changing organizational logics in major austrian enterprises

Re-publicization and establishment of public enterprises in Austria since the millennium Etienne Koo

Changing organizational logics in major Austrian enterprises

Master’s Thesis to confer

the academic degree of

Master of Science

in the Master’s Programme

General Management

Author:

Etienne Koo, M.Sc.

0855786 / 973

Submission:

Institute of Organization and Global Management Education

Thesis Supervisor:

A.Univ.-Prof. Mag. Dr. Werner Auer-Rizzi

Assistant Supervisors:

Univ.-Prof.in Dr.in Dorothea Greiling

Assist.-Prof.in Dr.in Birgit Grüb

Linz, January 2015

http://www.jku.at/ima/content/e60052/index_html?team_view=section&emp=e60052/employee_groups_wiss60053/employees60054

Statutory declaration

I declare that I have authored this Thesis independently, that I have not used other than the declared

sources / resources and that I have explicitly marked all material which has been quoted either

literally or by content from the used sources.

The present Master Thesis is identical to the electronically submitted version.

Date, place Signature

Changing organizational logics in major Austrian enterprises Etienne Koo

I

Table of content

1. Introduction ............................................................................................................................... 1

2. Research question ..................................................................................................................... 2

3. Methods of problem solution ................................................................................................... 2

4. Conspectus on concepts of public enterprise management ................................................... 3

4.1 Retrospection on significant developments in Austria ........................................................ 3

4.2 Public Management and its organizational logics ............................................................... 7

4.2.1 New Public Management ......................................................................................... 7

4.2.1.1 Conceptual premises ................................................................................ 8

4.2.1.2 Limits of New Public Management ....................................................... 10

4.2.2 New Public Governance ........................................................................................ 11

4.2.2.1 The concept and its idea of cooperation ................................................ 11

4.2.2.2 Public-Private Partnerships ................................................................... 12

4.2.3 Public choice .......................................................................................................... 13

4.2.3.1 Conceptual premises of public choice ................................................... 14

4.2.3.2 Rent seeking .......................................................................................... 15

5. The organization CIRIEC ...................................................................................................... 17

5.1 Structure at CIRIEC ........................................................................................................... 17

5.2 Research at CIRIEC ........................................................................................................... 18

5.3 Country analysis and policy trends .................................................................................... 19

5.3.1 Aim of the project .................................................................................................. 19

5.3.2 Methods of problem solution ................................................................................. 20

6. CIRIEC Austria ...................................................................................................................... 21

6.1 Methodology ...................................................................................................................... 21

6.2 Analysis of major Austrian enterprises .............................................................................. 23

6.2.1 ASFINAG .............................................................................................................. 24

6.2.1.1 Legal base .............................................................................................. 24

6.2.1.2 Main tasks .............................................................................................. 24

6.2.1.3 Organizational structure ........................................................................ 26

6.2.1.4 Relationship to Austrian politics ........................................................... 27

6.2.1.5 Organizational developments since the Great Recession ...................... 33


II

6.2.2 Bundesimmobiliengesellschaft .............................................................................. 37

6.2.2.1 Legal base .............................................................................................. 37

6.2.2.2 Main tasks .............................................................................................. 38




6.2.3 Österreichische Bundesbahnen Holding AG ......................................................... 44

6.2.3.1 Legal base .............................................................................................. 44

6.2.3.2 Main tasks .............................................................................................. 45




6.2.4 Österreichische Bundesforste AG .......................................................................... 52

6.2.4.1 Legal base .............................................................................................. 52

6.2.4.2 Main tasks .............................................................................................. 53




6.2.5 Österreichische Industrieholding AG .................................................................... 61

6.2.5.1 Legal base .............................................................................................. 61

6.2.5.2 Main tasks .............................................................................................. 62




6.2.6 Österreichische Post AG ........................................................................................ 68

6.2.6.1 Legal base .............................................................................................. 69

6.2.6.2 Main tasks .............................................................................................. 69




6.2.7 Österreichischer Rundfunk ORF............................................................................ 78

6.2.7.1 Legal base .............................................................................................. 78

6.2.7.2 Main tasks .............................................................................................. 79



III



6.2.8 OMV AG ............................................................................................................... 89

6.2.8.1 Legal base .............................................................................................. 89

6.2.8.2 Main tasks .............................................................................................. 91




6.2.9 Schienen-Infrastruktur-Dienstleistungsgesellschaft mbH ................................... 100

6.2.9.1 Legal base ............................................................................................ 100

6.2.9.2 Main tasks ............................................................................................ 101

6.2.9.3 Organizational structure ...................................................................... 103

6.2.9.4 Relationship to Austrian politics ......................................................... 103

6.2.9.5 Organizational developments since the Great Recession .................... 105

6.2.10 Telekom Austria AG ............................................................................................ 106

6.2.10.1 Legal base ............................................................................................ 106

6.2.10.2 Main tasks ............................................................................................ 108




6.2.11 Verbund AG ......................................................................................................... 116

6.2.11.1 Legal base ............................................................................................ 116

6.2.11.2 Main tasks ............................................................................................ 118




7. Discussion .............................................................................................................................. 127

7.1 State-owned vs. private enterprises ................................................................................. 127

7.1.1 Peculiarities in management and performance .................................................... 128

7.1.2 Governmental influences and policies ................................................................. 129

7.1.3 The role of trade unions ....................................................................................... 131

7.2 Situation in Austria .......................................................................................................... 133

7.2.1 Final reflection on selected enterprises ................................................................ 134

7.2.1.1 ASFINAG ............................................................................................ 135


IV

7.2.1.2 Bundesimmobiliengesellschaft ............................................................ 136

7.2.1.3 Österreichische Bundesbahnen Holding AG ....................................... 137

7.2.1.4 Österreichische Bundesforste AG ....................................................... 139

7.2.1.5 Österreichische Industrieholding AG .................................................. 140

7.2.1.6 Österreichische Post AG ..................................................................... 141

7.2.1.7 Österreichischer Rundfunk ORF ......................................................... 142

7.2.1.8 OMV AG ............................................................................................. 143

7.2.1.9 Schienen-Infrastruktur-Dienstleistungsgesellschaft mbH ................... 144

7.2.1.10 Telekom Austria AG ........................................................................... 145

7.2.1.11 Verbund AG ........................................................................................ 146

8. Conclusion ............................................................................................................................. 149

References................................................................................................................................... 153


V

List of figures

Figure 1: ASFINAG organizational structure ............................................................................... 26

Figure 2: ÖBB Holding Group organizational structure ............................................................... 47

Figure 3: OMV Group organizational structure ............................................................................ 96

Figure 4: Telekom Austria Group subsidiaries............................................................................ 109


VI

List of tables

Table 1: ÖIAG stakes .................................................................................................................... 63

Table 2: ORF management ............................................................................................................ 81

Table 3: ORF subsidiaries ............................................................................................................. 82

Table 4: OMV Gas & Power subsidiaries ..................................................................................... 92

Table 5: Special companies transferred to Verbund AG ............................................................. 118

Table 6: Verbund AG subsidiaries .............................................................................................. 121


VII

List of abbreviations

ABB Asea Brown Boveri

AKUT Akustisches Tunnelmonitoring

APA-OTS Austria Presse Agentur – Originaltext Service

APG Austrian Power Grid

APK Pensionskasse Aktiengesellschaft

ARE Austrian Real Estate

ASFINAG Autobahnen- und Schnellstraßen Finanzierungs-Aktiengesellschaft

ASAG Autobahnen- und Schnellstraßen AG

ASECAP European association of operators of toll road infrastructure

ASG Alpenstraßen AG

ASTAG Arlberg Strassentunnel AG

ATX Austrian Traded Index

B2B Business to Business

BAG Brenner Autobahn AG

BAWAG PSK Bank für Arbeit und Wirtschaft und Österreichische

Postsparkasse Aktiengesellschaft

BIG Bundesimmobiliengesellschaft

B-PCGK Public Corporate Governance Codex

BZÖ Bündnis Zukunft Österreich

CAD Computer-aided-design

CEO Chief Executive Officer

CFO Chief Financial Officer

CIRIEC International Centre of Research and Information on the Collective Economy

CTO Chief Technical Officer

EBIT Earnings before interest and taxes


VIII

EBITDA Earnings before interest, taxes, depreciation and amortization

EBT Earnings before taxes

EETS European Electronic Toll System

e.g. exempli gratia, for example

EGBV EconGas Beteiligungsverwaltung

ENAP École national d’aministration publique

ESM Europäischer Stabilitätsmechanismus

EVN Energieversorgung Niederösterreich

EWG Europäische Wirtschaftsgemeinschaft

FIMBAG Finanzmarktbeteiligung Aktiengesellschaft des Bundes

FPÖ Freiheitliche Partei Österreichs

GBH Gewerkschaft Bau-Holz

GDG-KMSFB Gewerkschaft der Gemeindebediensteten – Kunst, Medien, Sport, freie Berufe

GDP Gross Domestic Product

GIS Gebühren Info Service

GKB Graz-Köflacher Bergbau

GÖD Gewerkschaft Öffentlicher Dienst

GPA Gewerkschaft der Privatangestellten, Druck, Journalismus und Papier

GPF Gewerkschaft der Post- und Fernmeldebediensteten

GSMA Groupe Speciale Mobile Association

IBBTTA International Bridge, Tunnel and Turnpike Association

i.e. id est, that is

IMB Immobiliengesellschaft des Bundes mbH

IMIB Immobilien- und Industriebeteiligungen GmbH

IPIC International Petroleum Investment Company

LTE Long Term Evolution

M2M Machine to Machine


IX

NEOS Das Neue Österreich und Liberales Forum

OECD Organization for Economic Cooperation and Development

ÖBB Österreichische Bundesbahnen

ÖBf AG Österreichische Bundesforste AG

ÖGB Österreichischer Gewerkschaftsbund

ÖIAG Österreichische Industrieholding AG

ÖSAG Österreichische Autobahnen- und Schnellstraßen AG

ÖVP Österreichische Volkspartei

OMV AG Österreichische Mineralölverwaltung Aktiengesellschaft

ORF Österreichischer Rundfunk

ORS Österreichischer Rundfunksender GmbH

PAG Phyrn Autobahn AG

PPP Public-Private Partnerships

PROGE Produktionsgewerkschaft

PTA AG Post- und Telekom Austria AG

PTBG Post und Telekommunikationsbeteiligungsgesellschaft

RoLa Rollende Landstraße

SCHIG mbH Schienen-Infrastruktur-Dienstleistungsgesellschaft mbH

SPÖ Sozialdemokratische Partei Österreichs

TAAG Tauernautobahn AG

TIWAG Tiroler Wasserkraft

US United States

vida Verkehrs- und Dienstleistungs-Gewerkschaft

1. Introduction Etienne Koo

1

1. Introduction

In today’s globalized world, business is characterized by the free movement of capital, people and

goods as well as technological advancements which lead to interconnections all over the world.

Public as well as private companies have to adapt to these circumstances by reacting accordingly

when faced with increasing complexity or external challenges. In this, researchers such as

Hood (1991), Mastronardi (1998) or Schedler and Proeller (2009) assume the permanent

development of public companies towards usually private-related issues such as rationalization,

deregulation, flexibility and the appropriate use of performance indicators. However, other authors

like Naschold (1996) or Thom and Ritz (2006) criticize the implementation of these approaches

as trend which leads to the dismantling of the welfare state and ultimately the need for new refor-

mations by benefitting from problems. When it comes to Austria, the historical background of the

rather young Republic has to be considered when wanting to analyse major public enterprises.

Developments after World War I and II led to significant socialization tendencies and conse-

quently the strong connection of the state and to national enterprises. The then established bureau-

cracies, hierarchical structures and management tactics aligned with politics are still prevalent

today in a variety of Austrian public companies. The repeating crises, the latest being the global

financial economic crisis in 2008, led to the accumulative importance of the state as instrument of

emergency interventions and provider of capital. Yet, increasing liberalization tendencies within

the European Union as well as worldwide, lead to changes in how politicians intervene in the

management of public companies. Moreover, opposing topics of governance and public choice

gain increasing importance when it comes to the analysis of organizational logics. While the first

assumes cooperation of governmental and non-governmental institutions for the overall well-being

of everybody, the latter indicates that every individual is governed by self-interest and a rational

behaviour on what it wants and seeks. The latter also leads to negative consequences of rent-seek-

ing in alliance with Tullok (1967) who indicates that political representatives may transfer the

benefits away from the mass and towards a small elitist group. All these aspects are tackled by

researchers at CIRIEC; a non-governmental organization working on the collection of information

of public interest. Currently, some of them are handling the issue of whether the state plays an

increasing role in national and international companies within certain countries. The researchers

thereby build on the assumption that it does; mainly due to previous CIRIEC research, OECD

reports and World Bank reviews. However, for the purpose of contributing to the collection of

papers on this topic, this Thesis deals with the analysis of major enterprises in Austria.

2. Research question Etienne Koo

2

2. Research question

In order to find out whether the state plays an increasing role in national and international compa-

nies, the research team of the International Scientific Commission of Public Services and Public

Enterprises under the lead of the Austrian professor Gabriel Oberman started a call for papers on

this topic in 13 countries. The aim of those providing information to the researchers is to contribute

to the overall research question of “Is there an increasing importance of the state in national and

international enterprises?” Therefore a variety of sub-questions have to be answered in alliance

with CIRIEC; for example “Are there discussions about privatizations of public companies?” or

“Do politicians intervene in the management of major enterprises and if so, how?” Moreover, the

researchers at CIRIEC call for the provision of additional information on the organizational logics

within the companies as well as its relation to its surrounding; for instance competitors or trade

unions.

The underlying principle of the Thesis is therefore to contribute to the investigation of CIRIEC by

providing a thorough analysis of eleven major Austrian enterprises; thereby including all required

aspects posed by the research team.

3. Methods of problem solution

In order to provide appropriate information on the role of the state in major enterprises in Austria,

a qualitative documentary analysis is applied within this Thesis. Therefore, the Thesis is structured

among three parts where secondary desk research is utilized accordingly. The first part deals with

a thorough analysis of concepts of public enterprise management and the second part refers to the

main work, which is the analysis of eleven examples of major, primarily public, enterprises. While

the research within the first section focuses on renowned books and journals on the topics of New

Public Management, New Public Governance and Public Choice, the second part aims at capturing

the legal background, tasks, structure and relationship to Austrian politics as well as financial de-

velopments since the Great Recession within each enterprise example. Therefore, the main part

primarily includes research from wordings of law, law gazettes, homepages, journals and newspa-

pers. Unfortunately, a quantitative approach cannot be applied scientifically due to the fact that

especially the topic of political power plays and governmental influences within major companies

is not openly communicated by insiders. For the purpose of completeness, the third part deals with

the application of theoretical aspects and relevant concepts to the previously discussed examples

of enterprises. Again, the information of renowned books and journals as well as homepages is

exerted.

4. Conspectus on concepts of public enterprise management Etienne Koo

3

4. Conspectus on concepts of public enterprise management

The first part refers to a conspectus on concepts of public enterprise management. Therefore, a

closer look is taken at historical developments in Austria since its establishment as First Republic

and hence after the dissolution of the monarchy after World War I. The reason behind this depic-

tion lies in the purpose of showing the importance of the government and role the state played over

time in Austria. Moreover, it shows the influence of politicians in the development of the Austrian

society as well as state-owned enterprises. Thereafter, a closer look is taken at the most important

aspects of public management and organizational logics behind it. Consequently the notion of New

Public Management is examined from different research points of view according to its theoretical

aspects as well as limitations. Connected to this is the concept of New Public Governance which

is analysed thereafter; thereby also including the idea of Public-Private Partnerships as special case

within governance. Finally, the concept of Public Choice, and therefore the idea of utility maxim-

izing individuals, is depicted as contradiction to the aspects of cooperation in governance. Related

to this, aspects of rent-seeking and possible negative consequences are discussed briefly.

4.1 Retrospection on significant developments in Austria

Since the dissolution of the Austrian-Hungarian monarchy in 1918, which marks both the end of

World War I and consequently the foundation of the First Republic of Austria, the country was

characterized by a strong public management.1 Right after World War I, the Republic had to cope

with the deprivations of the war, high inflation and unemployment rates as well as the insufficient

supply of necessities and significant destruction of living areas.2 At that time, the social democrat

Otto Bauer introduced a concept of socialization which is still prevalent in different forms in to-

day’s state-owned companies. The model aimed at socializing important industries in order to

revive the economy and improve the welfare of Austrian citizens.3 Heavy industries like coal, ore

mining, iron and steel were considered as ready for socialization first, while other businesses,

thereby excluding those dependent on foreign financial investors or small family businesses, were

prepared to be unified under a cartel-organization for the purpose of maximal concentration.4

1 cf. Weber, W.: Die Verstaatlichung in Österreich (1964): 36; Langer, E.: Die Verstaatlichungen in Österreich

(1966): 12; Deutsch, R.: Chronologie eines Kampfes (1978): 8; Turnheim, G.: Die staatliche Industrie Österreichs in

der Ersten Republik (2009): 7f. 2 cf. Weber (1964): 36; Langer (1966): 12; Turnheim (2009): 7f. 3 cf. Weber (1964): 37; Langer (1966): 11; Deutsch (1978): 10 4 cf. Weber (1964): 27ff.; Langer (1966): 13; Deutsch (1978): 10f.


