Today’s guest post is from Jennifer Kartner, an anticorruption researcher who recently received her Ph.D. in political science from Arizona State University:
On Friday, May 17, 2019, the German newspapers Der Spiegel and the Die Sueddeutsche Zeitung released an explosive video showing two key politicians of the far-right Austrian Freedom Party (FPÖ), Heinz-Christian Strache and Johann Gudenus, scheming with a woman who claimed to be a wealthy Russian citizen. Their meeting took place in July 2017, a few months before the October 2017 Austrian parliamentary elections. In the video, Strache and Gudenus discuss how, with the help of the woman, they could ensure that the FPÖ wins the upcoming elections. The plan was that the Russian would buy 50% of the Austrian newspaper Die Kronen Zeitung—a newspaper reaching a third of all Austrian news consumers—before the elections, and then she would ensure that the already-populist newspaper would drum up more support for the FPÖ. (Mr. Strache estimates in the video that the newspaper takeover would help push the FPÖ’s expected vote share from 27 to 34 percent.) Once the FPÖ won the election, FPÖ elected officials would return the favor by helping the oligarch win contracts for public construction projects; all she had to do was to establish a construction company that could plausibly compete with the Austrian firm Strabag. The three meeting participants also talked about the possibility of privatizing the Austrian public broadcast station ORF, and Mr. Strache spoke of wanting to build a media landscape “just like Viktor Orbán built in Hungary.” But the deal never actually came together. Die Kronen Zeitung didn’t change owners, the FPÖ came in third in the parliamentary elections and ended up entering into a coalition government with the center-right ÖVP, and Strabag continues to win the majority of public construction contracts in Austria.
The political backlash in response to the publication of the video was swift and severe. An estimated 5,000 people came out to protest on the streets. A day after the publication, Mr. Strache resigned from his Vice-Chancellorship, as well as his other political and party positions, and issued a public apology, and a couple of days after that, all remaining FPÖ ministers in the government were fired or resigned in protest. While Austrian authorities are still debating whether they can charge Mr. Strache for any criminal activities, the public’s response shows that, regardless of the legal ramifications, ordinary citizens view this behavior as corrupt.
But perhaps one of the most disturbing things about this affair is that if the parties had gone through with their plan, and the secret video had never been leaked, neither the authorities nor the public would likely have ever had any reason to suspect a complex corruption scheme behind it. To see this, suppose for the moment that the scheme went ahead as planned. Would anyone have caught on? The answer is likely no:
- A takeover of Die Kronen Zeitung would of course have been noticed, as would any subsequent changes among the ranks of its journalists. But if the deal had been fronted by a proxy, it’s unlikely that it would have been linked to the FPÖ. And even if the newspaper’s tone became more FPÖ friendly, this probably wouldn’t have been enough to raise red flags, as the newspaper’s reporting already tends to be more on the populist side. As for the privatization of ORF, discussion of this possibility has been swirling around for years, meaning that privatization of the ORF, or parts of it, would not have been particular surprising. And here too, if the new Russian owners were to hide behind a proxy, their link to the newspaper would likely remain unknown for some time (at least, it likely would remain so until after the deal went through). And if the Russians had gone ahead and launched a new construction company that could provide products of similar quality as Strabag, and that new company won a bunch of contracts from the new FPÖ government, that also would not have raised any suspicions. Indeed, the FPÖ likely would be able to spin this as evidence of their commitment to fostering more (international) competition in the Austrian construction sector.
- More generally, in outlining their proposed deal, the FPÖ politicians and the Russian oligarch were very careful to separate their exchange of favors across time and sectors, avoiding any obvious quid pro quo. Without the video, the circumstantial evidence of a deal would probably not have been enough to support a prosecution, or to mobilize a public outcry sufficient to drive the FPÖ out of office.
Thus if the scheme had succeeded, it’s likely that nobody would have caught on, or at least not until long after both sides benefited. And while in this case we got lucky—the scheme didn’t work out and the conspirators were caught on video—what we saw in this case is unlikely to be unique. Indeed, the plotting and boasting we see in this video provides us with a good sense of how corruption likely takes place in wealthy democracies that have strong laws and institutions designed to address more traditional forms of corruption, like straight-up embezzlement and quid pro quo bribery. And from this we can see that our current legal understandings of corruption are woefully inadequate to deal with the more sophisticated forms of corruption that take place in established democracies. So while we can breathe a sigh of relief that this particular deal fell through and the two Austrian politicians got caught, we should recognize that the real lesson here is the need to press policymakers to reform laws and regulations to address these more sophisticated forms of corruption. After all, this deal may have fallen through, but how many similar schemes have been successfully carried out in seemingly well-functioning democracies, without any damning video evidence?