have worked with the two men say. Just weeks before Schmid got the big state holding job, he helped the chancellor with a delicate matter involving the Catholic Church.

After a local civil servant was stabbed to death by a Turkish refugee in western Austria in early 2019, Kurz endorsed a tough new law to allow authorities to place asylum seekers deemed "dangerous" in preventive custody.

But Catholic leaders, led by the popular archbishop of Vienna, Cardinal Christoph Schönborn, opposed the idea, publicly comparing it to the tactics used by repressive regimes. "Every dictatorship in the world locks people up out of simple mistrust," Schönborn wrote in a newspaper column. "Tomorrow it might be you or me."

Kurz encouraged Schmid to "step on the gas" with a plan to exert pressure on the church. "We're going to leave them with a considerable package," Schmid texted him ahead of a meeting with a senior church official.

Schmid went on to explain he would inform his church counterpart that "in the context of reviewing all tax privileges across the republic, the finance ministry is going to take a very close look at the church." Both men knew that for the church, which would have difficulty operating without preferential tax treatment, the threat was the equivalent of the nuclear option.

Kurz's response: "Yes, super."

A few hours later, Schmid reported back to Kurz on the meeting, writing that the church official was "a basket case" after receiving the threat. The man "turned red then pale and then started shaking," Schmid wrote to his boss.

"Super, thank you so much!!!!," Kurz replied.

Despite Kurz's apparent elation, the tactic didn't work. Schönborn, the cardinal, continued to lambaste the proposed asylum policy, calling it "inhuman."

Just weeks after Schmid's church visit, Kurz's government collapsed amid the Ibiza Affair. The asylum policy never went into effect, though Kurz's party is still pursuing it.

Beyond the scandals eating away at Kurz's credibility, the larger question is whether he can survive as a political bad boy. Even though his approval rating has tanked in recent days, most observers are betting he will, given the weakness of the opposition.

"Since he took over the People's Party in 2017, the question was whether this is just clever marketing or is something really going to change," Filzmaier said.

At least Austrians now have the answer.

What's not coming out clearly in the article is the attempts of Kurz to pressure the WKStA (Prosecutors of Economic and Corruption cases) into dropping the case, thinking about dismantling it, and suggesting laws to prevent prosecutors from raiding public administration and government offices in criminal investgations, but rather having them formally request materials through bureaucratic means.

It's also interesting to see how media cover the scandal. State broadcaster ORF has several influential analysts who cover it, but there's other papers who are much more careful in how they report. E.g. Kurier is owned by a close friend of Kurz. Additionally, the government is one of the biggest advertising customers for newspapers and tabloids, and can spend their PR budget at their discretion, so some papers may be more inclined to "play nice" to protect income (though they will quickly jump ship if there's change in the air, or there's a promising new candidate - years ago, the Krone, Austria's biggest tabloid and one of the papers in Europe with highest per capita distribution, heavily supported a Social Democrat candidate for chancellor after he - supposedly - promised them more ad revenue if he won office. This government ad money situation needs to stop IMHO.

Kurz lost a lot of trust in recent surveys. There are still plenty supporters, however. Some shrug it off as, "that's just how politics is done in Austria." There's some truth to that, but Kurz explicitly promised to be better than that. More people have issues with how his government handles the pandemic than the scandals. The opposition is of course up in arms, and the Greens look increasingly weak in not standing up to their coalition partner in these matters. It's a plus that the Greens run the justice ministry at the moment - an ÖVP run one would likely have tried to bury this matter long ago or acquiesced to the chancellor's desire to make opportune changes.

What is new is the vehemence with which the chancellor attacks the detractors and looks at changing how government works to protect himself. Previous governments did put "their" people in useful positions, but mostly shied away from upsetting the system too much. Question is what will break first: Kurz or the system.

And even if he steps down - he and many of his paladins are in their 30s; they will be part of the republic for decades to come. If not in politics, then in business - or both.

[Syt]

Oh, and the latest is that investigators (supposedly - confirmation outstanding) found on Thomas Schmid's government issued phone ca. 2500 dick pics that he may or may not have shared with others in government. Personally, I don't think it's a heinous thing (though this really doesn't belong on a government phone), but I wouldn't be surprised if instead of the corruption or incompetence shown by this government, this is the thing that leads to consequences.