4

Bauer established a socialization commission which was responsible for the design of new organ-

izational backgrounds and legal guidelines.5 The socialization concept, however, did not manifest

the state as the ultimate owner of the socialized companies but rather drew on the notion of estab-

lishing a Supervisory Board of Directors which consists of representatives of workers, consumers

and the state in order to guarantee a fair participation of all parties involved in the well-being of

the industry.6 As already mentioned before, this model of supervising public companies is still

present in today’s state-owned companies and is discussed in more detail within the section of

major Austrian enterprises and their relationship to Austrian politics. Additional developments

during 1919 and 1920, which are still of importance nowadays, are the guidelines concerning an

8-hour-workday, unemployment insurance and support, the establishment of works councils as

well as the Chamber of Labour and social protection of children.7

Nevertheless, the period after the dissolution of the monarchy was characterized by a difficult

economic situation and under-used industrial capacities as well as high unemployment rates; a

circumstance which led to discussions about the viability of Austria and the subsequent connection

to Germany in 1938.8 Consequently, a variety of major enterprises in the areas of steel, copper,

aluminium, ore and chemistry were transferred into German ownership; thereby marking the big-

gest transfer of properties ever faced by Austria.9 Germany was already focused on the prepara-

tions for the war and hence all investments in the Austrian economy were not planned according

to Austrian strengths like leather and textile, but rather in alliance with the construction of war

machines and therefore mainly the primary industry.10 The time during World War II and the con-

nection of Austria to Germany was also characterized by investments in road building in Austria;

a circumstance discussed in more detail within the section 6.2.1 of ASFINAG later within this

Thesis.

In 1947, the American general George Catlett Marshall introduced the European Recovery

Program, also known as Marshall Plan; a strategy against poverty, hunger and chaos in Europe

after the end of World War II.11 At that time, Austria was occupied by four victorious allies and

did not only face high poverty and the lack of food supply, but also the fact that the allies claimed

5 cf. Weber (1964): 37.; Deutsch (1978): 10 6 cf. Weber (1964): 27 7 cf. Deutsch (1978): 9; Turnheim (2009): 10 8 cf. Turnheim, G.: Die industriellen Investitionen und die Staatliche Industrie zwischen 1938 und 1945 (2009): 15 9 cf. Sandgruber, R.: Ökonomie und Politik. In Wolfram, H. (ed.): Österreichische Wirtschaftsgeschichte vom

Mittelalter bis zur Gegenwart (2005): 419; Turnheim (2009): 16f. 10 cf. Deutsch (1978): 20; Turnheim (2009): 15 11 cf. Bierling, S.: Geburt eines Mythos. In Holzhamer, H.-H. & Hoch, M. (eds.): Der Marshall-Plan. Geschichte und

Zukunft (1997): 17


5

all German Foreign Assets within their zone.12 Only the fact that the allies interpreted the assets

in a variety of ways led to the chance for Austria to protect the Austrian heritage and industries.13

In an attempt to do so, the politicians of the People’s Party and Social Democratic Party agreed

upon nationalizing a majority of essential companies and manifested this within the first Nation-

alization Act of 1946.14 This Act, also known under BGBl. Nr. 168/194615, included the direct and

indirect nationalization of 141 companies; thereby mainly referring to enterprises related to coal,

oil, steel and machinery, electronics, aluminium, ore and the banking sector.16 However, the

omnipresence of the Cold War and continuing disagreement on what constituted to German

Foreign Assets, led to a difficult economic situation for Austria and it was not until 1955, when

the State Treaty BGBl. Nr. 152/195517 was signed, that the nationalization of industries could be

fully implemented.18

During the 1960s, Austria joined the European Free Trade Agreement; however, rooted in the idea

of neutrality the country was not able to join the EWG19 and cooperate with its major trading

partners France, Germany and Italy.20 Additionally, the increasing importance of the consumer

goods industry and tertiary sector instead of the capital goods industry led to the fact that the public

industry grew at a noteworthy slower pace than the private industry in Austria.21 Throughout the

1970s this situation further worsened due to predominant salary and employment politics within

public enterprises in the era of Bruno Kreisky.22 These politics aimed at keeping the unemploy-

ment rates low and subsequently manifested in the plan that, even in times of high inflation, the

Austrian Trade Union ÖGB23 intentionally set collective agreements under the inflation rate.24

Initially successful, this budget expansive politic led to increasing troubles due to augmented

public debt and the subsequent need for structural adjustments in public industries during the

1980s.25 State-owned enterprises faced a severe crisis due to internal management problems, the

12 cf. Deutsch (1978): 23; Seidel, H.: Österreichs Wirtschaft und Wirtschaftspolitik nach dem Zweiten Weltkrieg

(2005): 299; Turnheim, G.: Die verstaatlichten Unternehmen zwischen 1945 und 1955 (2009): 30 13 cf. Deutsch (1978): 24; Turnheim (2009): 30 14 cf. Deutsch (1978): 25; Turnheim (2009): 31 15 There is no official translation 16 cf. Turnheim (2009): 34 17 There is no official translation 18 cf. Langer (1966): 48f.; Deutsch (1978): 32; Turnheim (2009): 32 19 EWG stands for Europäische Wirtschaftsgemeinschaft; Official translation being European Economic Community 20 cf. Langer (1966): 4; Clement, W. & Socher, K.: Wirtschaftspolitischer Hintergrund und Rahmenbedingungen

(2009): 179 21 cf. Clement & Socher (2009: 182 22 cf. Sandgruber (2005): 490; Clement & Socher (2009): 186 23 ÖGB stands for Österreichischer Gewerkschaftsbund 24 cf. Sandgruber (2005): 490; Clement & Socher (2009): 186 25 cf. Lacina, F., Lehner, D., Mitterbauer, P., Resch, A., Sandgruber, R. & Tumpel-Gugerell, G.: Österreichische

Industriegeschichte 1955 bis 2005: Die ergriffene Chance (2005): 36; Sandgruber (2005): 491; Clement & Socher

(1009): 186f.


6

missing exploitation of strengths, the ignorance of long-term strategic goals and the deficit-

spending politics which primarily focused on the well-being of the employee rather than the com-

pany i.e. its economic situation.26 At that time, the state sold a variety of shares; amongst others

of companies such as Siemens Austria AG, Voest-Alpine Hebetechnik und Brückenbau AG and

OMV;27 the latter being discussed separately in section 6.2.8 within this Thesis.

Tendencies of privatization further increased during the 1990s when Austria joined the European

Union and subsequently aligned with contrary concepts of deregulation, neoliberalism and mod-

ernization rather than public regulations.28 In addition to this, the amendment of the laws ÖIAG-

Gesetz, BGBl. Nr. 204/198629 and ÖIAG-Finanzierungsgesetz30 aimed at achieving the maximum

industrial value added possible by assigning the Austrian industrial organization ÖIAG31 with the

establishment of privatizations and the sale of state-owned holdings.32 The organization ÖIAG and

its importance for the Austrian state is discussed in more detail in section 6.2.5 within this Thesis.

The retrospection of the history since the establishment of the First Republic shows the importance

of the state and governmental interactions in Austria. Especially the developments after World

War I and II indicate how the Austrian government intervenes in major industries and subsequently

also imply political influences and power plays which are depicted separately in each of the major

public enterprises discussed later within this Thesis. However, despite the fact that Austria can be

considered as special case due to socialistic and nationalized tendencies throughout its history, the

role of the state and how it manages public enterprises has changed; especially since the 1990s and

the joining of the European Union. This circumstance is discussed in more detail within the fol-

lowing part where a closer look is taken at concepts of public management.

26 cf. Wieser, O.: Unternehmenskultureller Wandel durch Privatisierung in Form von Management-Buy-Outs

innerhalb der verstaatlichten Industries Österreichs (1997): 22; Sandgruber (2005): 491f.; Clement & Socher (2009):

187 27 cf. Kraft, S. & Obermann, G.: Privatisierungen in Österreich und in anderen westeuropäischen Ländern: Ein

Überblick (1990): 60f. 28 cf. Clement & Socher (2009): 190f. 29 There is no official translation 30 There is no official translation 31 ÖIAG stands for Österreichische Industrieholding AG 32 cf. Österreichische Industrieholding AG: ÖIAG Bericht 1994-1999 (1999): 18f.; BGBl. Nr. 973/1993 §1 (4)


7

4.2 Public Management and its organizational logics

While a variety of researchers hold the opinion that the concepts of managing public and private

companies differ rather than overlap, Weber (1976) was one of the first to claim that there is no

difference between them at all as both root in the same social and economic principles.33 Moreover,

he established three forms of leadership; namely charismatic, traditional and legal; whereas the

latter includes bureaucracies as the purest form of rational order.34 According to Weber (1976),

bureaucracies in European countries manifest in a hierarchical public sector with strict regulations

concerning competences and qualifications.35 Civil servants are responsible for the exertion of

administrative tasks and even though they are subordinated to the state, they are categorized as

being superior to normal citizens.36 The concept furthermore indicates that civil servants are not

paid according to their performance but rather according to their position; moving up the hierarchy

can be achieved by age, rank and duration of employment.37 Thom and Ritz (2006) designate that

this form of bureaucracy is still prevalent in a variety of public companies today; especially within

German-speaking areas.38

However, new tendencies and increasing complexity led to a different picture of the state and its

tasks.39 While the tasks in public companies used to be manageable and clear, as well as relatively

constant and stable, they are now complex, dynamic, multidimensional and characterized by fast

changes.40 Moreover, politics used to be branded by the uncritical acceptance of authorities and

political parties; a circumstance that has radically changed as the society nowadays is categorized

by non-voters, protest-voters, a change in values and indifference.41 Public management has to

adjust to these new circumstances and apply new concepts accordingly. One of these concepts

refers to New Public Management and is discussed in more detail within the following.

4.2.1 New Public Management

Developed during increasing deregulation patterns throughout the 1990s, the concept of New

Public Management is, indeed, also for the Austrian public sector of significant importance when

33 cf. Weber, M.: Wirtschaft und Gesellschaft, 5. Auflage (1976): 825f. 34 Ibid.: 551ff. 35 Ibid. 36 Ibid. 37 Ibid. 38 cf. Thom, N. & Ritz, A.: Public Management. Innovative Konzepte zur Führung im öffentlichen Sektor, 3.

Auflage (2006): 5 39 cf. Budäus, D.: Public Management. Konzepte und Verfahren zur Modernisierung öffentlicher Verwaltungen

(1994): 43ff.; Thom & Ritz (2006): 7; Schedler, K. & Proeller, I.: New Public Management, 4. Auflage (2009): 7;

17 40 cf. Thom & Ritz (2006): 7 41 Ibid.


8

having a look at major state-owned enterprises. Therefore, the conceptual premises as well as lim-

its of the idea of New Public Management are depicted separately subsequently.

4.2.1.1 Conceptual premises

As already specified within the retrospection on Austrian history, there are two contrary types of

ideologies which are the most prevalent among Western European countries; namely the ideology

of a welfare state as it is predominant within Austria and the ideology of neo-liberalism as it is

prevailing within the concept of the European Union.42 The first roots in the philosophy of seeing

the state as an active part of society and therefore an intervening institution when it comes to the

creation of social security and common welfare as well as the combat against social inequalities.43

The latter, however, is based on the philosophy of competition, individuality and the striving after

maximizing the performance by, for instance, privatizing major industries.44 The concept of New

Public Management lies in the overcoming of weaknesses within the ideological antagonism of a

social and a neo-liberalistic state45 and while Rhodes (1991) is considered to be the first to use this

new term,46 it is the concept of Hood (1991) which acquired the most acceptance among research-

ers until now.47 The author ascribes the new concept characteristics such as the focus on cost re-

duction, flexibility and discipline as well as the professional and active management of strategic

goals and performance indicators.48 Moreover, due to the already mentioned augmented complex-

ity and dynamic parameters, competition within the public sector increased and furthermore led to

temporary contracts and invitations to tender.49 In addition, Friedrichsmeier (2000) declares that

the fundamental difference between the political sector and the administration is that the first has

to define the long-term strategies, while the latter has to operatively implement them.50 This leads

to the assumption of the author that decentralizing federal offices and privatizing a variety of gov-

ernmental functions is essential within the concept of New Public Management.51 However,

Schedler and Proeller (2009) indicate that both the government and the administration are neces-

sities within the well-being and well-functioning of a state and it is not the primary goal of New

Public Management to replace governmental institutions by private ones but rather to strengthen

42 cf. Schedler, K.: Die Systemforderungen des NPM an Staat und Recht. In Mastronardi, P. & Schedler, K. (eds.):

New Public Management in Staat und Recht (1998): 4ff.; Schedler & Proeller (2009): 13 43 Schedler & Proeller (2009): 13 44 Ibid. 45 Schedler & Proeller (2009): 31 46 cf. Rhodes, R. A. W.: The Theory and Method in British Public Administration: the view from political science.

Political Studies, Vol. 39, No. 3 (1991): 533ff. 47 cf. Hood, C.: A Public Management for all seasons? Public Administration, Vol. 69, No. 1 (1991): 3ff. 48 Ibid. 49 cf. Hood (1991): 3ff.; Schedler & Proeller (2009): 7; 17 50 cf. Friedrichsmeier, H.: New Public Management (2000): 15 51 Ibid.


9

the public sector by focusing on former private-related aspects such as cost reduction, flexibility

and rationalization.52 This also includes the attempt to take the social and the neo-liberalistic

approach of state forms and focus on positive aspects within both of them.53 A similar approach is

taken by Reichard (2002) who, as a consequence, sees the state as an institution which has to fulfil

tasks of motivating and enabling instead of simply producing and rather than solely planning and

controlling, it furthermore has to activate and coordinate.54 A slightly different approach is taken

by Mastronardi (1998) who sees the concept of New Public Management as the beginning of a

significant reformation period in which former mistakes in public management are adjusted by the

application of liberalisation, privatization and deregulation concepts; thereby aiming at the im-

provement of the economy.55

Despite any interpretations of the conception itself, the fact that its beginnings root in New Zealand

during the late 1980s and have allocated over Great Britain, the Netherlands and the United States

during the 1990s, led to the assumption of its political neutrality by Haldemann (1997).56 Though,

the author indicates that different perceptions of the concept evolved and during the 1990s, the

model of Wirkungsorientierte Verwaltungsführung (WoV)57 was established and implemented in

the public sector of Switzerland.58 The idea behind the concept of WoV was the inclusion of com-

petition and incentives as essential parts within the management of public enterprises; thereby also

incorporating private entities and third parties to accomplish all relevant tasks and obtain more

efficient results.59 Later also applied in Austrian public companies is the basic idea of performance

agreements which regulate the thorough preparation of future goals in detail on the one hand, and

the introduction of global budgets60 which aim at increasing internal control and transparency by

depicting not only balance sheets but full income statements on the other hand.61

Yet, major criticism is raised by a variety of researchers and for the purpose of coherence, the

limits and possible weaknesses of the concept are briefly discussed subsequently.

52 cf. Schedler & Proeller (2009): 53f. 53 Ibid. 54 cf. Reichard, C.: Governance öffentlicher Dienstleistungen. In Budäus, C., Schauer R. & Reichard, C. (eds.):

Public und Nonprofit Management. Neuere Entscheidungen und aktuelle Problemfelder (2002): 30f. 55 cf. Mastronardi, P.: New Public Management im Kontext unserer Staatsordnung. In Mastronardi, P. & Schedler,

K. (eds.): New Public Management in Staat und Recht (1998): 48 56 cf. Haldemann, T.: New Public Management und wirkungsorientierte Verwaltungsführung (WoV). In

Mitterlehner, R. & Kyrer, A. (eds.): New Public Management (1997): 9 57 There is no official translation 58 cf. Haldemann (1997): 10f. 59 cf. Schedler (1998): 37 60 Note: The translation refers to the German word Produktgruppenbudget (Globalbudget) 61 cf. Haldemann (1997): 13f.


10

4.2.1.2 Limits of New Public Management

In general, there are different opinions upon what can be characterized as weakness or disad-

vantage of the concept and therefore the next selected researchers and their aspects of criticism

represent solely a part of a bigger variety.

Authors like Naschold (1996) and Thom and Ritz (2006) post clear criticism on the concept of

New Public Management. While the first claims that modernisations which aim at deregulating

and liberalizing the public sector might ultimately led to the dismantling of the democratic welfare

state,62 the latter, ten years later, rather criticizes the fact that reformations tend to generate new

reformations by benefitting from problems.63 Jann (1998) even categorizes the concept as ideo-

logical trend and a way to create employment by consulting in the implementation of its principal

components.64 He furthermore heavily criticizes the context-ignoring adaptation of the ideas of

New Public Management without reflecting upon their suitableness.65 Besides, a variety of re-

searchers agrees upon the circumstance that the implementation of New Public Management ideas

tends to focus too much on internal reformations; thereby constricting the focus on further possi-

bilities and restricting the cooperation with external societal actors.66 In more detail, Rossmann

(2005) furthermore claims that the concept lacks a clear strategic focus on how the political and

administrative body cooperate; thereby meaning that the act of posing rationale aspects above

political ones, especially in areas where the political influence is omnipresent, can lead to signifi-

cant difficulties in the implementation phase.67 In addition, some authors raise concerns about the

implementation and usage of business economics management tools like for example the, already

62 cf. Naschold, F.: New Frontiers in Public Sector Management. Trends and Issues in State and Local Government

in Europe. Walter de Gruyter & Co Berlin (1996): 3f. 63 cf. Thom & Ritz (2006): 24 64 cf. Jann, W.: New Public Management. In Edeling, T., Jann, W. & Wagner, D. (eds.): Öffentliches und privates

Management. Fundamentally Alike in All Unimportant Respects? Leske und Budrich, Opladen (1998): 24f. 65 Ibid. 66 cf. Reichard (2002): 29; Bauer, H.: New Public Management und Governance – Strategien zur nachhaltigen

Weiterentwicklung der öffentlichen Verwaltung. In Bauer, H., Biwald, P. & Dearing, E. (eds.): Öffentliches

Management in Österreich. Realisierungen und Perspektiven (2003): 11; Löffler, E.: Good Governance als

Weiterentwicklung von New Public Management: Verschiedene Reformansätze in Europa. In Bauer, H., Biwald, P.

