The Cyprus-Vienna Connection In Huawei Bribery Case

This post is a follow-up to last week's article on Austrian government's investigation into Huawei paying bribes for Telekom Austria business. FORMAT broke the story with its own investigation which was available only in the Austrian language. I've had it translated into English and have reproduced it below. At last report, the Vienna prosecutor's office is investigating.

The Hochegger Lobbying Affair: New Multi-Million Dollar Deals

- Secret Strasser-Hochegger Connection

- Crackdown on Former Telekom Executives

Prosecutors are uncovering a new multi-million dollar lobbying deal made by Peter Hochegger. Two former Telekom executives are being investigated for dubious business transactions with Hochegger.

Lu Hongwei and Peter Hochegger had a shared passion: doing business with Telekom Austria. The Austria boss of the Chinese conglomerate, Huawei, and the well-connected lobbyist decided to fuse their interests into a special “Marketing Promotion Agreement” in August of 2007. The resulting contract was made between Huawei Technologies Investment Limited, based in Hong Kong, and Hochegger's Astropolis Investments Consulting Limited, based in Nicosia, Cyprus.

In the “Agreement,” to which Format has gained exclusive access, Astropolis guaranteed the procurement of Telekom contracts valued at a minimum of 60 million euros. In return, Huawei was prepared to pay 10 percent commission for every secured contract.

Going purely by these numbers, Astropolis was able to take in six million euros over the course of two years. The payment procedure was always the same: after Telekom had settled its balance with Huawei, Lu Hongwei would contact Hochegger via email, reminding him to write an invoice. Hochegger's fee would then be transferred to an Astropolis account (Acct. #: 155-40451087448) with the Bank of Cyprus.

The question remains why China's largest telecommunications equipment supplier–with a turnover of 16 billion euros and a revenue of 1.9 billion euros–would need a small time PR-adviser like Peter Hochegger to do business with a partially state-owned company like Telekom.

Lu Hongwei, who is now head of Huawei's office in Serbia, was not available for comment. His successor, Sun Zhengyang, doesn't know anything about Hochegger or any commission-based contracts. Hochegger isn't making any statements, due to pending court cases.

His silence, however, doesn't change the potential volatility of the Astropolis contracts. The fact that Hochegger, who as an adviser to Telekom earned roughly 25 million euros over 10 years (see: “Hochegger's Biggest Assignments”), was able to secretly collect additional millions of euros in commissions from Huawei is an explosive revelation. For years, Telekom had been astounded with Huawei's unexpectedly high market share. One Telekom employee said of Huawei: “They were getting successive contracts that once went to Nokia and Ericsson.”

State attorney Hannes Wandl, who is investigating the Telekom affair (Case # 614 st 3/10m), sees many parallels to the recent Buwog scandal. A key connection is that Immofinanz's dubious lobbying-related commissions first went to Astropolis–as reported in Format 38/09–before eventually finding their way to Walter Meischberger. The central question here is whether Hochegger shared his commissions from Huawei with a third party.

General suspicion falls on all Telekom managers who were in some way affiliated with contracts that went to Huawei between August 2007 and September 2009. These employees are likely to receive unwelcome attention from the BAK, Austria's federal office for the prevention of corruption. The agency has already compiled a long list of suspects based on witness testimony and the opening up of several bank accounts in Cyprus. The starting date for what promises to be a lengthy examination falls after Easter.

A Volatile Audit Report

Prosecuting attorney Wandl has had his sights on two former Telekom executives for a long time; Rudolf Fischer and Gernot Schieszler are both suspected of having misused Telekom funds. Last week Wandl commissioned a police raid. The official justification for this act, as it was presented to Format, was that Fischer and Schieszler had overseen “payments on behalf of Telekom Austria to Valora AG, totaling 9.08 million euros, with no service in return.” Valora AG, a consultancy firm, belongs to Hochegger. “Rudolf Fischer, Gernot Schieszler and Wolfgang F. are thus suspected of having committed the crime of perfidy.”

