Ex-Telekom Austria bosses sentenced for corruption

VIENNA Wed Feb 27, 2013 12:03pm EST

VIENNA Feb 27 (Reuters) - Three former Telekom Austria managers were given jail sentences of between three and three-and-a-half years on Wednesday for manipulating the share price to trigger bonuses for themselves and others.

The three were found guilty of breach of trust for arranging the mass buying of shares in 2004 to push up the share price and activate an incentive scheme that paid out a total of nine million euros ($12 million) to 96 managers.

"They knew they were abusing their authority," Judge Michael Tolstiuk told a Vienna court, putting the overall damage to the company at around 10 million euros.

A fourth defendant, former chief executive Heinz Sundt, was acquitted due to lack of sufficient evidence.

The case was the first to reach court from multiple corruption investigations into the former state telecoms monopoly.

The executives had engaged banker Johann Wanovitz of Viennese investment firm Euro East to buy the 1.2 million shares, later paying him about 1.5 million euros for his services, some of it delivered in cash in a paper bag.

Lawyer Rudolf Mayer, defending ex-Chief Financial Officer Stefano Colombo, had argued that the former executives were victims of a changing culture in Austria, where business has traditionally been done on the basis of friendships and favours.

"What in the past was considered business on the basis of good relationships is corruption today," said Mayer, whose most famous past client was Josef Fritzl, who locked up his daughter in a cellar for 24 years and fathered seven children with her.

Colombo was given the longest sentence, of three-and-a-half years.

Rudolf Fischer, who ran Telekom Austria's fixed-line business at the time and who had admitted approving a tranche of 500,000 euros for Wanowitz, was sentenced to three years.

Ex-wholesale manager Josef Trimmel, who introduced the executives to Wanovitz and made many of the practical arrangements, was sentenced to three years, two years of which are conditional.

Colombo and Trimmel had denied wrongdoing.

Lawyers for all three said they would consider an appeal.

The verdict on Wanovitz will be delivered later after a further witness who has been out of the country is available to give evidence next month.

Most of the senior managers got payouts of around 200,000 euros, and all but one of the 96 opted to take their bonus in cash rather than shares.

Telekom Austria is suing about 20 people to try to claim back about 20 million euros it says it was tricked into paying out for services that were not delivered.

Current Chief Executive Hannes Ametsreiter, who was a senior marketing manager in 2004, is not accused of participating in the share manipulation and has paid back his bonus. ($1 = 0.7567 euros) (Reporting by Georgina Prodhan; Editing by Elaine Hardcastle)