& Dearing, E. (eds.): Öffentliches Management in Österreich. Realisierungen und Perspektiven (2003): 267;

Rossmann, B.: Zur Bedeutung der Governance im Rahmen der Reorganisation des Staates. In Bauer, H., Biwald, P.

& Dearing, E. (eds.): Public Governance. Öffentliche Aufgaben gemeinsam erfüllen und effektiv steuern (2005): 22;

Trattnigg, R. & Wutscher, W.: Erfolgsfaktoren für Good Governance in der Verwaltung – eine Innensicht. In Bauer,

H., Biwald, P. & Dearing, E. (eds.): Public Governance. Öffentliche Aufgaben gemeinsam erfüllen und effektiv

steuern (2005): 48 67 cf. Rossmann (2005): 21f.


11

previously in the concept of WoV indicated, full depiction of income statements and other finan-

cial criteria which can be misinterpreted.68 However, against this criticism holds the fact of

increasing transparency in the public sector.69

Similar to the concept of New Public Management, the concept of New Public Governance

simultaneously gained increasing importance during the late 1990s and thereafter and is conse-

quently depicted separately within the following section.

4.2.2 New Public Governance

While some see the concept of New Public Governance as a supplementation to New Public Man-

agement, others see it as an evolutionary development from the one to the other. In this Thesis,

both sides are depicted subsequently; thereby also considering the idea of Public-Private

Partnerships as a special form of implementing governance.

4.2.2.1 The concept and its idea of cooperation

Similar to the concept of New Public Management, the notion of Public Governance orientates on

the differences between the social welfare and neo-liberalistic state as well as its developments.

As already depicted within the section of retrospection on Austrian history, the social welfare state

went through a significant crisis during the late 1970s and early 1980s due to inefficient manage-

ment tactics aligned with Keynesian tendencies.70 Subsequently the quite different approach of

deregulation, liberalisation and privatization efforts emerged and, especially through the joining

of the European Union, it was fostered heavily within public enterprises.71 In order to compensate

for the negative aspects in both state forms and, in addition, restructure the public sector in an

efficient but not exclusive way, supplementary measures have to be considered. One approach is

to incorporate Governance; thereby referring to the aspect of including non-governmental and non-

public actors into the creation of well-being for the whole state.72 Moreover, the society is taken

into account as a difficult-to-lead subsystem which needs to be tackled in a cooperative and active

way.73

68 cf. Bolay, F. W.: Was haben eigentlich die Bürger von der Verwaltungsreform? Wirkungsorientierte

Verwaltungssteuerung und betriebswirtschaftliche Modernisierung. Verwaltung und Management, Issue 6 (2006):

325f.; Kuhlmann, S.: Hat das „Neue Steuerungsmodell“ versagt? Lehren aus der „Ökonomisierung“ von Politik und

Verwaltung. Verwaltung und Management, Issue 3 (2006): 149f. 69 cf. Haldemann (1997): 13f. 70 cf. Lacina, Lehner, Mitterbauer, Resch, Sandgruber, & Tumpel-Gugerell, (2005): 36; Sandgruber (2005): 491;

Clement & Socher (1009): 186f. 71 cf. Clement & Socher (2009): 190f. 72 cf. Rossmann (2005): 19; Thom & Ritz (2006): 10 73 cf. Jann, W.: Der Wandel verwaltungspolitischer Leitbilder. Von Management zu Governance? In König, K. (ed.):

Deutsche Verwaltung an der Wende zum 21. Jahrhundert (2002): 294f.


12

Some researchers see the concept of Public Governance as supplementation to the concept of New

Public Management, mainly because the latter focuses too much on rational and economic

approaches that might not fit with the needs of politically influenced state-owned enterprises with

a public mission.74 However, others like Osborne (2010) take a different approach by seeing an

evolution within the concept of New Public Management from a traditional administrative

approach to the approach of New Public Governance which poses the assumption that the concept

of New Public Management is only a step, or partial theory, on the way of further development

into a new theory that can possibly be applied successfully.75 Attempts to reduce bureaucracy refer

to strategies of Outsourcing, Total Quality Management or Lean Management and their imple-

mentation within the idea of New Public Management which led to decentralization and generali-

zation within the public sector.76 While researchers like Picot and Wolff (1995) define a clear

difference between private and public enterprises in the way that public ones do not constantly

face the pressure of reorganization due to changing markets,77 later research shows that the liber-

alisation of markets within the European Union as well as increasing global connections led to

augmented competitive factors for public companies as well and subsequently the pressure to adapt

to changing circumstances in a flexible and fast way.78

4.2.2.2 Public-Private Partnerships

Greve and Hodge (2010) indicate that Public-Private Partnerships can be characterized as a special

case within New Public Governance. The authors hold the opinion that the inclusion of non-

governmental and non-public actors in the society surrounding the public enterprise can lead to

partnerships that benefit both sides in the accomplishment of a specific task or efficiency.79

According to Bastin (2003), the concept exists since the mid-1990s and includes the time-restricted

contractual agreement between actors of the public and private sector to cooperate on the fulfil-

ment of projects; mainly, but not exclusively, the establishment of infrastructure or conveyance of

public services.80 A more detailed description of public-private partnerships is provided by

74 cf. Rossmann (2005): 21f.; Thom & Ritz (2006: 10f. 75 cf. Osborne, S. P.: The New Public Governance? Emerging perspectives on the theory and practice of public

governance (2010): 5 76 cf. Stößel, V.: Outsourcing in der öffentlichen Verwaltung. Ein Instrument zur effizienteren Versorgung mit

öffentlichen Gütern? (1998): 69f.; Jann (2002): 292f.; Hopp, H. & Göbel, A.: Management in der öffentlichen

Verwaltung. Organisations- und Personalarbeit in modernen Kommunalverwaltungen (2004): 38ff. 77 cf. Picot, A. & Wolff, B.: Zur ökonomischen Organisation öffentlicher Leistungen. „Lean Management“ im

öffentlichen Sektor? In: Naschold, F. & Pröhl, M. (eds.): Produktivität öffentlicher Dienstleistungen (1995): 66f. 78 cf. Thom & Ritz (2006): 7; Schedler & Proeller (2009): 7; 17 79 cf. Greve, C. & Hodge, G.: Public-private partnerships and public governance challenges. In Osborne, S. P. (ed.):

The New Public Governance? Emerging perspectives on the theory and practice of public governance (2010): 149ff. 80 cf. Bastin, J.: Public-Private Partnerships: A Review of International and Austrian Experience. In Eilmansberger

T., Holoubek, M., Kalss, S., Lang, M., Lienbacher, G., Lurger, B. & Potacs, M. (eds.): Public Private Partnership

(2003): 2


13

Klijn (2005) and Lenk and Röber (2011) who differ between two types of partnerships; namely

project-related and institutional ones.81 Within the first form, both the public and private partner

provide resources, share risks, costs and benefits and work together on a time-limited base.82 The

latter however, refers to a permanent form of cooperation; for example by creating a joint entity

with an own legal background and organizational structure.83 These partnerships give both sides

the opportunity to benefit from the other side by combining the often contradicting goals of

providing public goods with maximizing profitability; thereby adding value and increasing

knowledge.84 In addition to this, Lenk and Röber (2011) indicate that, due to financial restrictions

in the public budget, politicians tend to use public-private partnerships for the purpose of pre-

financing projects that otherwise could not be accomplished.85 A different approach of this

partnership is taken by Macdonald (2011) who designates the often-used possibility of creating a

state-owned enterprise with the freedom of acting in the sense and with the business tools of a

private one.86 However, this form includes the special condition that the business is always in arm-

length control of the government and consequently supported in case of financial distress,

problems or times of crises.87

In any case, the incorporation of governance for the future well-being of public enterprises implies

the inclusion of non-public and non-governmental actors as well. Public choice as a way of seeing

the management of public enterprises can be considered as a further approach and is therefore

discussed in more detail within the following section.

4.2.3 Public choice

This last part of the theoretical depiction refers to public choice as a form of seeing and doing

politics. It relates economic factors to political science; thereby implying that participating indi-

viduals in public surroundings always seek to satisfy their own demands based on self-interest.88

81 cf. Klijn, E.-H.: networks and Inter-organisational Management: Challenging, Steering, Evaluation, and the role

of Public Actors in Public Management. In Ferlie, E., Lynn Jr., L. E. & Pollitt, C. (eds.): The Oxford Handbook of

Public Management (2005) 257ff.; Lenk, T. & Röber, M.: Public-Private Partnership as Part of Public Sector

Modernisation. In Lenk, T., Röber, M., Kuntze, M., Redlich, M. & Rottmann, O. (eds.): Public-Private Partnership

(2011): 1f. 82 cf. Lenk & Röber (2011): 1f. 83 Ibid. 84 Ibid. 85 Ibid.: 2 86 cf. Macdonald, H. I.: PPPs: How Public, how Private, how Much a Partnership? In Lenk, T., Röber, M., Kuntze,

M., Redlich, M. & Rottmann, O. (eds.): Public-Private Partnership (2011): 1 87 Ibid. 88 cf. Dunleavy, P.: Democracy Bureaucracy & Public Choice. Economic Explanations in Political Science (1991):

3; Stretton, H. & Orchard, L.: Public Goods, Public Enterprise, Public Choice. Theoretical Foundations of the

Contemporary Attack on Government (1994): 123f.; Thom & Ritz (2006): 15


14

Connected to this, the topic of rent-seeking is explained briefly thereafter.

4.2.3.1 Conceptual premises of public choice

The theory of public choice was first introduced in the 1960s by James Buchanan and Gordon

Tullok; even though single parts of the concept can be traced back to the year 1776 and Adam

Smith’s “Wealth of Nations”.89 Basic topics within the public choice approach align with those

addressed in political science; namely voting rules and voting behaviour as well as political parties,

bureaucracy and the theory of the state.90 Contrary to Weber’s bureaucracy model, which sees the

civil servants as loyal and rational members of society, the concept of public choice implies that

public service staff acts individually upon self-interest.91 Buchanan and Tullok (1962) see the ra-

tional individual as egoistic utility maximizer92 and while Mueller (1979) expands this sight by

relating economics to political philosophy,93 Stretton and Orchard (1994) summarize the basic

thought behind public choice as the fact that people want the same thing in their economic as in

their political life.94 In alliance with this view, Thom and Ritz (2006) designate later that the self-

interest of civil servants manifests in collective public actions and subsequently political processes

which are composed of individual preferences.95 In other words, Thom and Ritz (2006) indicate

that the decisions and behaviour of politicians are the result of the sum of individual preferences

of civil servants.96 Additional premises defined by Dunleavy (1991) are the assumption that people

know their preferences and are not only able to list and rank them but also to pose logical con-

sistency on them.97 Moreover, the postulated picture of people as egoistic utility maximizers im-

plies that they always seek the cheapest and most beneficial solution; thereby acting in an efficient

manner that allows for preference optimization.98

Within the theory of public choice, bureaucracy plays a major role. According to Niskanen (1974),

civil servants, and in fact all those employed in the sector of public services, act upon self-interest;

a statement in which the researcher aligns with all previously discussed authors.99 However,

Niskanen (1974) sees public services sectors as monopolistic and intransparent and as a solution,

89 cf. Thom & Ritz (2006): 15 90 cf. Mueller, D. C.: Public choice (1979): 1 91 cf. Dunleavy (1991): 3; Stretton & Orchard (1994): 123f.; Thom & Ritz (2006): 15 92 cf. Buchanan, J. M. & Tullok, G.: The Calculus of Consent. In Ann Arbor: The University of Michigan Press

(1962): 17ff. 93 cf. Mueller (1979): 1 94 cf. Stretton & Orchard (1994): 123f. 95 cf. Thom & Ritz (2006): 16 96 Ibid. 97 cf. Dunleavy (1991): 3 98 Ibid. 99 cf. Niskanen, W. A.: Nichtmarktwirtschaftliche Entscheidungen. Die eigentümliche Ökonomie der Bürokratie. In

Widmaier, H. P. (ed.): Politische Ökonomie des Wohlfahrtsstaates (1974): 208ff.


15

proposes to separate strategic planning from operative implementation while simultaneously fos-

tering competition among authorities.100 Contrary to Niskanen (1974) who, similar to Stretton and

Orchard (1994) and Thom and Ritz (2006) later, primarily focused on the relation between civil

servants and politicians, Downs (1974) in the same year mainly concentrated on the bureaucracy

within authorities; i.e. internal dynamics.101 He defines different types of employees within

authorities; namely newcomer, keeper, zealots, lawyers and civil servants.102 The focus within a

public authority, and consequently the effort on how well economic and organizational measures

are developed and implemented, depends on which types are predominant within the public

authority.103 Moreover, Downs (1974) implies the assumption of failure within authorities due to

their internal hierarchies, size and lack of appropriate control mechanisms.104 In more detail, the

author refers to the fact that big public authorities are generated and consequently need control

mechanisms; however more control also means more effort and expenditures which leads to the

establishment of new institutions responsible for the control.105 Thus, their size leads, again, to the

need for control; a spiral that keeps going and increasing bureaucracy and complexity.106 This

bureaucracy theory of Downs (1974) can still be applied in a variety of public enterprises today; a

circumstance depicted in more detail within the discussion section at the end of this Thesis. For

the purpose of completeness, the phenomenon of rent seeking as result of egoistic behaviour within

public companies is described briefly subsequently.

4.2.3.2 Rent seeking

Related to the picture of the rational and egoistic utility maximizer, Tullok (1967) formulated his

thoughts on rent seeking in a period of contradicting views on this topic. In the author’s opinion,

rent seeking mainly refers to monopolies and the circumstance that actors redistribute the aggre-

gated welfare away from the consumer and towards the monopolist itself.107 Tullok (1989) later

adjusts this view by posing that those that benefit do not have to be monopolists, but simply a

minority profiting from rents created for the greater good of a majority.108 The economist differs

between good and bad rent-seeking; thereby indicating that the action of seeking rents for having

100 Ibid.: 221ff. 101 cf. Downs, A. (1974): Nichtmarktwirtschaftliche Entscheidungssysteme. Eine Theorie der Bürokratie. In

Widmaier, H. P. (ed.): Politische Ökonomie des Wohlfahrtsstaates (1974): 202 102 Ibid. 103 Ibid. 104 Ibid.: 199ff. 105 Ibid. 106 Ibid. 107 cf. Tullok, G.: Rent Seeking. In Rowley, C. K. (ed.): The Shaftesbury Papers, 2 (1993): 1 108 cf. Tullok, G.: The Economics of Special Privilege and Rent Seeking (1989): 1


16

created something good is not per se bad but rather the action of exploiting these rents and re-

directing their positive effect for everybody to single actors;109 indeed, something carried out by a

lot of governments all over the world.110 Related to this, Krueger (1974) engaged in aspects of

governmental restrictions and subsequent actions of corruption and bribery connected to rent seek-

ing.111 Khwaja and Mian (2004) define corruption as a globally widespread phenomenon which

poses significant costs on the economy.112 Especially when it comes to lending, politicians choose

governmental banks for seeking rents as they are able to remain solvent even in times of high

default.113 Moreover, politicians can pursue corrupt loans more easily than other individuals and

at a lower cost than monetary bribes.114

The subsequent section of the Thesis refers to the main part and therefore the introduction of the

organization CIRIEC, its history and goals as well as its current project. Thereafter, CIRIEC is

applied to Austria by focusing on one of its latest projects and analysing eleven cases of major

Austrian enterprises. Later, these cases are applied to the previously depicted theoretical bases of

public company management and their organizational logics within a final discussion.

109 cf. Tullok, G.: Rents and Rent Seeking. In Rowley, C. K., Tollison, R. D. & Tullok, G. (eds.): The Political

Economy of Rent Seeking (1988): 51f. 110 cf. Tullok (1989): 1 111 cf. Krueger, A. O.: The Political Economy of Rent Seeking. The American Economic Review (1974): 291 112 cf. Khwaja, A. I. & Mian, A.: Corruption and Politicians: Rent-seeking in an Emerging Financial Market

(2004): 2 113 Ibid.: 7 114 Ibid.

