Former Austrian minister sentenced to eight years in prison in €1bn corruption trial

Justin Huggler
Karl-Heinz Grasser (centre) flanked by his lawyers - HELMUT FOHRINGER/AFP
Karl-Heinz Grasser (centre) flanked by his lawyers - HELMUT FOHRINGER/AFP

A former Austrian finance minister was sentenced to eight years in prison on Friday in the country’s biggest corruption trial since World War Two.

Karl-Heinz Grasser, who served as finance minister from 2000 to 2007, was found guilty of corruption, accepting bribes and falsifying evidence. 

He and two co-defendants were convicted of accepting kickbacks of €9.6m (£8.6m) for passing insider information on the privatisation of public housing.

It was a spectacular downfall for a man once known for a flamboyant, jet-set lifestyle more in keeping with a celebrity than a politician. 

Grasser married an heiress to the Swarowski crystal family fortune while serving as finance minister in 2005, and the couple frequently featured in the Austrian tabloid press.

Grasser and his wife, heiress Fiona Swarowski, in 2005 - GERT EGGENBERGER/AP
Grasser and his wife, heiress Fiona Swarowski, in 2005 - GERT EGGENBERGER/AP

He rose to power as a member of the far-Right Freedom Party (FPÖ) and was once seen as a protege of Jörg Haider, the party’s controversial former leader. But after a break with his former mentor he left the party and allied himself to the conservative Austrian People’s Party (ÖVP).

The case that brought him down centres on the privatisation of 60,000 public housing apartments while he was finance minister in 2004. 

Grasser was found guilty of providing insider information on the sale that allowed a consortium to win with a bid of €961.2m, just €1.19m more than its closest rival. Three years later the apartments were valued at almost twice as much.

“Only Grasser could have passed on the information,” Judge Marion Hohenecker said as she handed down the sentence. 

The courtroom in Vienna where Grasser was tried - HELMUT FOHRINGER/AFP
The courtroom in Vienna where Grasser was tried - HELMUT FOHRINGER/AFP

Grasser and his co-defendants had engaged in a “comprehensive cover-up” and created an “infrastructure of concealment” that made it clear the kickbacks were not a legitimate commission.

She dismissed claims by Grasser that he had been given €500,000 in cash from his mother-in-law because he had a “talent for investment” as “absurd and refuted”.

It was a sobering day for the Austrian judicial system, which has come under fire for the length of time it took to bring Grasser to trial.

The case was uncovered in 2009, just two years after he left office, but charges were not brought until 2016 and the trial did not begin until 2017. 

It dragged on for another three years and Grasse was handed a reduced sentence, in part because the progress of the case through the courts has been so slow.