Ex-Telekom Austria exec tells court he's sorry for share scandal

VIENNA Mon Feb 11, 2013 10:08am EST

VIENNA Feb 11 (Reuters) - A former Telekom Austria boss on trial for his part in a market manipulation scandal apologized for approving a payment to a banker who bought shares in the company, triggering bonuses for dozens of managers.

In the first court case resulting from multiple corruption probes into the company, Rudolf Fischer said he had okayed the 500,000 euro ($669,000) payment but had not known it would be delivered in cash in a plastic bag at a popular Vienna market.

"I know it was a mistake. I'm sorry," said Fischer, pleading partial guilt to a charge of corruption.

Fischer said the banker had bought the shares at his own risk, not as the result of any formal contract made with Telekom Austria managers, and the intention had been to pass some future, legitimate business his way as a sign of gratitude.

Fischer, who then ran Telekom Austria's fixed-net segment and later became deputy chief executive, has since paid the money back to the company.

Fischer and four others are accused of arranging the mass buying of Telekom Austria shares in 2004, causing a price rise that triggered a payout of about 9 million euros for 100 managers at the company.

He and the four others - three former top Telekom Austria managers and the banker who bought the shares - face up to 10 years in jail if found guilty. The other defendants pled not guilty of corruption on Monday.

The probes into alleged slush funds, political payoffs and market manipulation have damaged the image of former monopoly Telekom Austria, which is still partially state-owned and now also part-owned by Mexican telecoms tycoon Carlos Slim.

They are among a plethora of corruption and bribery cases making their way through the legal system in Austria, where prosecutors are trying to root out a tradition of doing business and politics through personal connections and favours.

Prosecutor Hannes Wandl said Fischer - together with ex-CEO Heinz Sundt, ex-CFO Stefano Colombo and ex-wholesale manager Josef Trimmel - conspired to pay banker Johann Wanovitz a total of 1.5 million euros to push the share price up to the target.

"Was it in the interests of the shareholders that the top managers decided themselves whether they deserved the bonus? The answer is a very clear 'No'," Wandl told the court.

FORGOTTEN PROMISE

Fischer said Wanovitz had agreed to buy the 1.2 million shares at his own risk, and that Telekom Austria had informally agreed to give him business in the future if the scheme worked.

He said he had then forgotten all about the promise until several months later when Trimmel, who knew Wanovitz personally, reminded him that the banker was still waiting for his side of the bargain to be fulfilled.

By then, Telekom Austria was under investigation by the FMA financial regulator over the share price movement and could not enter into a direct contract with Wanovitz but concealed the payment in a contract with a third party, Fischer said.

The FMA's investigation found no wrong-doing.

Fischer said the payment of the bonuses had been essential to keep up the motivation of employees, who had missed out in 2002 and 2003 after the share price plunged when the company issued a profit warning within months of its market debut.

Telekom Austria's current Chief Executive Hannes Ametsreiter, who in 2004 headed the company's mobile marketing operations in Austria, last year paid back the bonus he received as a result of the price rise and has denied wrongdoing.

He is now trying to claw back 20 million euros from 20 people suspected of defrauding the company by claiming payments for services they did not provide.

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