5. The organization CIRIEC Etienne Koo

17

5. The organization CIRIEC

CIRIEC represents a non-governmental organization which works in a scientific way to collect

information on topics of public interest such as public authorities, public utilities and not-for-profit

associations.115 In addition to simply collecting the necessary information, the organization aims

at scientific research and the publication of significant work.116 The name CIRIEC is an acronym

and stands for “International Centre of Research and Information on the Public, Social and Coop-

erative Economy”.117 The original title of “International Centre of Research and Information on

the Collective Economy” trades back to the year 1947 when professor Edgard Milhaud founded

the organization at the University of Geneva in order to ensure the continuity of its research done

in the form of a journal known as “Annals of Collective Economy”.118 The association CIRIEC

kept its headquarters in Geneva until 1957 before it decided to move to Liège in Belgium where it

is still settled today.119

5.1 Structure at CIRIEC

The association is organized in a rather formal way by separating the general administrative bodies

from the scientific ones. While the first consist of the honorary president, president, vice-president

and other important members, as well as the International Board, International Secretariat and

General Assembly, the latter constitutes of the International Scientific Council and Commis-

sions.120 The honorary president, the president, the vice-president and other important members

account for the so called Praesidium which acts as the executive committee of CIRIEC and is

appointed for a period of two years.121 The International Board forms the Board of Directors and

is responsible for the composition of delegates and CIRIEC’s 13 national sections which are dis-

cussed in more detail later within this section.122 The International Secretariat is responsible for

the management of the daily work at CIRIEC and therefore in charge of accomplishing a fluent

work-flow.123 The General Assembly meets at the international congresses of CIRIEC every two

years and is responsible for the discussion of currently relevant topics.124

115 cf. Homepage CIRIEC: CIRIEC 116 Ibid. 117 Ibid. 118 cf. Homepage CIRIEC: History 119 Ibid. 120 cf. Homepage CIRIEC: Organization 121 Ibid. 122 Ibid. 123 Ibid. 124 Ibid.


18

The scientific parts, namely the International Scientific Council and the International Scientific

Commissions are responsible for topics in the areas of public services and social economy.125 The

contemporary president of the International Scientific Commission in charge of public services

and enterprises is the Austrian professor Gabriel Oberman who is presently focused on the future

of public enterprises.126

5.2 Research at CIRIEC

The organization of CIRIEC is divided into two types of members; collective and individual ones.

While the first consist of public agencies and corporations characterized as working in a non-profit

manner or having a scientific or cultural nature, the latter consist of individual researchers, profes-

sors, experts and others interested in the work of CIRIEC.127 In order to collect the appropriate

information accordingly, CIRIEC fosters a scientific network comprising of over 100 experts in

the areas of public, social and cooperative economy.128 All members have to pay an annual fee and

can only constitute to the scientific network if they are nominated by the association’s bodies.129

The work within the scientific network can be fulfilled within working groups or individually;

however, in any case the work is done on a complete voluntary base and the results are published

for all members.130

At present there are 13 national sections which consist of both collective and individual mem-

bers.131 The sections are situated in the countries Argentina, Austria, Belgium, Canada, Colombia,

France, Germany, Italy, Japan, Portugal, Spain, Turkey and Venezuela and the investigation con-

ducted by the members is usually done in English, French or occasionally German.132 The re-

searchers within these national sections as well as within the scientific network contribute to the

overall exploration on specific topics of interest by the conduction of working papers which can

be retrieved from CIRIEC’s homepage.133 One of the current calls for working papers refers to

country specific major public enterprises and policy trends within them; something more closely

examined within the following section.

125 cf. Homepage CIRIEC: Organization 126 cf. Homepage CIRIEC: Scientific network 127 cf. Homepage CIRIEC: National Sections and other Members 128 Ibid. 129 cf. Homepage CIRIEC: Scientific network 130 Ibid. 131 cf. Homepage CIRIEC: National Sections and other Members 132 Ibid. 133 cf. Homepage CIRIEC: CIRIEC’s collection of working papers


19

5.3 Country analysis and policy trends

The International Scientific Commission of Public Services and Public Enterprises led by the Aus-

trian professor Gabriel Oberman is currently working on the collection of papers concerning the

country specific analysis of major public enterprises and policy trends within their relationship to

the government.134 The new collection is considered as collaborative project and is conducted

together with Massimo Florio from the University of Milan in Italy, Philippe Bance from the

University Rouen in France and Luc Bernier from the ENAP in Québec Canada.135

The researchers build on the assumption that public enterprises steadily increase their role at a

local and national level, thereby mainly referring to research conducted by the OECD and the

World Bank as well as independent studies and previous CIRIEC research.136 Within this assump-

tion, a public enterprise is defined as an organization producing public services, having a public

mission and budgetary autonomy as well as managerial freedom of choice, being owned or con-

trolled by public sector entities or an organization where the ownership can be shifted to the private

sector.137 Moreover, the researchers define the term ownership as having effective control over the

organization; i.e. public institutions like governments, ministries or the parliament hold power in

the enterprise by, for example, contributing to the appointment of the top management.138

5.3.1 Aim of the project

The aim of the International Scientific Commission of Public Services and Public Enterprises is to

collect papers and consequently essential information on major public enterprises and their re-

lationships with governments regarding policy trends in the countries of CIRIEC’s 13 national

sections. The focus thereby is not restricted to national public enterprises but can be extended to

multinational and even global ones.139 Moreover, within these enterprises the main focus is on

energy, transportation, water, solid waste and manufacturing industries; the latter only if it is con-

nected to a public mission in defence, aero-space or high-tech solutions.140 The banking sector per

se is excluded from the research.141

134 cf. CIRIEC International Scientific Commission Public Services / Public Enterprises: Call for papers. Major

Public Enterprises: Country Analysis and Policy Trends. Draft Version (July 25, 2004) 135 Ibid. 136 Ibid. 137 Ibid. 138 Ibid.: 2 139 Ibid. 140 Ibid. 141 Ibid.


20

The goal is to find the most recent information on public enterprises categorized within the CIRIEC

definition, and certainly within one of the declared industries, for the purpose of analysing their

policy trends and governmental relationships since the year 2000 but specifically since the

year 2008; i.e. after the global financial crisis and subsequent phase of Great Recession.142

5.3.2 Methods of problem solution

In order to find out which policy trends characterize the relationship between major public enter-

prises and governments since 2008, the researchers pose the following questions for orientation:143

To what extent do public enterprises survive and even expand on a global level?

How do they perform on a national and international level and who are the major players?

How does the control of the government manifest and which missions do they assign?

Are public enterprises transforming themselves in multinationals?

In order to examine these questions accordingly, the analysis is aimed to be conducted in form of

a country specific survey of major public enterprises and the governmental body.144 After classi-

fying the major public enterprises in the country itself, their performance has to be identified

accordingly; thereby mainly referring to their achievement of set objectives, financial goals and

missions.145 Subsequently, the focus is on the analysis of current policy trends and how they affect

the public companies.146 These policy trends need to be analysed in a structured way regarding

elements of possible proposed privatizations, their relationship to trade unions as well as the im-

plementation of regulatory arrangements.147 The collaborative investigation on these areas of

concern are collected by CIRIEC from researchers all over the world and subsequently published

within the scientific network.

142 Ibid.: 3 143 Ibid. 144 Ibid. 145 Ibid. 146 Ibid. 147 Ibid.

6. CIRIEC Austria Etienne Koo

21

6. CIRIEC Austria

The overall purpose of CIRIEC is to collect and provide information of public interest; in that way

primarily including information on public authorities and utilities. While CIRIEC’s Honorary

President Erich Haider is simultaneously the Vice-President of CIRIEC Austria and the current

Executive Director at the company Linz AG,148 the contemporary collection of scientific papers

on country analyses and policy trends is conducted by the International Scientific Commission of

Public Services and Public Enterprises led by the Austrian professor Gabriel Oberman.149 Clearly,

the incorporation of research on the situation in Austria is of major importance. Therefore, infor-

mation is collected for eleven major Austrian enterprises; thereby including only those industries

approved by CIRIEC. This means that the corporations refer to businesses of energy, transporta-

tion and infrastructure as well as broadcasting, telecommunications and common goods for the

societal well-being. The first section deals with the methodology used to analyse the chosen

examples; in this way mainly referring to how research is conducted and which questions guide

the research process. Thereafter, the analysis of the, primarily public, major Austrian enterprises

is conducted in an alphabetical order.

6.1 Methodology

The key purpose of CIRIEC within this new collection of papers is to find out which role the state

plays in the management of key enterprises; thereby mainly referring to internal management prac-

tices, organizational logics, political influences as well as discussions about privatizations and the

relation to its workers. In alliance with CIRIEC, the research on these topics is accomplished

within a qualitative documentary analysis which means that the information provided within this

Thesis is based on secondary desk research. The reasons behind the application of a qualitative

approach instead of a quantitative one lies in the fact that political interventions and power plays

are only clearly visible to insiders who are not willing to share their knowledge and information

with external people. Therefore, the analysis of governmental influences and political parties

within the major Austrian enterprises discussed, is applied according to different documents; in

that way also including the wording of the law, amendments of the law, the depiction of organiza-

tional structures and hierarchies as well as their managing personnel, newspapers, homepages,

books and journals.

148 Homepage CIRIEC: Organization 149 cf. CIRIEC International Scientific Commission Public Services / Public Enterprises: Call for papers. Major

Public Enterprises: Country Analysis and Policy Trends. Draft Version (July 25, 2004)


22

Consequently, the following criteria is taken into consideration.

Is the company 100% public or a public-private mixture?

What are the political connections of the company?

Do political parties intervene in the management of the company?

Do politicians hold an occupation in the enterprise; e.g. a managing position?

Are there discussions or rumours about privatizations of completely public corporations?

How do the companies perform; especially since the global crisis?

What affects their logics and management tactics?

Is there a relation to trade unions?

The information is provided in a systematic order; thereby including all information expected by

CIRIEC. First, the legal base of the company is analysed according to different laws and its his-

torical roots. As already indicated within the retrospection on major developments in Austria after

World War I, the history plays a major role when wanting to analyse the connections of Austrian

enterprises to the state. Thereafter, the main tasks of the company as well as its organizational

structure, and therefore possible bureaucracies and hierarchies, are analysed. Subsequently, the

relationship to Austrian politics and hence connections to political parties, the National Council as

well as governmental representatives is depicted in more detail. This is, indeed, connected to the

organizational structure as it shows which position is occupied by politicians or political friends.

Thereafter, the company’s developments since the global crisis and subsequent phase of Great

Recession are investigated accordingly; thereby including information from balance sheets and

income statements as well as annual reports and strategic mission statements in order to provide a

holistic picture on both the financial and organizational side. All this information is provided for

each selected enterprise.

Later within this Thesis, each of the examples is summarized and connected to theoretical con-

cepts, in that way aiming at the provision of complete information on its logics and developments.

For the purpose of clarity, this final discussion of the examples also includes its connections to

trade unions and possible developments within the near future which are not discussed beforehand.


23

6.2 Analysis of major Austrian enterprises

In alliance with the requirements of CIRIEC, the following, fully or partly public, Austrian enter-

prises are analysed in an alphabetical order. First, the public limited company ASFINAG, which

is responsible for the Austrian highways and therefore road infrastructure, is studied in more detail.

The company is 100% state-owned and its history and developments are characterized by strong

political connections. Thereafter, the limited liability company BIG as the public manager of state-

owned real estates is depicted according to the required criteria. Next, the railway holding com-

pany ÖBB Holding Group as the strategic leading organization of a variety of subsidiaries in the

business of the transportation of goods and people is described. While both the company BIG and

the ÖBB Holding Group are 100% public, the first is known for being connected to the Austrian

People’s Party while the latter can be related to the Social Democratic Party; a circumstance de-

scribed in more detail within each enterprise analysis. The next company depicted is the Austrian

Federal Forestry Group ÖBf AG which is 100% public and responsible for Austria’s natural hab-

itats. Within this, the enterprise is in charge of managing, maintaining and protecting all natural

areas like lakes, hunting areas, fishery and forestry. Similar to BIG, the enterprise is primarily

connected to the People’s Party; yet, an aspect which is explained in more detail within the com-

pany’s section. Subsequently, the industrial holding company ÖIAG is described according to rel-

evant criteria. Most importantly, this state-owned company is responsible for the management of

public stakes as well as privatization efforts. The company holds stakes in three enterprises addi-

tionally discussed in separate sections within this Thesis; namely 52.8% of the Austrian Post

Group, 31.5% of the OMV Group and 28.4% of the Telekom Austria Group. The Austrian Post

Group is among the leading logistics and mail delivery services in Austria and as such, responsible

for the universal supply of postal services to all Austrian citizens. It is analysed after the ÖIAG

section and depicted in more detail, amongst others, according to its historical roots and close

relationship to the government, political parties and external shareholders. Afterwards the 100%

public broadcasting company ORF, as the biggest media company in Austria, is examined accord-

ing to CIRIEC criteria. The political connections of the company are manifold and therefore in-

vestigated in a very detailed way. After this, the partly by ÖIAG managed oil and gas company

OMV Group as the biggest listed industrial corporation of its kind in Austria is analysed thor-

oughly. Subsequently the 100% state-owned limited liability company SCHIG mbH as consulting

and service provider in railway infrastructure is depicted methodically. The third separately ana-

lysed company which is partly managed by ÖIAG is the Telekom Austria Group which is exam-

ined according to relevant CIRIEC criteria thereafter. Finally, the electricity provider Verbund

AG, as one of the leading electricity companies in Europe, is investigated more clearly.


24

6.2.1 ASFINAG

Already founded in 1982, the public company Autobahnen- und Schnellstraßen Finanzierungs-

Aktiengesellschaft ASFINAG150 is responsible for the creation and maintenance of Austrian high-

ways and interstates as well as the imposition of tolls for their usage.151 These highways and inter-

states comprise of 2,178 kilometres and the company has to secure the smooth and safe proceed-

ings on these streets at all seasons and weather conditions.152

6.2.1.1 Legal base

The legal background of the company is the law ASFINAG-Gesetz, BGBl. Nr. 591/1982153 which

regulates the establishment of a public limited company responsible for the financing of Austrian

highways and interstates as well as the planning and establishment of streets and tunnels;154

thereby simultaneously changing the Bundesministeriengesetz 1973, BGBl. Nr. 389/1973155

which manifested the tasks of all Austrian federal ministries at that time.156 This law thus regulated

that the Austrian Ministry of Traffic, Innovation and Technology is in charge of the company and

its responsibilities.157 This spin-out was accomplished under the government of the Social Demo-

cratic Party and the Austrian’s People Party.158 The company’s headquarter is located in Vienna

and its initial share capital was seven million euros whereas all shares remained in the ownership

of the state.159

6.2.1.2 Main tasks

The overall tasks of the company comprise of the financing, planning, building and maintenance

of highways and interstates in Austria; thus mainly focusing on the appropriate infrastructure and

safety.160 The focal emphasis of the company thereby lies on traffic information, appropriate man-

agement, safety issues as well as technological innovations and availability.161 In order to achieve

150 There is no official translation 151 cf. ASFINAG Geschäftsbericht mit integriertem Nachhaltigkeitsbericht (2013): 3; Homepage ASFINAG:

Unternehmen 152 Ibid. 153 There is no official translation 154 cf. BGBl. Nr. 591/1982 155 There is no official translation 156 cf. BGBl. Nr. 389/1973 157 cf. BGBl. Nr. 389/1973 Abschnitt L: Bundesministerium für Verkehr, Innnovation und Technologie 158 cf. Homepage Börse Express: Asfinag-Schulden wuchsen 2009 auf 11.3 Mrd. Euro (10.05.2010) 159 cf. BGBl. Nr. 591/1982 § 1 160 cf. BGBl. Nr. 591/1982 § 2(1) 161 cf. ASFINAG Geschäftsbericht mit integriertem Nachhaltigkeitsbericht (2013): 4


25

these goals, the company has to impose tolls for the usage of the supervised highways and inter-

states.162 In general, the company is not financed by the state budget but primarily by the income

from motorway toll stickers and tolls.163 However, in 2013 the company decided to finance itself

via two alternative ways as well; first, the emission of two bonds with seven and 20 years maturity

and second, a 390 million euros credit granted by the European Investment Bank.164

One of the major goals of ASFINAG is to increase the safety on Austrian highways and inter-

states.165 The company therefore builds on the creation of two-tubes-tunnels and innovations like

the thermo-scanner which inhibits the entering of overheated trucks and the system AKUT166

which automatically recognizes unusual noises in a tunnel and sets an alarm.167 In addition, the

organization focuses on the commitment and education of the public via information campaigns

such as “Drängeln tötet!”168 which appeal at the responsibility of each driver.169

One of the major principles that guides the organizational politics and actions internally as well as

externally is sustainability. The company underlines its intention to balance the economic, ecologic

and societal expectations in a responsible way; thereby contributing to the circumstance of Austria

being an attractive industrial location.170 In order to reach the goal of comprehensive sustainability,

the company fosters research and development and builds on technological innovations in the area

of tunnel building and recycling.171 An example is the fact that the company established 330 square

metres of photovoltaics area as well as six wind generators on the roof of the tunnel Plabutsch172

thus aiming at significant cost reductions in electricity.173 This pilot project will be expanded

throughout Austria within the upcoming years.174 Moreover, due to the fact that Austria is a coun-

try with high transit traffic, the company holds the strategy that those trucks with less emissions

pay less tolls while those with high emissions pay higher tolls.175

162 cf. ASFINAG Geschäftsbericht mit integriertem Nachhaltigkeitsbericht (2013): 24; Homepage ASFINAG:

Unternehmen 163 Ibid. 164 cf. ASFINAG Geschäftsbericht mit integriertem Nachhaltigkeitsbericht (2013): 27 165 cf. ASFINAG Geschäftsbericht mit integriertem Nachhaltigkeitsbericht (2013): 19 166 There is no official translation 167 Ibid. 168 Official translation for the slogan „Drängeln tötet!“: “Tailgating kills!” 169 cf. ASFINAG Geschäftsbericht mit integriertem Nachhaltigkeitsbericht (2013): 21 170 cf. ASFINAG Geschäftsbericht mit integriertem Nachhaltigkeitsbericht (2013): 4; 24; 34; Homepage ASFINAG:

Kernbereiche; Unternehmen; Verantwortung 171 cf. ASFINAG Geschäftsbericht mit integriertem Nachhaltigkeitsbericht (2013): 26f. 172 There is no official translation 173 Ibid. 174 Ibid. 175 cf. ASFINAG Geschäftsbericht mit integriertem Nachhaltigkeitsbericht (2013): 25


26

Another important principle is built upon the customer; i.e. the people using the chargeable high-

ways and interstates.176 These customers include private people as well as touristic companies

using busses and corporations using trucks to transport their goods.177

6.2.1.3 Organizational structure

The public limited company ASFINAG holds responsibility over six limited liability companies.

