Corruption In Austria: Is It A Concern?

Austria has a well-developed institutional and legal system, and most corruption cases that are investigated by a parliamentary committee end with judicial trials and effective judgments. However, the country has seen several significant corruption cases over the past decade, including the Ibiza Affair, which involved the Austrian Vice Chancellor, and the BUWOG Affair, which involved a large housing portfolio owned by the Republic of Austria. On the Corruption Perceptions Index, Austria scored 71 out of 100 in 2022, ranking 20th among 180 countries. In 2021, the country's score was 74 out of 100, and it ranked 13th.

Austria's Corruption Perception Index score

Austria has a well-developed institutional and legal system, and most corruption cases under investigation by a parliamentary committee end with judicial trials and effective judgments. However, there have been several significant corruption cases in the country over the past decade, involving land and regional officials, high-level public officials, the central government, and even the former Chancellor.

Austria's Corruption Perception Index (CPI) score, according to Transparency International's 2022 report, was 71 out of 100, with 0 being "highly corrupt" and 100 being "very clean". This score placed Austria 20th out of 180 countries, with the highest possible rank being the least corrupt. The average score among the 180 countries was 43, and the best score was 90.

Within Western Europe and the European Union, Austria ranked lower, with the highest score in the region being 90, the average being 65, and the lowest being 42. The CPI is the leading global indicator of public sector corruption, ranking countries around the world based on how corrupt their public sectors are perceived to be.

In Austria, bribery of public officials is regulated by law under the Austrian Criminal Law Code (Strafgesetzbuch or StGB). The law defines "bribery" as offering, promising, or granting a benefit to a public official or third party to influence their public functions. Both the party granting the benefit (active bribery) and the party accepting it (passive bribery) may be held liable. The consequences of bribery can include imprisonment and fines, with the severity of the punishment depending on the value of the benefit involved.

While corruption exists in Austria, it is not considered a significant impediment to doing business in the country. According to the World Economic Forum's Global Competitiveness 2013-2014 report, it is uncommon for companies to make irregular payments or bribes related to imports and exports, public utilities, annual tax payments, and the awarding of public contracts and licenses. However, favouritism among government officials towards well-connected companies and individuals is noted as a competitive disadvantage for the country.

Corruption in the Austrian healthcare system

Austria has a well-developed institutional and legal system, and most corruption cases under investigation by a parliamentary committee end with judicial trials and effective judgments. However, corruption in the Austrian healthcare system is a significant issue, with a 2013-2019 study finding that Austria had the highest rate of corruption in healthcare out of all EU countries, with one in nine Austrian patients being asked to pay bribes.

Institutional Corruption

Institutional corruption in the healthcare sector refers to situations where service providers act in accordance with institutional and environmental settings but still undermine the healthcare system's purposes due to financial conflicts of interest. In Austria, this can occur when salaried public hospital physicians treat supplementary insured patients in public hospitals and also work as self-employed physicians in private practices and/or as attending physicians in private hospitals. This dual practice creates financial incentives that can influence medical decisions and affect the volume, range, frequency, and timing of medical services.

Special Fees and Dual Practice

Public hospitals in Austria are allowed to operate a special class, where patients pay additional fees for increased accommodation and food standards and the freedom to choose their physician. These special fees can introduce significant conflicts of interest for hospital physicians as they are 'rewarded' for treating supplementary-insured patients, potentially influencing their medical decisions. Additionally, the widespread possibility of dual practice for senior hospital physicians allows them to boost their income by referring patients from outpatient to inpatient care, which may impede attempts to relieve the inpatient sector.

Two-Tier Medical System

The current institutional design in Austria may contribute to a two-tier medical system, where there are differences in waiting times, access, range, and volume of services between socially and supplementary-insured patients. This inequity in service provision can result in longer waiting times and a greater number of lab tests for supplementary-insured patients, creating a system where those who can pay receive faster and more comprehensive treatment.

Impact on Healthcare System

The institutional corruption and potential gateways to corruption in the Austrian healthcare system have several negative consequences. These include inefficient resource use due to supplier-induced demand, inequity in the form of a two-tier medicine system, and potential impairment of the population's health if the financial viability of the healthcare system suffers.

Addressing Corruption

To address institutional corruption in the Austrian healthcare system, reforms could include reshaping the payment system for public hospital physicians, changing the tariffication and allocation of physician fees, and re-regulating the options for dual practice, particularly in private hospitals. Additionally, regulating the service provision of self-employed physicians and reorganizing the statutory health insurance system could help reduce corruption and improve equity in access to healthcare services.

The Ibiza Affair

Austria has a score of 71 on the Corruption Perceptions Index, ranking 20th out of 180 countries. While bribery of public officials is regulated by law in Austria, the country still faces issues with corruption. The Ibiza Affair is a prime example of this.