Fischer and Schieszler were high-ranking Telekom liaisons to Hochegger and his lobbying partner at the time, Walter Meischberger. The connection was so strong that Schieszler found immediate employment under Meischberger after leaving the company in mid-2009.

According to the official investigation, Telekom's internal auditing yielded the following results with regard to Fischer and Schieszler: “In the 16 recorded business transactions with Valora AG, which resulted in a total of 29 invoices, not one of the alleged 16 return services” was documented. The file states that: “In each case there exists only one contract, drawn up by the purchasing department, which took over invoicing duties and handled offers from Valora, which always matched the invoices. The above-named accused were the sole participants in all confirmed business transactions of this nature.”

Volatile Witness Testimonies

Numerous Telekom employees were questioned about the 9.06 million euros that went up in smoke:

“Telekom's Purchasing Manager, Brigitte Schüssler, claimed that during the time period in question Wolfgang F. was head of the purchasing department. She has no memory of the two specific cases in which her name came up.”

“Responding to claims that his department was implicated in a bill totaling 380,000 euros, Stefan Tweraser, former Retail Marketing Manager, stated that he had no memory of the indicated consultancy contract; neither Tweraser nor any of his colleagues in the department had commissioned such a contract.”

“Wolfgang Pastner, Telekom's incumbent Secretary General, stated that none of the cases referred to in the invoices were known to him . . . Similarly, Peter Michaelis, Chairman of the Board at Telekom, had no knowledge of said cases.”

Despite an inquiry from Format, Fischer and Schieszler–to whom both the presumption of innocence right now applies–have remained mum. The former Telekom top managers declined to comment on the allegations arising from the internal audit, as well any potential involvement in Hochegger's deals with Huawei.

The audit report, which has become Fischer and Schieszler's bane, throughly investigated business transactions between former Telekom heads and Hochegger's Austrian network. “We are fully cooperating with Vienna's public prosecuting office,” states Elisabeth Mattes, a speaker for Telekom. Mattes also vehemently refutes Hochegger's claim that Telekom had attempted to silence him. She states: “Of course we exonerated Mr. Hochegger from all confidentiality agreements.”

Up until now, Telekom had been unaware of the Huawei commissions that, as Format uncovered, were paid to Hochegger. Christopher Schnecker, TA Director of Audit, will soon be closely examining the transactions with industry giants Huawei; the total contract volume greatly exceeds 130 million euros. Evidence of questionable projects and all names affiliated therewith will be immediately handed over to the prosecuting office. This is the wish of Chief Executive Officer Hannes Ametsreiter. “We will turn over every leaf and every cost estimate,” says Ametsreiter.

Hochegger's Biggest Assignments: Millions with ÖBB, Telekom and KHG

Buwog Commission–9.6 Million Euros: During the selling of government-owned apartments, lobbyists Walter Meischberger and Hochegger took in 7.7 million and 1.9 million euros, respectively.

KHG Consulting–3 Million Euros: Between the years 2000 and 2003, the ministry of finance [i.e. the treasury] headed by Karl-Heinz Grasser assigned projects to Hochegger's agency.

Telekom–25 Million Euros: The largest sum of money was amassed through the partially state-owned company. The agency made 10 million euros solely in PR services, such as organizing events and drafting press releases. An additional million euros was paid to Hochegger when he advised management on a new corporate structure. Hochegger's plans for state-employed colleagues also garnered him one million euros, this despite the fact that those plans never came to fruition. Hochegger was also brought on board to be a cheerleader for broadband; for this task too he received one million euros, with an additional million for the purchase of e–tel.

Telekom/Novomatic–600,000 Euros: Together, they wanted to break into the online gambling industry. Hochegger was to help.

Porr–200,000 Euros: Walter Meischberger and Hochegger took in money for unspecified services in Romania.

ÖBB-PR–6.1 Million Euros: Hochegger's agency was also doing lucrative business with the national railway.

- END -



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