Each of these divisional companies has its own Management Board and either a Supervisory

Board, an Advisory Board or at least a controlling organ.178

A brief depiction on how these companies currently position themselves under the authority of

ASFINAG can be retrieved from the following figure 1.179

Figure 1: ASFINAG organizational structure

176 cf. ASFINAG Geschäftsbericht mit integriertem Nachhaltigkeitsbericht (2013): 13ff.; Homepage ASFINAG:

Kernbereiche 177 cf. Homepage ASFINAG: Maut 178 cf. ASFINAG Geschäftsbericht mit integriertem Nachhaltigkeitsbericht (2013): 38ff. 179 cf. ASFINAG Geschäftsbericht mit integriertem Nachhaltigkeitsbericht (2013): 38

ASFINAG

Autobahnen- und Schnellstraßen-Finanzierungs-Aktiengesellschaft

ASFINAG

Bau

Management

GmbH

ASFINAG

Commercial

Services

GmbH

ASFINAG

Maut

Service

GmbH

ASFINAG

European

Toll Services

GmbH

ASFINAG

Alpenstraßen

GmbH

ASFINAG

Service

GmbH


27

The overall responsibility within ASFINAG is regulated as follows. The Management Board con-

sists of two members, namely Alois Schedl and Klaus Schierhackl.180 Both are responsible for the

subordinated limited liability companies; however, they have separated their responsibilities, e.g.

Schedl is additionally in charge of the marketing and communication part whereas Schierhackl is

responsible for the overall strategy as well as internationalization efforts and innovations.181 The

Supervisory Board of ASFINAG consists of six members; four of them are elected at the General

Assembly and two of them are appointed by the staff association.182

The number of members at the Management Boards and Supervisory or Advisory Boards differs

among the limited liability companies; for example the company ASFINAG Bau Management

GmbH183 has two Management Board and nine Supervisory Board members184 while the corpora-

tion ASFINAG Commercial Services GmbH185 counts two Management Board and six Advisory

Board members.186 The amount depends on the legal background as well as individual structure

and management of the subsidiaries; however, it is not analysed in more detail within this Thesis.

6.2.1.4 Relationship to Austrian politics

The need for highways in Austria was already known in 1926 when the concept of the Italian

autostrade187 was discussed for the first time.188 In 1928 the association for Austrian highways

decided to investigate which streets represent the most frequently used ones and consequently

should be expanded.189 Concepts for expansions of those streets were designed mainly by individ-

ual planners and not by the responsible authorities.190 Thus, it was not until March 1938, and the

connection of Austria to Germany, that the project of expanding Austrian streets to highways was

discussed again due to war preparations.191 Six days after the entry of German troops in Austria,

the programme for building 1,100 kilometres of highways was announced and in April the con-

struction work began.192 The then employed general director of the construction company Strabag

in Munich appointed Rudolf Ganter-Ullmann as the main construction engineer; himself the


Vorstand 181 Ibid. 182 cf. ASFINAG Geschäftsbericht mit integriertem Nachhaltigkeitsbericht (2013): 40 183 There is no official translation 184 cf. ASFINAG Geschäftsbericht mit integriertem Nachhaltigkeitsbericht (2013): 41f. 185 There is no official translation 186 cf. ASFINAG Geschäftsbericht mit integriertem Nachhaltigkeitsbericht (2013): 52f. 187 Italian word for Autobahn 188 cf. ASFINAG: 30 Jahre ASFINAG (2012): 11 189 Ibid. 190 Ibid.: 12 191 Ibid. 192 Ibid.


28

manager of the company Vianova Straßenbau AG Wien193 in which the Strabag held the majority

rights.194 The overall goal of the construction was not only to improve the internal Austrian street

connections but also to connect Austria to its surrounding countries and increase transportability

and flexibility.195 Additionally, one of the underlying principles of the construction work was to

integrate the nature into the route of the highways; thereby guaranteeing eccentric views over

mountains and lakes.196 This, indeed, implied that the highways were not constructed according to

principles of efficiency and synergies; i.e. the overall goal was not to get from one place to another

in the fastest but rather in the most spectacular way.197

The beginning of 1942 marked the cessation of the highway construction in Austria and the plan

of building over 1,000 kilometres was not accomplished.198 However, a lot of highways were

partly finished and so the period after World War II was marked by the continuing work on them

in Austria.199 The time after World War II was characterized by high unemployment rates, high

poverty and the lack of food supply.200 Furthermore the victorious powers held a conference in

Potsdam during that time and decided upon reparation payments and other claims and even though

Austria did not have to transfer any reparation payments, the designed agreements defined that the

occupying powers were allowed to claim all German Foreign Assets within their zone.201 As

already depicted earlier within this Thesis, only the fact that there was no official definition on

what contributed to German Foreign Assets and how they were characterized, prevented Austria

from losing a variety of them.202 While the victorious powers interpreted these assets individually,

and each of them differently, the politicians of the Austrian’s People Party and Social Democratic

Party decided to nationalize a majority of essential companies in an attempt to prevent them from

falling into Soviet ownership.203 The Nationalization Acts of 1946 and 1947 regulated these

nationalizations in the areas of coal, oil, electronics, steel and machinery, aluminium and ore and

the baking sector.204 The full implementation of these acts was not until 1955 when the State Treaty

was signed and the victorious allies agreed upon not claiming any assets from Austria.205 However,

Austria’s politicians were already concerned with the continuing of the construction of highways

193 There is no official translation 194 cf. ASFINAG: 30 Jahre ASFINAG (2012): 12 195 Ibid.: 13 196 Ibid.: 13ff. 197 Ibid. 198 Ibid.: 15ff. 199 Ibid. 200 cf. Seidel (2005): 299 201 cf. Deutsch (1978): 23; Turnheim (2009): 30 202 cf. Deutsch (1978): 24; Turnheim (1009): 30 203 cf. Deutsch (1978): 25; Turnheim (1009): 31 204 cf. Turnheim (2009): 31ff. 205 cf. Langer (1966): 48f.; 82


29

in 1953 and did not only amend the law Bundesstraßengesetz 1948206 but also introduced the

establishment of the limited liability company Autobahn-Studiengesellschaft m.b.H.207 which was

subsequently responsible for the planning and preparation of highways.208 The political connec-

tions were already present within this company through the occupation of the Supervisory Board

which was headed by the State Secretary Fritz Bock and additionally constituted of the Vice-

Deputy Governors from Upper Austria and Lower Austria Felix Kern and August Kargl, as well

as the general director of the bank Creditanstalt209 Josef Joham and the representative of the

nationalized industry within the VOEST210 Walter Hitzinger.211 However, the company only lasted

for half a year.212 The still open question on German Foreign Assets and the difficult situation led

to the fact that the government decided to reincorporate the tasks of highway construction into the

responsibility of the Federal Ministry of Trade and Reconstruction and dissolve the company.213

Throughout the 1950s and the beginning of the 1960s the ministry was able to build around

500 kilometres of highways by financing it via the federal budget which constituted, among others,

of income from petroleum taxes.214 However, in 1964 this income was not enough to cover the

increasing traffic on Austrian highways and hence the subsequent need for further construction.215

Therefore, the government decided to establish several companies with the sole purpose of plan-

ning, financing and implementing the construction of specific highways in certain areas.216 Exam-

ples include the Brenner Autobahn AG (BAG)217 which was founded in 1964 to finish the con-

struction of the Brenner highway; the Tauernautobahn AG (TAAG)218 which was founded in 1969

and responsible for the construction of the Tauern highway; the Phyrn Autobahn AG (PAG)219

established in 1971 and in charge of the Phyrn highway as well as the Arlberg Strassentunnel AG

(ASTAG)220 which was founded in 1973 and responsible for the construction of the Arlberg

tunnel.221 However, the 1970s were characterized by ecological movements, open resistance and

protests against further highway construction and consequently the decreasing of the motorization

206 There is no official translation 207 There is no official translation 208 cf. ASFINAG: 30 Jahre ASFINAG (2012): 18 209 There is no official translation 210 There is no official translation 211 cf. ASFINAG: 30 Jahre ASFINAG (2012): 18 212 Ibid.: 19 213 Ibid. 214 Ibid.: 129 215 Ibid. 216 Ibid. 217 There is no official translation 218 There is no official translation 219 There is no official translation 220 There is no official translation 221 cf. ASFINAG: 30 Jahre ASFINAG (2012): 130


30

wave.222 The construction of highways delayed and in the 1980s two new corporations were

established; namely the two public limited companies Autobahnen- und Schnellstraßen AG

(ASAG)223 in 1981 and Wiener Bundesstraßen AG224 in 1985.225

In order to achieve cost savings and simplify structural components, ASFINAG was founded in

1982 and subsequently responsible for the financing of projects and distribution of money among

the corporations; thereby also including the later founded Wiener Bundesstraßen AG.226 The

financing was accomplished via outside funds; however, the state was responsible and fully liable

for the public limited corporation ASFINAG.227 During that time, the Management Board con-

sisted of two members; Gerhard Janschek as the head of the credit-section, i.e. the financing area

of the Austrian Federal Ministry of Finance and Karl Rainer from the Management Board of the

company ASTAG.228 Both were assigned by the Federal Minister of Finance to prepare everything

for the foundation of the company ASFINAG on a part-time basis besides their actual jobs.229 In

addition to the period 1982 to 1987, Janschek stayed in the Management Board on a part-time base

throughout the years 1987 to 1994; together with Karl Just.230 Due to Janschek’s position in the

Federal Ministry of Finance, ASFINAG was able to simplify its financing structure by coordinat-

ing all financial activities with the demands of the state.231

The first consolidation of the six companies happened in 1993 for the purpose of achieving syner-

gies and saving costs.232 The law BGBl. 826/1992233 manifested the legal background of the con-

solidation and subsequently the merger of the six corporations into two, namely the public limited

company Alpenstraßen AG (ASG)234 responsible for the highways in Western Austria and the

public limited company Österreichische Autobahnen- und Schnellstraßen AG (ÖSAG)235 respon-

sible for the rest of Austria.236 While the companies BAG and ASTAG merged into ASG, the

companies TAAG, PAG, ASAG and Wiener Bundesstraßen AG merged into ÖSAG.237 Until 1996

over 660 kilometres of highways were constructed by the corporations through outside financing

222 Ibid.: 23 223 There is no official translation 224 There is no official translation 225 cf. ASFINAG: 30 Jahre ASFINAG (2012): 131 226 Ibid. 227 Ibid. 228 Ibid.: 136 229 Ibid. 230 Ibid. 231 Ibid.: 137 232 Ibid. 233 There is no official translation 234 There is no official translation 235 There is no official translation 236 cf. ASFINAG: 30 Jahre ASFINAG (2012): 131f. 237 Ibid.: 132


31

methods.238 However, in 1997 the tasks of the company ASFINAG were redesigned with the law

ASFINAG Ermächtigungsgesetz239 which indicated a significant change from the corporation as

sole financing association to a company responsible for the planning, construction and mainte-

nance of highways in Austria.240 Moreover, it was regulated that all shares were solely held by the

state which, subsequently, installed usus fructus rights241 for several Austrian highways for

ASFINAG.242 As a countermove to the guarantee of these rights, ASFINAG took over state liabil-

ities in the area of highway construction of over 5.662 billion euros.243 In addition, the shares of

the companies ASG and ÖSAG were fully transferred into the ownership of ASFINAG.244 The

then responsible executives in the Management Board were Engelbert Schragl and Bernhard

Engleder; the first being a member of the People’s Party and the latter representing a member of

the Social Democratic Party.245 However, the political constellation of the People’s Party and the

Freedom Party within the government at the beginning of the millennium led to discrepancies in

the management of the construction company and the appointment of new managers.246 In 2001

Engelbert Schragl was replaced by Walter Hecke and Franz Lückler.247 While the first was con-

nected to the Freedom Party and was new in the company, the latter was already employed at

ASFINAG as CFO of ÖSAG since the year 2002 and maintained contact to the People’s Party due

to his former job as head of the transportation department at the provincial government Styria.248

Subsequently, in 2002, the Management Board was expanded from two to three persons and

Bernhard Engleder was replaced by Christian Trattner; known as having good connections to the

Social Democratic Party.249 Walter Hecke officially withdrew his job in 2005 due to strategic dis-

crepancies with the other members of the Management Board about the topic of partly privatizing

the company.250 However, the other two members stayed in their positions until 2007 and in 2006

the duo was supplemented by Mathias Reichhold. From 2002 to 2003 Reichhold held the position

of Austrian Federal Minister of Traffic, Innovation and Technology and after his work for Magna

238 Ibid. 239 There is no official translation 240 cf. ASFINAG: 30 Jahre ASFINAG (2012): 132 241 Official translation for Furchtgenussrecht 242 cf. ASFINAG: 30 Jahre ASFINAG (2012): 132 243 Ibid.: 133 244 Ibid. 245 cf. ASFINAG: 30 Jahre ASFINAG (2012): 137f.; Homepage Der Standard: Auf- und Abfahrt in der Asfinag

(22.08.2008) 246 Ibid. 247 cf. ASFINAG: 30 Jahre ASFINAG (2012): 137ff. 248 cf. ASFINAG Geschäftsbericht (2006): 11 249 cf. Homepage Wirtschaftsblatt: Der dritte Mann für die Asfinag (15.11.2001); Homepage Der Standard: Asfinag:

Christian Trattner neuer Finanzchef (22.01.2002); Homepage Der Standard: Auf- und Abfahrt in der Asfinag

(22.08.2008); cf. ASFINAG: 30 Jahre ASFINAG (2012): 139 250 cf. Homepage Der Standard: Auf- und Abfahrt in der Asfinag (22.08.2008); cf. ASFINAG: 30 Jahre ASFINAG

(2012): 139


32

until 2006, his connections to the Freedom Party simplified the entry into the company

ASFINAG.251

The legal background of the company manifests that it is allowed to impose tolls on highway users

for the purpose of financing the maintenance of existing and planning of new highways.252 The

introduction of tolls for cars under 3.5 tons in the year 2000 and subsequent implementation of an

electronic toll imposing system for cars over 3.5 tons and trucks represented a new step for the

financing of the company.253 In 2005, the enterprise changed its role and transferred itself into a

holding corporation which outsourced its operative tasks, such as planning, maintenance and the

imposing of tolls, to subsidiaries.254 The initial structure of three different subsidiaries responsible

for the regions East, North and South, was consolidated into one subsidiary in 2008, namely the

limited liability company ASFINAG Service GmbH.255 In addition to this, the limited liability

company ASFINAG Telematik GmbH was dissolved and its tasks integrated into the corporation

ASFINAG Mautservice Gesellschaft.256 This step was implemented, amongst others, due to heavy

criticism of the Austrian Federal Court on the management tactics and financial situation of the

limited liability company ASFINAG Telematik GmbH.257 Since 2007, the Management Board

consists of only two members again; namely Alois Schedl and Klaus Schierhackl; both of them

re-appointed for another full management period in 2012.258 This also aligns with the political

constellation of the Social Democratic Party and People’s Party in the then predominant govern-

ment. While Alois Schedl, as former head of budget in the Federal Ministry of Construction and

Technique, is considered as having connections to the Social Democratic Party, Klaus Schierhackl

is known as being close to the People’s Party.259 Yet, both of them were already employed at the

company before they were appointed as managers. Schedl was in the Management Board of the

251 cf. Homepage Der Standard: Auf- und Abfahrt in der Asfinag (22.08.2008); ASFINAG Geschäftsbericht

(2006): 11; ASFINAG: 30 Jahre ASFINAG (2012): 139 252 cf. ASFINAG: 30 Jahre ASFINAG (2012): 132; ASFINAG Geschäftsbericht mit integriertem

Nachhaltigkeitsbericht (2013): 24; Homepage ASFINAG: Unternehmen 253 cf. ASFINAG: 30 Jahre ASFINAG (2012): 133 254 Ibid. 255 Ibid. 256 cf. ASFINAG: 30 Jahre ASFINAG (2012): 133; Rechnungshof: ASFINAG Verkehrstelematik Follow-up

Überprüfung (2012/6): 145ff.; Rechnungshof: Wirkungsbereich der Bundesministerien für Verkehr, Innovation und

Technologie Finanzen. Autobahnen- und Schnellstraßen-Finanzierungs-Aktiengesellschaft: Verkehrstelematik

(2009/9): 143f. 257 cf. Rechnungshof: ASFINAG Verkehrstelematik Follow-up Überprüfung (2012/6): 145ff.; Homepage Der

Standard: Rechnungshof zerreißt Asfinag-Telematikprogramm in der Luft (06.08.2009); Homepage Die Presse:

Telematik Heftige Rechnungshof-Kritik an der Asfinag (06.08.2009) 258 cf. Homepage ASFINAG: Vorstand 259 cf. Homepage ORF: Verkehr (25.10.2007); Homepage ASFINAG: Vorstand


33

company Wiener Bundesstraßen AG260 until 1993 and subsequently led ÖSAG until his appoint-

ment as managing director.261 Schierhackl worked at ASFINAG since 1997 when he was first

appointed as head of the department for tolls and subsequently as manager of the limited liability

company ASFINAG Maut Service GmbH until 2007.262 Due to his close connections to the Euro-

pean association of operators of toll road infrastructure ASECAP263 he accomplished to hold the

position as its president from 2011 until 2013.264 In addition, he is a member of the Board of

Directors in the International Bridge, Tunnel and Turnpike Association IBTTA.265

As can be retrieved from the previous depiction of the construction company, ASFINAG can be

traced back to long historical developments; indeed, all of them characterized by political power

and governmental interventions through the appointment of the Management Board. The ideolo-

gies within the company can be regarded as a mixture of the principles of the different political

parties; always depending on which parties currently constitute the Austrian government. Due to

the fact that the state is liable for the financial situation and actions of the company, even though

it is not responsible for the direct financing of it, the state is interested in coordinating and leading

the company in an appropriate way. However, the interpretation of this differs among the political

parties and their representatives within the company. While the previous sections dealt with the

analysis of the company’s historical developments, structure and political connections, the follow-

ing part examines in more detail the developments of the organization since the period of the Great

Recession and therefore after the crisis in 2008.

