Austria’s Strache affair and the undue influence toolkit

A week ago, German newspapers Süddeutsche Zeitung and Der Spiegel published evidence of the former Vice-Chancellor of Austria, Heinz-Christian Strache and a colleague apparently negotiating corrupt deals with the purported niece of a Russian oligarch close to President Vladimir Putin.

Both Strache and the colleague, Johann Gudenus, have resigned and their party, the right-wing populist FPÖ, has been kicked out of the Austrian governing coalition, triggering snap elections expected in September. The country’s chancellor, Sebastian Kurz, is facing a vote of no confidence.

Strache and Gudenus were caught on hidden cameras meeting with a woman and her associate on Ibiza in 2017. She claimed to be in the process of buying a controlling stake in Kronen Zeitung, Austria's biggest-selling tabloid, and said she would use the paper to promote the FPÖ in elections in Austria later that year.

The woman was actually a decoy, and the meeting a hidden-camera operation, so no real deals were struck. Yet, the scandal shows that even in countries perceived as relatively corruption-free, undue influence can fuel the abuse of power and lead to state capture. It illustrates the tools and methods used by those who wish to enrich themselves from public funds and advance private interests over the public good; how media manipulation, suspicious procurement deals and dark money in politics can be used to sway elections; and how illegal money can be cleaned for the criminal and corrupt to the detriment of us all.

Here we break down the main issues, why they matter and what can be done about them.

Not only did Strache approve of the proposed takeover of a key media institution, he talked admiringly of the way the state media in Hungary is used to advance the interests of the ruling party. The Austrian equivalent would be the state broadcaster ORF, which is funded by the public but controlled by a politically appointed body. The FPÖ has been accused of trying to exert more political influence over ORF, which has been perceived to be largely critical of Kurz’s coalition government.

Transparency of media ownership is a critical area for ensuring a healthy media landscape. As in other business areas, however, finding out who actually controls a media company is not always possible. Research by Access Info Europe shows that in only nine of 20 European countries assessed can the public find out who owns media outlets using reporting to regulators or company registers.

In many countries, including the largest economies, Transparency International is calling for public registers of beneficial – i.e. actual – ownership of companies. Properly verified and easily accessible company ownership information would help diminish the undue influence of money in politics. In the case of media ownership, it would allow the public to understand any hidden agendas and alliances between media, politics, and other business interests.

It isn’t just about ownership. Editorial independence of journalists needs to be guaranteed; otherwise media stop doing their job as watchdogs and become mouthpieces for vested interests. There is also a clear link between a free and safe environment for journalists and effective control of corruption. In Europe and elsewhere, however, some politicians have campaigned on an anti-corruption agenda, and then cracked down on press freedoms once in office.

According to Süddeutsche Zeitung, Strache and Gudenus suggested another idea: “"If she wants," Strache said twice, "if she likes the idea," she could make a donation to the party.”

In Austria, there is a €2,641 cap on political donations from foreigners, so the politicians floated the idea of using a third party, or ‘the association’, to disguise the origins of a donation to the FPÖ.

In many countries political parties rely on private donations not only for their core activities but also to run election campaigns. The problem arises when large contributions start to exercise undue influence on politics. Some countries have reformed their political systems with the aim of striking a balance between encouraging moderate contributions and limiting excessively large ones.

Measures range from restrictions and limits on private contributions, including on foreign contributions, to requirements that enhance transparency of party funding and credibility of financial reporting. In the midst of all these restrictions, parties still might attempt to circumvent regulations through the use of other institutions – such as associations, foundations, think tanks, as conduits for funds or services.

The majority of countries still lack legislation on entities related to political parties, which allows parties and candidates to avoid state and civil society oversight by transferring questionable donations from accounts that must be publicised to one that is not.

So-called dark money in politics makes it impossible for voters to know if a politician is acting in the interests of their donors or other private interests.

When public contracts are awarded not on merit but as political favours or ways to siphon off public funds, service delivery inevitably suffers, and tax payers lose out.

There are some tried and tested ways of reducing the risk of corruption in public procurement.

Initiatives like Transparency International’s Integrity Pacts involve independent civil society organisations and affected communities in the oversight of expensive public works projects across the EU. According to this model, independent monitors are granted access to the entire procurement process and work to make sure that open contracting principles are respected throughout. One example is the integrity pact Transparency International Austria delivered during the refurbishment of the Austrian parliament building.

Some Transparency International chapters have also developed online monitoring tools that allow citizens and media to scrutinise government spending like ProZorro in Ukraine and TenderMonitor in Georgia.

Globally, there are tools like the Open Contracting Data Standard, which – when applied – contribute to an environment of transparency that allows media and civil society to spot signs of corruption and back-room deals.