In October 2021, police officers raided the offices of Austrian Chancellor Sebastian Kurz. Searching for evidence of corruption, the officers quickly found the Chancellor had funnelled €1.2 million of taxpayers’ money to pro-Kurz media outlets, triggering a political crisis that would see the Chancellor offer his resignation within the week.
Sebastian Kurz’s sudden fall from grace sent shockwaves across Europe. But this was not the only political crisis Austria has witnessed in recent months. Over the past three years, a web of sleaze allegations has engulfed large parts of the political establishment, leading to growing demands from citizens to end the Freunderlwirtschaft.
Austria’s reputation has not only been tainted by political corruption, but its banking sector has also been marred by a series of scandals in recent years. It appears the lack of transparency in Vienna’s bank secrecy laws, as well as the proclivity for ignoring red flags, has made the country extremely attractive for money launderers.
The scale of the problem is endemic.
In 2017, one of the country’s historic lenders, Bank Winter, was accused of helping launder $175 million out of Russia’s National Bank Trust into a labyrinth of offshore holding companies.
Similarly, Raiffeisen Bank International, one of Austria’s biggest lenders, was tarred by allegations of lax anti-money laundering controls. The bank was implicated in the 2016 Panama Papers leak and fined €2.7 million for poor money-laundering prevention methods. While this penalty was later overturned by Austria’s supreme court, Raiffeisen came under fire once more in 2019, when the activist Bill Browder accused the bank of handling more than $643 million in dirty money from Russian criminals.
Adding another string to Austria’s money laundering bow, in 2019, one of Austria’s leading banks, Meinl, had its licence revoked following allegations it helped launder tens of millions of euros on behalf of individuals and entities connected to the former Ukrainian president Viktor Yanukovich.
Against this backdrop, it is hardly surprising that 71% of Austrians believe corruption is widespread in their country. And yet, despite public concern, Austria continues to harbour international tax dodgers and fraudsters, with politicians such as the Russian opposition leader, Alexei Navalny, explaining that “(e)veryone is aware that corrupt crooks like to invest in Austria.”
A key reason vast sums of illicit money are invested in the alpine state is that Austria is the only Western European country that offers citizenship without prior residence requirements. All that is required to gain access to its eagle-emblazoned passport is a minimum €3 million investment and a few helpful connections.
Austria’s 2011 “Part-of-the-Game-Affäre” scandal illustrated just how easy this process can be. In return for a €5 million bribe, former politician Uwe Scheuch handed over Austrian citizenship to a Russian investor, explaining the transaction was just ‘part of the game’. Soon after, Jörg Haider, the late governor of the southern Austrian region of Carinthia, and his former advisor, Franz Koloini, followed suit, helping two Russian businessmen obtain citizenship in return for cash.
Austria is set to become the new playground for fugitive millionaires, with tax dodgers and money launderers alike viewing Austria’s lax financial regulatory controls and citizenship requirements with delight.
Nonetheless, while a string of scandals has been unearthed to date, it appears the true scale of the problem remains hidden, with questions continuing to surround key individuals in Austrian society.
One person that has been arousing suspicion is Dr Rilwanu Lukman, a former Nigerian Minister of Petroleum Resources and erstwhile Secretary General of the Organisation of Petroleum Exporting Countries (OPEC).
Lukman died in Austria in July 2014 after living in Vienna for several years. To many, he is remembered as a bastion of the oil and gas industry, having held senior positions on the boards of Agrid International, Africa Heritage Oil & Gas, Africa Heritage Investments, and Africa Heritage Logistics. But to others, Lukman’s legacy is less clear cut.
As a major shareholder in several oil and gas companies, it is likely Lukman amassed significant wealth in his lifetime. This alone would not be cause for concern. However, in the past, there have been previous suggestions of conflicts of interest and questions have been raised over Lukman’s eligibility to hold sensitive political positions in the oil and gas sector, given his personal financial interests in the industry.
And most recently, Lukman has been embroiled in the infamous Process & Industrial Developments (P&ID) v Federal Republic of Nigeria case, where the shell company P&ID is pursuing the government of Nigeria for $10 billion over a collapsed gas contract – a sum equivalent to roughly one-fifth of Nigeria’s foreign reserves.
It is alleged that P&ID procured the contract by paying bribes to Nigerian officials, with the likes of Lukman overlooking the shortcomings of P&ID’s bid in return. Lukman’s family denies these allegations, yet ultimately the verdict is for the courts to decide. Following London’s High Court ruling in September 2020 that there is a strong prima facie case P&ID procured the contract by bribery, questions about Lukman’s involvement remain to be answered.
As Austria continues to harbour the illicit money of the well-connected and wealthy, the alpine country may struggle to polish its national reputation, which has been tarnished by years of financial scandals and political corruption.