6.2.1.5 Organizational developments since the Great Recession

Due to the fact that the company is not financed by the state budget, even though it is publicly

owned, it is dependent on the income from motorway toll stickers and tolls and subsequently the

economic situation in Austria and its surrounding countries. In 2009 the recession following the

economic crisis in Europe hit the company especially in the area of these incomes; indeed, because

the bad economic situation led to less transportation of goods and therefore less traffic in

Austria.266 While the income from car motorway toll stickers stayed the same, the income from

truck tolls decreased by around 13% in 2009 which indicates not only that private car users were

not able to compensate the decline in truck traffic but also a decline of 129 million euros in tolls.267

260 There is no official translation 261 cf. Homepage ASFINAG: Vorstand 262 cf. Homepage ASFINAG: Vorstand 263 ASECAP stands for Europäische Vereinigung mautfinanzierter Autobahnen, Brücken und Tunnels 264 cf. Homepage ASFINAG: Vorstand 265 Ibid. 266 cf. ASFINAG Geschäftsbericht (2009): 53 267 Ibid.: 52


34

Moreover, the EBIT decreased significantly from 442.2 million euros in 2008 to 384.7 million

euros in 2009 which led to an annual result of 290.2 million euros in 2009; a decline of 39.8 million

euros in comparison to 2008.268 The fact that ASFINAG already decided on investments of around

550 million euros in the maintenance and creation of new highways and interstates in 2009 conse-

quently led to an increase in debts for the company due to declining incomes.269 The company

reacted by increasing the prices for car motorway toll stickers by the end of 2009.270

In 2010, ASFINAG started to reorganize the tasks among its subsidiaries and formulated a new

strategy based on the SMART-formula271 thus creating 17 main goals divided into 34 sub-goals

and 130 individual measures.272 In addition, the usage of synergy effects was one of the main

priorities and therefore the company decided to create the limited liability corporation ASFINAG

Service GmbH as result of a merger between the service centres East, North and South.273 The

organization furthermore started to increasingly focus on the core areas of safety, sustainability

and the growing attention towards the customer.274 An example for the safety aspect of business

was the established traffic safety programme 2020 which, amongst others, introduced the

emergency lane in case of traffic jam as mandatory future aspect of traffic in Austria.275 In addition

to this, the company installed emission-dependent regulations for tolls and subsequently tolled

those trucks with higher emissions higher than those with less and, even though the traffic amount

increased only slightly by 6.6%, this change in tolls did not only bring a sustainable aspect but

also more income for the company in 2010.276 The modification augmented the income from tolls

by around 11.0%, which equals an increase of 130 million euros, and consequently also enhanced

the EBIT from 385 million euros in 2009 to 450 million euros in 2010.277 The annual result in

2010 improved to 339 million euros.278 However, it has to be considered that, due to ongoing

projects in the creation of highways and interstates, the company’s balance sheet showed a signifi-

cant augmentation in its expenditures; from 941 million euros in 2009 to 1,318 million euros in

2010; an increase of 941 million euros.279 Moreover, ASFINAG reported a negative free cash flow

268 Ibid. 269 cf. Homepage Börse Express: Asfinag-Schulden wuchsen 2009 auf 11.3 Mrd. Euro (10.05.2010) 270 cf. Homepage Die Presse: Asfinag spürt Krise: Vignette wird teurer (21.05.2009) 271 SMART stands for Specific, Measurable, Attainable, Relevant and Time-bound and aims at specifying the

strategies within a company according to these criteria. 272 cf. ASFINAG Geschäftsbericht (2010): 9 273 Ibid.: 10 274 Ibid. 275 cf. ASFINAG Geschäftsbericht (2010): 22f. 276 cf. ASFINAG Geschäftsbericht (2010): 26f.; 108 277 cf. ASFINAG Geschäftsbericht (2010): 107 278 Ibid. 279 Ibid.: 109


35

of three million euros.280 However, the company managed to increase its employees by 43 people

from 2009 to 2010 which, amongst others, justifies the increase in personnel expenditures from

151 million euros in 2009 to 160 million euros in 2010.281

In 2011 the company fully integrated its sustainability efforts by, in addition to its annual report,

publishing a sustainability report including all relevant criteria.282 The attention of the company

started to focus on its Corporate Governance Codex, the recycling of construction material at site

and the fostering of its toll system for the further decline of emissions caused by transit traffic.283

Moreover, ASFINAG started several collaborations on a national and European level with traffic

agencies, federal authorities and agricultural industries.284 The intention thereby centred on the

conservation of biological diversity among the roads as well as the usage of synergies, overlapping

knowledge and networks.285 In addition to this, the organization increased its safety efforts through

the medial introduction of the emergency line in case of traffic jams as well as the decision to

legally manifest the emergency line in the law by the beginning of 2012.286 When it comes to the

financial situation by the end of 2011, the company handled to improve its results in a variety of

key performance indicators. The income of tolls increased again by 3.0%, i.e. additional 50 million

euros, due to an increase in truck traffic of 3.7%.287 This also manifested in an upsurge of EBIT

from 450 million euros in 2010 to 584 million euros in 2011.288 The annual result shows an aug-

mentation of 101 million euros from 339 million euros in 2010 to 440 million euros in 2011.289

Simultaneously the company managed to decrease its expenditures by 118 million euros in com-

parison to the previous year and the free cash flow improved to a positive number of 106 million

euros. 290

The beginning of 2012 marked the legally regulated duty of building an emergency line in case of

traffic jam in order to secure the drive-through for rescue teams.291 In addition to safety aspects,

the company heavily built on innovations and new technologies for the improvement of infor-

mation services and help at site.292 A major aspect in 2012 was the establishment of the European

Electronic Toll Service (EETS) which aimed at the simplification of tolls and traffic on a European

280 Ibid.: 110 281 Ibid.: 109 282 cf. ASFINAG Geschäftsbericht mit integriertem Nachhaltigkeitsbericht (2011) 283 cf. ASFINAG Geschäftsbericht mit integriertem Nachhaltigkeitsbericht (2011): 55; 71 284 Ibid.: 64 285 Ibid.: 54ff. 286 cf. ASFINAG Geschäftsbericht mit integriertem Nachhaltigkeitsbericht (2011): 33 287 cf. ASFINAG Geschäftsbericht mit integriertem Nachhaltigkeitsbericht (2011): 122 288 Ibid. 289 Ibid. 290 Ibid.: 122; 126 291 cf. ASFINAG Geschäftsbericht mit integriertem Nachhaltigkeitsbericht (2012): 16f. 292 Ibid.: 10ff.


36

level.293 ASFINAG therefore intensified its cooperation with international partners and introduced

joint projects.294 These projects were expanded in 2013; an example being the EasyGo+ project

which includes only one on-board-unit for trucks driving through Austria, Denmark, Norway and

Sweden.295 By the end of 2012 the financial result of ASFINAG showed the following picture.

The income from truck tolls increased from 2011 to 2012 by 3.8% and due to the fact that the car

traffic also increased, the company’s income showed an additional 20 million euros solely from

motorway toll stickers.296 The total upsurge in income from tolls and motorway toll stickers of

60 million euros consequently increased the EBIT from 584 million euros in 2011 to 627 million

euros in 2012.297 The annual result enhanced slightly from 440 million euros in 2011 to 471 million

euros in 2012.298 However, the expenditures of the company amplified again from 548 million

euros to 669 million euros; mainly justified by new construction work within a PPP-project299 and

its subsequent opening in 2012.300 Furthermore, the free cash flow increased slightly to 167 million

euros.301

In 2013, the EBIT decreased a little to 626 million euros while the annual result enhanced a bit to

472 million euros.302 The liquidity of the company slightly improved as the free cash flow in-

creased to 188 million euros in 2013.303 Overall, 2013 marks a year of positive and steady, but

rather minor improvements in the financial data of the company.

The previous depiction of the 100% state-owned ASFINAG shows that, despite the attempts of

cost savings and the achievement of synergies, there is no tendency towards private related man-

agement tactics, policies or trends. Moreover, the discussion about a part-privatization of the com-

pany did not arise again since the leadership of Walter Hecke in 2005. Furthermore, the company’s

overall goal of planning, establishing and maintaining a comprehensive and nationwide highway

system can be regarded as having a national tenet subsequently contributing to the overall living

standards.

The following section deals with the analysis of the public Bundesimmobiliengesellschaft BIG304

a company responsible for the real estates of the Austrian state.

293 Ibid.: 21 294 Ibid. 295 cf. ASFINAG Geschäftsbericht mit integriertem Nachhaltigkeitsbericht (2013): 13 296 cf. ASFINAG Geschäftsbericht mit integriertem Nachhaltigkeitsbericht (2012): 49 297 Ibid. 298 Ibid. 299 PPP-project refers to a Public-Private-Partnership project the ASFINAG started in 2009 to build a highway. 300 cf. ASFINAG Geschäftsbericht mit integriertem Nachhaltigkeitsbericht (2012): 51 301 Ibid.: 52 302 cf. ASFINAG Geschäftsbericht mit integriertem Nachhaltigkeitsbericht (2013): 62; 69 303 Ibid.: 74 304 There is no official translation


37

6.2.2 Bundesimmobiliengesellschaft

The limited liability company BIG is 100% public and responsible for the administration of real

estates owned by the state.305 It manages around nine billion euros of fixed assets which currently

manifests in the administration of around 2,800 buildings.306 The main tenants for these buildings

are schools, universities and others such as juridical companies or churches.307

6.2.2.1 Legal base

The actual legal background of the company is the law Bundesgesetz zur Errichtung einer Bun-

desimmobiliengesellschaft mit beschränkter Haftung und Verfügung über bundeseigene

Liegenschaften einschließlich Mietwohngebäude (BIG-Gesetz) BGBl. Nr. 419/1992308 which ba-

sically regulated the establishment of an administrative body responsible for the real estates of the

state as well as the management of the assets connected to them.309

However, in the year 2000 this law was modified and a new one came into force namely the law

Bundesimmobiliengesetz BGBl. I Nr. 141/2000310 which regulates the new organization of BIG.311

According to this law, the company is subsequently responsible for all buildings listed in Appendix

A and A.1 within the law and beforehand in the ownership of the Federal Ministry of Economy

and Labour.312 All buildings listed in the Appendices were transferred in four tranches throughout

the years 2000, 2001, 2002 and 2003.313 For this transaction, the law designated a payment of

33 billion Schilling, i.e. exactly 2,398,203,527.54 euros, from BIG to the Federal Ministry of

Finance.314 This was financed through the emission of international bonds.315 Historical buildings,

like museums, are not transferred into the responsibility of BIG due to their cultural heritage and

significance.316

The law was already amended in 2000 and changed several times throughout 2003, 2004 and 2005

and most recently in 2012.317 It states that the public real estates and assets have to be managed in

305 cf. Homepage BIG: Über uns 306 Ibid. 307 Ibid. 308 There is no official translation 309 cf. BGBl. Nr. 419/1992 310 There is no official translation 311 cf. BGBl. I Nr. 141/2000 312 cf. BGBl. I Nr. 141/2000 § 1(2) 313 cf. BGBl. I Nr. 141/2000 § 13(1) 314 cf. BGBl. I Nr. 141/2000 § 14 315 cf. Homepage BIG: Geschichte 316 cf. BGBl. I Nr. 141/2000 § 1(2) 317 cf. BGBl. I Nr. 141/2000


38

an economic and market-oriented way; thereby considering possible synergy effects and the sus-

tainable use of resources.318 Moreover, the limited liability company is allowed to establish sub-

sidiaries responsible for the administration of certain buildings and their assets; however, specifi-

cally excluded from this permission are buildings used for education, i.e. schools or universities

as well as correctional facilities.319

6.2.2.2 Main tasks

The company can be considered as the biggest service provider in the segment of real estates and

as such, the tasks of BIG manifest as follows.320 First of all, the enterprise offers the task of man-

aging the real estates; i.e. property management and maintenance which count as the core business

of BIG.321 This includes tasks such as the calculation and collection of rents, the management of

dunning processes, the inspection of buildings, the management of insurances, the commissioning

of external service providers for the fire protection and winter road maintenance as well as the task

of consulting in the areas of energy contracting.322 The latter refers to the possibility of optimizing

buildings with only little energy effort; a task which BIG fulfils by acting as an intermediate

between the user of the real estate and the company that optimizes the energy household within

the building.323 The advisory role of BIG in this case refers to the tasks of selecting proper objects

and designing necessary conditions as well as tendering the object and confirming the contract to

the best bidder.324 Additionally, BIG helps in the contract negotiations with the best bidder there-

after and accompanies the contract to maturity.325 Within the service of managing the real estates,

BIG employs 16 management teams throughout Austria; each of them being responsible for the

sustainable and also value enhancing support of the objects.326 There is one team each in Tyrol,

Vorarlberg, Salzburg and Carinthia, two teams each in Styria, Upper Austria and Lower Austria

and six teams in Vienna.327 All of them act upon the law Mietrechtsgesetz (MRG), BGBl.

Nr. 520/1981328 which regulates not only all areas connected to rents and buildings but also the

relation between lessor and lessee.329

318 cf. BGBl. I Nr. 141/2000 § 1(1) 319 cf. BGBl. I Nr. 141/2000 § 2(1); (2); (3) 320 cf Homepage BIG: Dienstleistungen 321 cf. Homepage BIG: Objektmanagement 322 Ibid. 323 cf. Homepage BIG: Energieeffizienz & Umweltschutz, Erfolgsmodell Bundes-Contracting 324 Ibid. 325 Ibid. 326 cf. Homepage BIG: Objektmanagement 327 cf. Homepage BIG: Objektmanagement, Standorte und Teams 328 There is no official translation 329 cf. BGBl. Nr. 520/1981


39

The second major task of the service provider regards facility services; an area which is concerned

with the sustainable and holistic support of the real estates.330 This refers to the supervision and

maintenance of the objects throughout their whole life-cycle and within all diverse and relevant

areas such as technical assistance as well as the cultivation of green areas.331 Moreover facility

services include twenty-four-seven on-call service, inspection of objects and maintenance work,

minor repairs and consultancy work for safety, energy optimization and object management.332

The third task of BIG applies to data management and computer-aided-design which basically

refers to the systematic acquisition of data for the purpose of designing ideal space management.333

This also includes the measurement of buildings and external areas, their data absorption into the

system and subsequent data collection which can be used for CAD plans and designs.334

Overall, the public entity is not only acting as external service provider but also holds internal

responsibilities which are discussed within the following section of organizational structure.


Primarily BIG is responsible for the support of its tenants; a task which the company fulfils within

the scope of three major divisions, namely universities, schools and special real estates.335 Experts

at BIG are responsible for the whole life-cycle of buildings within these divisions; i.e. the advisory

over topics such as the design and choice of site, the construction management, detailed planning

and the commercial and technical maintenance thereafter.336 The division schools constitutes

around 40% of the portfolio which manifests in 2.8 million square metres of area at around

320 locations.337 The division universities is concerned with the sustainable and efficient manage-

ment of the university buildings which count around 400 locations and an area of 1.6 million square

metres.338 The division special real estates is concerned with buildings of the Federal Ministry of

the Interior, the Federal Ministry of Defence and the Federal Ministry of Justice; all of them re-

quiring special safety aspects.339 Moreover, this division also includes specialized properties such

as churches, customs houses, cemeteries or embassies in foreign countries.340

330 cf. Homepage BIG: Facility Services, Rundumbetreuung für Gebäude 331 Ibid. 332 cf. Homepage BIG: Facility Services, Angebotene Dienstleistungen 333 cf. Homepage BIG: Datenmanagement & CAD 334 Ibid. 335 cf. Homepage BIG: Unternehmensbereiche 336 Ibid. 337 cf. Homepage BIG: Unternehmensbereich Schulen 338 cf. Homepage BIG: Unternehmensbereich Universitäten 339 cf. Homepage BIG: Unternehmensbereich Spezialimmobilien 340 Ibid.


