Casinos Austria & Novomatic Embroiled in “Casino Affair” Scandal

Austria is all set to decide on granting sweeping new powers for investigation of the casino scandal probe famously referred to as the “Casino’s Affair”.

A new parliamentary committee has been set up to tackle the escalating corruption scandal that has hit the political establishment of Vienna. Austrian lawmakers will soon decide if the committee investigating the “Casino’s Affair” needs to be given more teeth to smoothen the probe.

WKStA, the prosecutor for economic crimes and corruption in Austria, is currently examining 11 people for tracing their role in unlawful political funding, bribery, and a probable promise of making changes to the nation’s gambling law so it can benefit one of the nation’s largest companies, and its elusive 70 something years old owner and billionaire, Johann Graf.

The investigation in the “Casino’s Affair” is focussed on the association between the state-funded gambling company and its shareholders. The details of this relationship became public after Heinz-Christian Strache, the Freedom party leader, was secretly videotaped soliciting money from Russia. This led to triggering the downfall of the government in May earlier this year. Mr Strache, who was holding the chair of the vice-chancellor then, had assisted in the installation of a crucial ally, Peter Sidlo, in the position of the new chief financial officer at Casino Austria, despite him having no previous executive-level experience.

“Casino’s Affair” investigation is also centred around determining whether there was some hidden motive behind Mr Sidlo’s appointment. Specifically, was the former coalition government considering ending the monopoly of Casinos Austria in the online gambling space? Such a move could have meant hundreds of millions of dollars of value to Novomatic.

Novomatic is an Austrian gambling firm which is also a partner in Casino Austria along with the Czech Sazka Group and the Austrian government. As far as Mr Strache is concerned, he has denied his involvement in any political corruption. He took to his Facebook account on Friday and wrote, “Never have I offered or accepted anything unlawful in connection with the CASAG (Casinos Austria) executive board appointment.”

Novomatic has always held strong ties with both the traditional ruling political parties of Austria, the Social Democrats and the People’s party. As per Karla Jurka, who is now a political consultant based out of Berlin and worked as campaign manager for the People’s party in the past, “This is an old political tradition in Austria. The governing parties discuss between themselves which job will go to which of their favoured candidates for any company or organisation that the state has an interest in. Independent candidates have more or less no chance in Austria. It has been this way since the end of the second world war for all jobs linked to the public area, including state-owned industry — anywhere the government has influence.”

A spokesman working for Novomatic has rubbished the accusations made in the “Casino’s Affair” scandal as being “completely unfounded”. As per the press release, “Novomatic is a minority shareholder of [Casinos Austria] with only two out of 18 mem­bers on the supervisory board [and] has no claim to a management board position and therefore cannot nominate a management board member on its own.”

The allotment of gambling licenses in Austria is, for now, the subject of a “special legal procedure . . . only possible within the framework of an international, transparent and public invitation to tender,” Novomatic added.

Public consciousness regarding “Casino’s Affair” has increased with a series of explosive headlines, leaks and dawn raids conducted by the police. There was a report over the weekend that stated that a police raid conducted at a remote Tyrolean alps hotel, used as a hiding place by Mr Strache and senior Freedom party members, unearthed a pile of gold bullion. The party claims the stash to be an investment.

Parteibuchwirtschaft — party-book economics, the broader culture of political nepotism and placemanship dominating the political system of Austria since the war, is blamed by many for the “Casino Affair.”

The extent and devious complexity of the “Casino’s Affair” scandal have overshadowed discussions related to the formation of a new government after the snap election held in October. Hartwig Löger, the former finance minister of the People’s party, is also being investigated by the WKStA for allegations of promising certain favours to Novomatic.

Forming the terms to guide the investigating committee for the “Casino’s Affair” is in itself a high political game. The Social Democrats want the committee to focus on investigating the Freedom party and its activities during its time in government with the People’s party. The People’s party, on the other hand, wants the inquiry broadened to encompass the dealings of Social Democrats with Novomatic. The Freedom party has said that it will support a probe into the prevalent corruption and political interference in the Austrian economy.

A lot of people consider the “Casino Affair” as merely a tip of the iceberg. As Thomas Hofer, a leading political commentator and consultant from Vienna put it, “The design and powers of this investigatory committee will be crucial but we don’t know yet how far it will go . . . there is so much to examine here.”