The secret recording was made during a meeting in Ibiza, Spain, in July 2017, a few months before the Austrian parliamentary election. At the time, Strache was the leader of the FPOe, a far-right, nationalist party. In the video, Strache and one of his aides, Johann Gudenus, are seen meeting with the woman, who claims to be the niece of a Russian oligarch and expresses an interest in investing in Austria.

During the conversation, Strache appeared to suggest that the woman could gain access to lucrative government contracts if she invested in Austria and supported the FPOe. He suggested that she could acquire a stake in Austria's largest tabloid newspaper, "Kronen Zeitung", and use it to help the FPOe's election campaign. In exchange, he offered to ensure that her construction company would be awarded public contracts. Strache also made a number of controversial and potentially illegal proposals, including a plan to create a media landscape similar to that of Hungary, where many outlets are controlled by allies of the country's authoritarian leader, Viktor Orban.

The video was released to the public by German news outlets "Der Spiegel" and "Sueddeutsche Zeitung" in May 2019, just a few days before the European Parliament elections. The release of the video caused a political scandal in Austria, leading to Strache's resignation as vice-chancellor and the collapse of the governing coalition between the FPOe and the conservative People's Party (OeVP).

The role of Chancellor Sebastian Kurz in corruption

Austria has a well-developed institutional and legal system, and most corruption cases that are investigated by a parliamentary committee end with judicial trials and effective judgments. However, there have been several significant corruption cases in the country involving land and regional officials, high-level public officials, the central government, and, in one instance, the former chancellor.

Austria's former chancellor, Sebastian Kurz, was involved in a corruption scandal that led to his resignation in 2021. Kurz was accused of using government funds to ensure positive media coverage in a tabloid newspaper, specifically by bribing pollsters and journalists to manipulate opinion polls in favour of his conservative People's Party (ÖVP). The allegations date back to the period between 2016 and 2018 when finance ministry funds were suspected of being used for this purpose.

The scandal triggered raids at various locations linked to Kurz and the ÖVP, including the chancellery, the finance ministry, and the homes and offices of his senior aides. Kurz denied the allegations, claiming that they were baseless and questioning the integrity of the prosecutors. However, he stepped down as chancellor due to the pressure and to prevent the collapse of his coalition government.

Kurz proposed Foreign Minister Alexander Schallenberg as his replacement, and Schallenberg took over as chancellor. Despite his resignation, Kurz remained a prominent figure in Austrian politics as the leader of the ÖVP and a member of parliament. He continued to attend cabinet meetings and maintained his influence within the party.

Kurz was placed under investigation by prosecutors for "suspicion of breach of trust, corruption, and bribery, partly with different levels of involvement." The scandal also involved nine other individuals and three organisations, including high-profile politicians and newspaper executives. The Österreich newspaper, which was alleged to have received taxpayer money for advertising in exchange for publishing the favourable polls, denied these claims.

In addition to the corruption scandal, Kurz was also under investigation for allegedly making false statements to a parliamentary commission, which he denied.

Kurz initially lost his immunity as a former chancellor, allowing the corruption probe to proceed. However, some members of his party hoped for his comeback, and he remained a central figure in Austrian politics even after stepping down as chancellor.

The legal system and anti-corruption measures

Austria has a well-developed legal system, and most corruption cases under investigation by a parliamentary committee end with judicial trials and effective judgments. The country's legal framework includes the Austrian Criminal Law Code (Strafgesetzbuch or StGB) and the Act on the Criminal Liability of Associations (Verbandsverantwortlichkeitsgesetz or VbVG).

Bribery of public officials is specifically addressed in Sections 304 to 308 of the StGB. The law defines "bribery" as offering, promising, or granting a benefit to a public official or a third party to influence their public functions. Both active and passive bribery are punishable, with penalties ranging from fines to imprisonment, depending on the value of the benefit involved.

In addition to bribery provisions, Austria has regulations for domestic private-to-private bribery (Sections 309 and 153a of the StGB) and the corruption of foreign public officials, which are held to the same standards as those for Austrian public officials.

To further combat corruption, Austria established a central department of public prosecution (Zentrale Staatsanwaltschaft zur Verfolgung von Wirtschaftsstrafsachen und Korruption or WKStA) in 2011, dedicated solely to economic offences and corruption. This department handles cases related to bribery and corruption, particularly when the value of the benefit exceeds EUR 3,000, or when it is in the public's best interest.

Despite these anti-corruption measures, Austria has faced several significant corruption cases in recent years, involving land and regional officials, high-level public officials, the central government, and even a former Chancellor. These scandals have raised doubts about the ethical standards of the political elite, with two-thirds of respondents in the Eurobarometer 2012 perceiving national politicians as corrupt.

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