40

Structurally, the limited liability company has two major subsidiaries; the limited liability com-

pany ARE Austrian Real Estate GmbH341 and the limited liability company BIG Beteiligungs

GmbH;342 both of them directly subordinated to BIG.343 The first additionally holds 100% of two

other companies, namely the limited liability company ARE Austrian Real Estate Development

GmbH344 and the limited liability company ARE Holding GmbH345 which are responsible for other

participations of BIG.346

The company ARE was founded in the course of a restructuration of BIG in 2012 in which the

office properties demerged and transferred from the ownership of BIG into the ownership of

ARE.347 This spin-out and simultaneous establishment of a new company was implemented retro-

actively for the year 2012 so that by January 2013, the company ARE could start its operative

tasks.348 Since then it can be considered as Austria’s biggest owner of real estates; thereby mainly

referring to over 1.8 million square metres of space which equals over 600 objects.349 The total

operative revenues in 2013 contain revenues from facility services, sales, lessee investments, rental

revenues and others and sum up to almost 218 million euros; the biggest portion of it being the

rental revenues of over 150 million euros.350 Also in 2013, the subsidiary ARE Development

GmbH351 was founded with the purpose of focusing on the sophisticated area of owner apart-

ments.352 The restructuring of BIG and subsequent establishment of ARE and its subsidiaries roots

in the increasing importance of non-public customers; e.g. private tenants and the need for re-

focusing due to the crisis in 2008; something discussed in more detail later within this Thesis.353


Due to the fact that the company is 100% public, it is basically in the ownership of the Republic

Austria and represented by the Federal Minister of Science, Research and Economics; currently

Reinhold Mitterlehner.354 Mitterlehner, who holds the position as Federal Minister of Economics

since 2013, was appointed as party chairman of the People’s Party after the former chairman and

341 There is no official translation 342 There is no official translation 343 cf. Homepage BIG: Konzernstruktur 344 There is no official translation 345 There is no official translation 346 cf. Homepage BIG: Konzernstruktur 347 cf. ARE Geschäftsbericht (2013): 5 348 Ibid. 349 cf. Homepage ARE: Unternehmen 350 cf. ARE Geschäftsbericht (2013): 62 351 There is no official translation 352 Ibid.: 5 353 Ibid. 354 cf. Homepage BIG: Eigentümer Republik Österreich


41

Minister of Finance Michael Spindelegger resigned due to discrepancies with the Social Demo-

cratic Party over a planned tax reform.355 Mitterlehner subsequently also took responsibility over

the position as Federal Minister of Science, Research and Economics in addition to his already

held positions356 thereby subsequently acquiring power within BIG.

The Management Board of BIG consists of two people; Wolfgang Gleissner and Hans-Peter

Weiss; both of them having connections to the People’s Party.357 Gleissner started his career during

the 1990s in the Federal Ministry of Economics and Labour and after several years within the

ministry, he changed to the BIG subsidiary Immobilienmanagementgesellschaft des Bundes

mbH358 where he was appointed as managing director subsequently.359 After the merger of IMB

and BIG, i.e. the dissolution of IMB, Gleissner was appointed as managing director of BIG in

2006.360 Weiss was employed at the Austrian Federal Forestry Group ÖBf AG after his studies

and subsequently held managing positions in Esterhazy companies before he was appointed as

managing director at BIG by the Federal Minister of Economics Mitterlehner in 2011.361 Both of

them additionally hold positions as managing directors at ARE since its establishment in 2012.362

The Supervisory Board of BIG consists of three publicly and two works council appointed mem-

bers and due to the fact that the company ARE is not obliged to establish its own Supervisory

Board, the one of BIG comes into force in case of need.363 The three publicly appointed members

consist of three people connected to the People’s Party. The chairwoman of the Supervisory Board

Christine Marek was a member of the Austrian National Assembly three times; the latest period

being from 2011 until 2013.364 Her career is characterized by a variety of political positions; from

the chairwoman of the People’s Party Vienna to positions in federal ministries and the employment

as Parliamentary State Secretary.365 Cordula Frieser was a member of the Austrian National

Assembly twice and subsequently employed in several Austrian committees.366 Wolfgang

Polzhuber is considered as part of the Federal Ministry of Science, Research and Economics.367

Thomas Rasch, who was appointed by the works council, is managing director at the Chamber of

Labour Vienna and not only in the Supervisory Board of BIG but also employed at the Federal

355 cf. Homepage Der Standard: Der Rücktritt von Michael Spindelegger (26.08.2014) 356 Ibid. 357 cf. ARE Geschäftsbericht (2013): 4 358 There is no official translation 359 cf. Homepage TU Wien: Lebenslauf Wolfgang Gleissner 360 cf. ARE Geschäftsbericht (2013): 4 361 Ibid. 362 Ibid. 363 cf. ARE Geschäftsbericht (2013): 4; Homepage BIG: Aufsichtsrat 364 cf. Homepage Parlament Republik Österreich: Christine Marek 365 Ibid. 366 cf. Homepage Parlament Republik Österreich: Mag. Cordula Frieser 367 cf. BIG Konzernbericht (2013): 42


42

Ministry of Economics, Family and Youth.368 Manfred Fausik, also appointed by the works

council, is a member of the Social Democratic Party since 1980 and also employed at the Federal

Ministry of Economics, Family and Youth as a member of both the central and technical

committee.369

Compared to other public companies, BIG looks back at a relatively short history of 22 years. The

milestones of its foundation in 1992 and the law amendment in 2000 mark the development of

tasks and duties.370 As can be retrieved from the depiction of positions within BIG above, the

company is currently dominated by representatives of the People’s Party; a circumstance also con-

nected to the current political situation and constitution of external public positions relevant for

BIG such as the position of Federal Ministry of Science, Research and Economics. The political

constellations also played an essential role during the Great Recession and subsequently; a fact

which is discussed in more detail within the following section.


Despite the fact that the global financial crisis and the subsequent phase of recession also hit the

company BIG, it has to be noted that the circumstances differ from other public companies. The

Credit Analysis of Moody’s International Public Finance in 2009 declared a stable outlook for the

company and the continuing of its AAA rating.371 Moreover, the report announced a balance of

the tasks and obligations with financial stability and therefore a better outlook than for other com-

panies.372 The report summarizes that the stable outlook roots in the strong link to the Austrian

government on the one hand, and subsequently high probability of the Republic to intervene in

troublesome situations on the other hand.373

However, the annual report of BIG in 2010 shows negative rental revenues of its major tenants

schools and universities was well as other public tenants in 2009 and 2010.374 This can be traced

back to the emergency measures established by the state after the crisis. The government decided

upon a deferment of rents for schools by simultaneously implementing the Economic Recovery

Programme II with the goal of fostering construction and maintenance.375 Consequently BIG lost

the rents of schools in 2009 and 2010; which make up 40% of its portfolio and over 240 million

368 cf. Homepage Arbeiterkammer: Thomas Rasch 369 cf. Homepage SPÖ Biedermannsdorf: Manfred Fausik 370 cf. Homepage BIG: Geschichte 371 cf. Moody’s International Public Finance: Credit Analysis Bundesimmobiliengesellschaft m.b.H. Vienna, Austria

(2009): 1 372 Ibid. 373 Ibid. 374 cf. BIG Konzernbericht (2010): 4 375 cf. Homepage Die Presse: Bundesimmobilien-Gesellschaft braucht eine Milliarde Euro (06.07.2009)


43

euros in numbers.376 The governmental attempt to recover the construction industry and economy

in Austria led to planned investments of around 875 million euros; amongst others in projects such

as the continuing of the new building of the Institute of Technical Chemistry at the Technical

University in Vienna from 2007 until 2010.377 This amount constituted of 495 million euros for

new buildings and renovations, 300 million euros for thermic restoration and 80 million euros for

maintenance.378 However, the Economic Recovery Programme II only covered 340 million euros

of investments which led to a difficult financial situation for BIG and the subsequent need for

around one billion euros.379 Despite the borrowing of 200 million euros from the European Invest-

ment Bank in 2009,380 the cash flow from investment activity showed a negative number of over

345 million euros in 2009 and over 414 million euros in 2010.381 Thus, the total cash flow could

be recovered from negative 19 million euros in 2009 to positive 6 million euros in 2010.382

The subsequent years of 2011 and 2012 were characterized by a major improvement of the com-

pany’s financial situation. One reason roots in the fact that the rents for schools were reinstated

which led to an income from rents from schools, universities and other public tenants of 679 mil-

lion euros in 2011 and 730 million euros in 2012.383 Another reason stems from the demerger of

both assets and liabilities to the new established limited liability company ARE.384 The restructu-

ration of BIG during 2011 and 2012 aimed at additional cost savings and the use of synergies.385

Moreover, the attempts to sell a variety of objects in 2011 ultimately also intended to re-focus on

its core business which is the management of schools, universities and special public real estates.386

However, these sales and the attempts to sell a variety of areas, amongst others two mountains, led

to displeasure among the Austrian citizens and image troubles for the company.387 Nevertheless,

the company managed to further improve its financial situation and increase its income from rents

by 3.4% from 730.6 million euros in 2012 to 755.2 million euros in 2013 as well as its operative

revenues by 8.5% from 872.4 million euros in 2012 to 946.3 million euros in 2013.388

376 Ibid. 377 cf. Rechnungshof: Bericht Bundesimmobiliengesellschaft m.b.H.: Konjunkturbelebungspaket II (2008) und

ressort-spezifische Bauprogramme; Neubau des Institutsgebäudes für Technische Chemie der TU Wien

(2013): 109f. 378 Ibid.: 129 379 cf. Homepage Die Presse: Bundesimmobilien-Gesellschaft braucht eine Milliarde Euro (06.07.2009) 380 cf. APA OTS: Keine Finanzierungsnot bei Bundesimmobiliengesellschaft (06.07.2009) 381 cf. BIG Konzernbericht (2010): 22 382 Ibid. 383 cf. BIG Konzernbericht (2012): 8 384 Ibid. 385 cf. ARE Geschäftsbericht (2013): 5 386 cf. ORF: BIG-Abverkauf – Bundesimmobiliengesellschaft Österreich, ORF-Report (23.06.2011) 387 Ibid. 388 cf. BIG Konzernbericht (2013): 8


44

Overall, the previous depiction of the time after the Great Recession shows that the public enter-

prise managed the continuing construction and maintenance of public buildings despite the lack of

public capital throughout the years. This was mainly achieved by the re-structuration concepts

which include the sale of unused properties and objects as well as the demerger of certain assets

and debt into the subsidiary ARE.

The following part deals with the state-owned railway company ÖBB Holding Group.

6.2.3 Österreichische Bundesbahnen Holding AG

Founded in April 2004, the ÖBB Holding Group389 is the strategic holding company of a variety

of ÖBB businesses and subsidiaries, amongst others, related to the Austrian railway system and

consequently transportation of goods and people.390

6.2.3.1 Legal base

The legal background of the enterprise ÖBB is represented by the law Bundesbahngesetz, BGBl.

Nr. 825/1992391 which regulates that the autonomous economic corporation “Österreichische Bun-

desbahnen” is turned into a company with legal personality; however, still represented by the

Federal Minister of Economy and Traffic.392 The law was amended several times throughout the

years and in 2003, the law Bundesbahnstrukturgesetz, BGBl. I Nr. 138/2003393 constituted the

establishment of the ÖBB Holding Group as responsible public limited corporation for all ÖBB

businesses and subsidiaries; i.e. the whole ÖBB group.394 The legal representative of the ÖBB

Holding Group is the Federal Minister of Traffic, Innovation and Technology and its headquarter

is located in Vienna.395

Further laws that apply to the ÖBB Holding Group are the law Eisenbahngesetz, BGBl.

Nr. 60/1957396, the law Schieneninfrastrukturfinanzierungsgesetz, BGBl. Nr. 201/1996397 which

also applies to the company SCHIG mbH analysed later within this Thesis, and the law Eisenbahn-

Hochleistungsstreckengesetz, BGBl. Nr. 135/1989398.399

389 Official translation for Österreichische Bundesbahnen Holding AG 390 cf. Homepage ÖBB Holding: Unternehmen 391 There is no official translation 392 cf. BGBl. Nr. 825/1992 § 1 (1) 393 There is no official translation 394 cf. BGBl. I Nr. 138/2003 § 2 (1); Homepage ÖBB Holding: ÖBB Konzern 395 cf. BGBl. I Nr. 138/2003 § 2 (1) 396 There is no official translation 397 There is no official translation 398 There is no official translation 399 cf. Homepage ÖBB Holding: Gesetzliche Grundlagen


45

6.2.3.2 Main tasks

The overall task of the ÖBB Holding Group is to secure the strategic direction of all companies

within the ÖBB group.400 Newly founded limited liability companies or public limited companies

within the corporation are managed by the ÖBB Holding Group which is additionally responsible

for the coordination of overlapping topics.401

Founded in 2004, the ÖBB Holding Group is, since then, in charge of the consistent strategic re-

focusing of all companies within the ÖBB group; thereby especially focusing on the achievement

of synergies among them and consequently the use of overlapping advantages.402 The newly

founded companies since then are market- as well as task-oriented and guided by the ÖBB Holding

Group.403 Moreover, in order to achieve consistency among all companies, at least half of the

capital representatives of the Supervisory Boards at each corporation consist of members of either

the Management or Supervisory Board of the overall ÖBB Holding Group.404

Furthermore, the entity is in charge of coordinating the research and development activities within

each company of the group.405 The focus thereby lies on the increasing liberalization tendencies

in Europe and how to react accordingly in order to secure the successful positioning within the

near future.406 The aim is to focus the core of research activities on technical, customer-oriented

and logistics innovations, like for instance new telematics-projects, the use of new materials in

infrastructure or special online customer information systems.407

An additional important task of the enterprise is to secure the group-wide communication and

marketing activities by fostering a transparent dialog internally as well as externally.408 According

to the ÖBB Holding Group, communication plays an essential role when it comes to the reputation

and image of the company, its brand and services.409 Communication thereby refers to informing

not only employees and other managers, but also customers, politicians, journalists, suppliers and

other stakeholders in direct contact with the company.410

400 cf. Homepage ÖBB Holding: Aufgaben 401 Ibid. 402 cf. Homepage ÖBB Holding: Strategische Leitgesellschaft 403 Ibid. 404 Ibid. 405 cf. Homepage ÖBB Holding: Forschung & Entwicklung 406 Ibid. 407 Ibid. 408 cf. Homepage ÖBB Holding: Konzernkommunikation und -marketing 409 Ibid. 410 Ibid.


46

Indeed, Corporate Social Responsibility and sustainability play an essential role for the company

as well.411 Similar to other public companies, the ÖBB Holding Group focuses on economic,

ecological and social aspects within its corporate culture.412


The law BGBl. I Nr. 138/2003 includes, in addition to the establishment of the ÖBB Holding

Group as overall strategic unit, the duty of this holding to create supplementary companies as part

of further restructuring efforts within ÖBB.413 Consequently, the law manifests the establishment

of the companies ÖBB-Personenverkehr AG414, Rail Cargo Austria AG415, ÖBB-Traktion

GmbH416, ÖBB-Technische Services GmbH417, ÖBB-Dienstleistungs-GmbH418, ÖBB-Immo-

bilienmanagement GmbH419, ÖBB-Infrastruktur Betrieb AG420 and ÖBB-Infrastruktur Bau

AG421.422 However, since 2004 some additional internal restructuration efforts took place and

therefore the current organizational structure deviates from the original attempt.

For the purpose of topicality, the following figure 2 contains a depiction of the current

organizational structure; however, thereby only including the prevalently most relevant companies

indicated within the law above. 423

411 cf. Homepage ÖBB Holding: Nachhaltige ÖBB 412 Ibid. 413 cf. BGBl. I Nr. 138/2003 414 There is no official translation 415 There is no official translation 416 There is no official translation 417 There is no official translation 418 There is no official translation 419 There is no official translation 420 There is no official translation 421 There is no official translation 422 cf. BGBl. I Nr. 138/2003 1. Hauptstück, 2. Hauptstück, 3. Hauptstück, 4. Hauptstück, 5. Hauptstück,

6. Hauptstück, 7. Hauptstück, 8. Hauptstück 423 cf. Homepage ÖBB Holding: ÖBB Konzern. Organisation


47

Figure 2: ÖBB Holding Group organizational structure

The Management Board of the ÖBB Holding Group consists of Christian Kern as CEO and Josef

Halbmayr as CFO;424 the former appointed in 2010 and the latter in 2008.425 Before his position

as CEO, Kern held Management Board positions in the Austrian Verbund AG and companies

related to it.426 CFO Halbmayr held positions in the former Post und Telekom Austria AG427 as

well as the further demerged Austrian Post Group and used to work in private banks as well as

controlling positions.428 The Supervisory Board consists of seven members appointed by the

capital representatives and four members appointed by the works council.429 The chairwoman of

the Supervisory Board is Brigitte Ederer; first vice-chairman is Ludwig Scharinger and second

vice-chairman is Herbert Kasser.430 The political connections of the Supervisory Board members

are discussed separately within the following section.

424 cf. Homepage ÖBB Holding: Organisation 425 cf. Homepage ÖBB Holding: Management 426 cf. Homepage ÖBB Holding: Mag. Christian Kern 427 There is no official translation 428 cf. Homepage ÖBB Holding: Mag. Josef Halbmayr MBA 429 cf. Homepage ÖBB Holding: Organe der ÖBB Holding AG 430 Ibid.

ÖBB Holding Group

CEO: Christian Kern CFO: Josef Halbmayr

ÖBB

Personenverkehr

AG

Rail Cargo

Austria AG

ÖBB

Infrastruktur AG European Contract

Log. Austria GmbH

ÖBB Business

Competence Center GmbH

ÖBB

Werbung GmbH

50%

ÖBB Produktion

GmbH

50%

ÖBB Produktion

GmbH

49%

ÖBB Technische

Services GmbH

51%

ÖBB Technische

Services GmbH

ÖBB

Immobilien-

management GmbH


48


CEO Kern is known for his good performance within a public company that is mainly character-

ized by political power plays, high media attention and thousands of permanent employees who

cannot be dismissed.431 Several of his predecessors have failed due to these reasons; however,

Kern managed to increase customers, operative revenues and steer the media attention properly by

charming public appearances and connections to those politicians tied to the ÖBB Holding

Group.432 Initial connections to Austrian politicians have been tied by Kern already in 1991 when

he held the position as assistant of the State Secretary Peter Kostelka in the Federal Chancellery.433

His relation to the Social Democratic Party seems to be tight but nonetheless he is not an official

member of the party. Recently his contract has been expanded prematurely for another five

years.434 Since 2011 there are additionally discussions and speculations about his connections to

Werner Faymann and a possible candidature as his successor in the position as Federal

Chancellor.435

Josef Halbmayr as CFO is contrarily characterized as being close to the People’s Party; however,

not an official member either.436 Opposing to the CEO, his media attention is not as big and con-

sequently there are not as many speculations about his tactics, political connections and possible

future political positions.

Chairwoman of the Supervisory Board Brigitte Ederer is a member of the Social Democratic Party

and, in addition to this position, she also holds the position as member of the Supervisory Board

of ÖIAG.437 Her political commitment started as State Secretary at the Federal Chancellery from

1992 to 1995.438 Thereafter, she was a member of the National Council three times throughout the

1990s and subsequently held positions as head of the Social Democratic Party and general director

at the Austrian Siemens Group.439

431 cf. Homepage Profil: ÖBB-Chef Christian Kern hat Chancen, Nachfolger von Kanzler Faymann zu werden

(02.08.2014) 432 Ibid. 433 cf. Homepage ÖBB Holding: Mag. Christian Kern; Homepage Format: Die Hochburgen des Proporzes

(11.06.2012) 434 cf. Homepage Profil: ÖBB-Chef Christian Kern hat Chancen, Nachfolger von Kanzler Faymann zu werden

(02.08.2014) 435 cf. Homepage Die Presse: Kann Kern Kanzler? Ein sozialdemokratisches Gerücht (08.05.2011); Homepage

Profil: ÖBB-Chef Christian Kern hat Chancen, Nachfolger von Kanzler Faymann zu werden (02.08.2014);

Homepage Kurier: „Den kann ich mir als Bundeskanzler vorstellen“ (27.09.2014); Homepage Kurier: So angezählt

ist Werner Faymann (29.11.2014) 436 cf. Homepage Format: Die Hochburgen des Proporzes (11.06.2012); Homepage Die Presse: Wie sich SPÖ und

ÖVP das Land teilen (24.07.2013) 437 cf. Homepage Parlament Republik Österreich: Mag. Brigitte Ederer 438 Ibid. 439 cf. Homepage Parlament Republik Österreich: Mag. Brigitte Ederer; Homepage Der Standard: Brigitte Ederer

wird ÖBB-Aufsichtsratschefin (10.09.2014)


49

The already retired former director of the Upper Austrian Raiffeisen Landesbank440 Ludwig

Scharinger holds the position as vice-chairman of the Supervisory Board since 2012 and is known

for being close to Ederer’s predecessor Horst Pöchhacker.441 Despite the circumstance that he has

resigned from his positions in the Upper Austrian Raiffeisen Landesbank and Hypo Alpe Adria

Bank, he kept the position within the ÖBB Holding Group Supervisory Board.442 His career has

caught a lot of media attention; most recently again due to reviving investigations on bribery in

case of the building of the Terminal Tower in Linz in 2008 and subsequent distributions of

rentals.443 He is one of 28 accused people, amongst them also the former Minister of Finance Karl-

Heinz Grasser and Horst Pöchhacker with whom Scharinger is accused to have made deals on

those companies renting offices within the Terminal Tower.444 Thus, since November 2014 it

seems that the whole investigations have to be re-started due to breakdowns within the Civil

Court.445

The second vice-chairman Herbert Kasser simultaneously holds the position as general secretary

at the Federal Ministry of Traffic, Innovation and Technology since 2007446 and furthermore, is

the responsible manager of the department for infrastructural planning and financing.447 He is

known for being close to Werner Faymann and therefore the Social Democratic Party.448 In addi-

tion to his position as second vice-chairman of the Supervisory Board at the ÖBB Holding Group,

he is vice-chairman at the Austrian ASFINAG449 which is discussed in more detail earlier within

this Thesis.

Additional members of the Supervisory Board, and appointed by capital representatives, are Kurt

Eder, Gertrude Tumpel-Gugerell, Leopold Specht and Paul Blumenthal.450 Kurt Eder is a member

of the Social Democratic Party and has been a member of the National Council from 1987 until

440 There is no official translation 441 cf. Homepage ÖBB Holding: Organe der ÖBB Holding AG; Homepage Der Standard: Linzer Bahnhofsturm: Ex-

Raiffeinsbanker Scharinger in Erklärungsnot (28.03.2014); Homepage Profil: Causa “Terminal Tower”: Justiz führt

neben Karl-Heinz Grasser 27 weitere Beschuldigte (14.04.2014) 442 cf. Homepage Wirtschaftsblatt: Ludwig Scharinger. Denkmal-Demontage auf Raten (02.04.2014); Homepage

Der Standard: Ludwig Scharinger kontrolliert wieder (09.07.2014) 443 cf. Homepage Der Standard: Linzer Bahnhofsturm: Ex-Raiffeinsbanker Scharinger in Erklärungsnot

(28.03.2014); Homepage Wirtschaftsblatt: Es wird eng für Scharinger (29.03.2014); Homepage Kurier: 28

Beschuldigte in Causa „Terminal Tower“ Linz (12.04.2014); Homepage Profil: Causa “Terminal Tower”: Justiz

führt neben Karl-Heinz Grasser 27 weitere Beschuldigte (14.04.2014) 444 Ibid. 445 cf. Homepage der Standard: Causen Buwog und Terminal Tower: Zurück an den Start (28.11.2014) 446 cf. Homepage Bundesministerium für Verkehr, Innovation und Technologie: Generalsekretär Herbert Kasser 447 cf. Homepage Bundesministerium für Verkehr, Innovation und Technologie: Herbert Kasser 448 cf. Homepage Der Standard: Faymann nominiert neuen Aufsichtsrat (05.04.2007); Homepage Die Presse:

Faymann holt sich einen Koordinator (28.02.2007) 449 cf. Homepage Bundesministerium für Verkehr, Innovation und Technologie: Generalsekretär Herbert Kasser;

Homepage ASFINAG: Aufsichtsrat 450 cf. Homepage ÖBB Holding: Organe der ÖBB Holding AG


50

2007.451 Gertrude Tumpel-Gugerell held the position as consultant of the Minister of Finance from

1981 to 1984 and is now working as financial consultant at the Austrian institute for economic

research.452 In addition to her position in the Supervisory Board of the ÖBB Holding Group, she

is a member of the Supervisory Boards of the Vienna Insurance Group, the bank Commerzbank

AG453, the Austrian Federal Research Agency454, the limited liability company Wien Holding

GmbH455 and FIMBAG456.457 Officially she is not a member of any political party; however, her

regular contact to the politician Doris Bures initiate connections to the Social Democratic Party.458

The member Leopold Specht is known for being close to the Social Democratic Party as well;

especially to the former Federal Chancellor Alfred Gusenbauer who appointed him into the

Supervisory Board position in 2007.459 Paul Blumenthal is known as former director of the Swiss

railway system and was appointed into the Supervisory Board by Doris Bures in 2010.460 However,

he is foremost known for his managerial career and not for political connections.

The third vice-chairman Roman Hebenstreit was appointed by the works council and is known for

his connections to the Social Democratic Party.461 Additional members appointed by the works

council are Andreas Martinsich, Gottfried Winkler and Günter Blumthaler.462 While Günter

Blumthaler is not officially connected to any political party, Andreas Martinsich and Gottfried

Winkler are related to the Social Democratic Party.463

The depiction of political connections of the members of the Management Board and Supervisory

Board of the ÖBB Holding Group show a clear tendency towards the Social Democratic Party;

mainly due to the fact that the majority of appointed people within the boards holds connections

to this party. The next part of the Thesis deals with an analysis of the organizational developments

within the corporation since the global economic crisis and subsequent phase of recession.

451 cf. Homepage Parlament Parlament Österreich: Kurt Eder 452 cf. Homepage WIFO: Lebenslauf Mag. Dr. Gertrude Tumpel-Gugerell 453 There is no official translation 454 Official translation for Österreichische Forschungsförderungsgesellschaft m.b.H.; FFG 455 There is no official translation 456 FIMBAG stands for Finanzmarktbeteiligungsgesellschaft des Bundes; There is no official translation 457 cf. Homepage WIFO: Lebenslauf Mag. Dr. Gertrude Tumpel-Gugerell 458 cf. Homepage Die Presse: SPÖ-Minister können ziemlich brutal sein (24.07.2012) 459 cf. Homepage Die Presse: Gusenbauers Mann in der Bundesbahn (11.01.2008) 460 cf. Homepage Die Presse: ÖVP zieht Aufsichtsräte aus ÖBB ab (26.05.2010); Homepage Die Presse: Doris

Bures, allein gegen alle (03.09.2010) 461 cf. Homepage ÖBB Holding: Organe der ÖBB Holding AG; Homepage SPÖ: Roman Hebenstreit 462 cf. Homepage ÖBB Holding: Organe der ÖBB Holding AG 463 cf. Homepage Rudi Kaske FSG vida: Mag. Andreas Martinsich; Homepage FSG vida: Gottfried Winkler


51


Similar to other public companies discussed within this Thesis, the global financial crisis and its

consequences did not pass the ÖBB Holding Group either. The overall transportation rate sank by

18.0% from 2008 to 2009.464 Moreover, the operative revenues decreased by 3.6% from around

5.0 billion euros in 2008 to 4.8 billion euros.465 However, the company’s EBIT enhanced signifi-

cantly from around 6.4 million euros to 313.6 million euros.466 Furthermore the free cash flow

shows a negative number of 2.8 billion euros; thus not a real difference to the year 2008 when it

was minus 2.1 billion euros.467 However, the annual result for 2009 shows a positive number of

115.9 million euros.468

In 2010, the consequences of decreasing transportation hit the company drastically. Despite the

fact that the operative revenues could be improved by around 6.0% to 5.1 billion euros, the EBIT

declined to 254.8 million euros and the annual result dropped to negative 338.0 million euros.469

Thus, the company managed to enhance the free cash flow from minus 2.8 billion euros to minus

1.9 billion euros which indicates a slight improvement of the liquidity; however, still in the nega-

tive area.470

According to the Management Board of the ÖBB Holding Group, the year 2011 marks the begin-

ning of a period of enhancement and growth for the company.471 Throughout the year, the corpo-

ration set on a course of restoration and refurbishment and could thereby enhance some of its

financial figures.472 The operative revenues, for instance, increased slightly from 5.1 billion euros

to 5.3 billion euros and the EBIT significantly improved by 32.8% to 593.2 million euros.473 The

annual result still shows a negative number in 2011; however, the company managed to consider-

ably improve it from minus 338.0 million euros to minus 35.2 million euros.474 The free cash flow,

also still negative, enhanced slightly to minus 1.3 billion euros.475

Throughout 2012, the company handled to, again, enhance its financial figures. Despite the fact

that the operative revenues increased only minor to 5.2 billion euros, the EBIT improved to

701.0 million euros and the annual result enhanced considerably from negative 35.2 million euros

464 cf. ÖBB Holding Geschäftsbericht (2009): 8 465 Ibid.: 122 466 Ibid. 467 Ibid.: 125 468 Ibid.: 123 469 cf. ÖBB Holding Geschäftsbericht (2010): 52f. 470 Ibid.: 55 471 cf. ÖBB Holding Geschäftsbericht (2011): 1 472 Ibid. 473 Ibid.: 64 474 Ibid.: 65 475 Ibid.: 67


52

to positive 85.7 million euros.476 The free cash flow stayed negative but improved to minus

969.0 million euros in 2012.477

The most recent annual report available is for the year 2013 and it shows that the company man-

aged to further enhance some of its financial figures. The operative revenues stayed at 5.2 billion

euros and the EBIT improved only minor to 755.0 million euros.478 Moreover, the annual result

enhanced from 85.7 million euros in 2012 to 101.9 million euros in 2013; thereby indicating a rise

of 18.9%.479 However, after its gradual improvement over the years, the free cash flow deteriorated

again to minus 1.3 billion euros which indicates a decline of 35.5%.

After the initial deterioration of the financial situation of the company right after the global finan-

cial crisis hit Austria, the ÖBB Holding Group attempted to manoeuvre through the subsequent

phase of recession by investing in growth and innovations in order to stimulate the railway traffic

and transportation again.480

The following section of the Thesis deals with the analysis of a company responsible for the man-

agement of the public nature in Austria.

6.2.4 Österreichische Bundesforste AG

The Austrian Federal Forestry Group481 ÖBf AG is responsible for Austria’s nature and therefore

the management, maintenance and protection of public natural habitats.482 This includes the man-

agement of forests and hunting, lakes and fishing as well as topics of renewable energy, natural

reserve management and consulting.483 ÖBf AG consequently represents the biggest counsellor in

the areas of natural reserves, forestry, hunting areas and fishery.484

6.2.4.1 Legal base

The roots of the entity trace back to the year 1925 when the law BGBl. Nr. 282/1925485 initiated

the establishment of the “Österreichische Bundesforsten” for the purpose of managing the public

natural properties.486 The regulation was amended in 1977 by the law Bundesgesetz vom

476 cf. ÖBB Holding Geschäftsbericht (2013): 92f. 477 Ibid.: 95 478 Ibid.: 92 479 Ibid.: 93 480 cf. ÖBB Holding Geschäftsbericht (2011): 1f.; ÖBB Holding Geschäftsbericht (2013): 3f. 481 Official translation for Österreichische Bundesforste AG 482 cf. Homepage Österreichische Bundesforste AG: Unternehmensprofil 483 cf. Homepage Österreichische Bundesforste AG 484 cf. Homepage Österreichische Bundesforste AG: Unternehmensprofil 485 There is no official translation 486 cf. BGBl. Nr. 610/1977 § 1(1)


53

17. November 1977 über den Wirtschaftskörper “Österreichische Bundesforste”487 which regu-

lated the establishment of an autonomous economic authority on the one hand and the transmission

of all properties stated within the law BGBl. Nr. 282/1925 to this authority on the other hand.488

This authority was under public control; i.e. calculated within the public budget, and henceforth

responsible for the management and administration of all forests, lakes and other natural properties

in the ownership of the state.489 However, in 1996 the government decided to demerge this part of

the public budget and re-organize the legal background of the authority into a public limited com-

pany; hence still under public control.490 Major reasons behind this decision were increasing in-

efficiencies, bad cost management and missing synergies which led to the need for a restructu-

ration of the company.491 The legal background of the Austrian Federal Forestry Group ÖBf AG

is therefore the law Bundesgesetz zur Neuordnung der Rechtsverhältnisse der Österreichischen

Bundesforste und Errichtung einer Aktiengesellschaft zur Fortführung des Betriebes “Öster-

reichische Bundesforste”, Bundesforstegesetz 1996, BGBl. Nr. 793/1996492 which consequently

manifests not only the establishment of the public limited company but also its tasks and duties.493

For the transmission of properties, the entity had to pay 100 million euros to the state until the end

of March 2005.494 Due to the fact that the company is still under public control, the Federal

Minister of Agriculture and Forestry embodies the official representative of the corporation and is

legally allowed to sell properties; however, only in accordance with the Federal Ministry of

Finance.495

6.2.4.2 Main tasks

Legally, the major tasks of ÖBf AG refer to the continuing of all responsibilities, duties and tasks

of the former “Österreichische Bundesforste”.496 Moreover, the company has to produce and uti-

lize the raw material wood in the most sustainable but also efficient way and take care of all lakes

and lakesides; i.e. their maintenance, the preservation of their ecological function, their protection

and preparation for people.497 Also legally regulated is the establishment of the two national parks

Donau-Auen and Kalkalpen which aims at their future protection and conservation.498

487 There is no official translation 488 cf. BGBl. Nr. 610/1977 § 1(1); (2) 489 Ibid. 490 cf. Homepage Österreichische Bundesforste AG: Rechtliche Grundlagen 491 cf. Homepage APA OTS: Molterer: Ausgegliederte Bundesforste sind Erfolgsgeschichte (24.10.2002) 492 There is no official translation 493 cf. BGBl. Nr. 793/1996 § 1(1) 494 cf. BGBl. Nr. 793/1996 § 2(2b) 495 cf. BGBl. Nr. 793/1996 § 4(4) 496 cf. BGBl. Nr. 793/1996 § 4(1) 497 cf. BGBl. Nr. 793/1996 § 4(2); (5) 498 cf. BGBl. Nr. 793/1996 § 4(3)


54

The national park Donau-Auen is, according to the company ÖBf AG, heavily influenced by

earlier developments such as the construction of gas pipelines, electric lines, agricultural areas,

routes and little bridges and consequently traffic.499 The major task of the company is therefore to

reduce the negative influences and simultaneously protect the natural habitat, its plants and

animals.500 This includes the management and protection of over 3,300 hectare of forest, over

500 hectare of meadow and over 1,200 hectare of fishery; 70% of it declared as sanctuary.501 In

addition to this, the entity is responsible for the maintenance of the castle Schloss Eckartsau502 and

its surrounding areas of over 27 hectare.503 The national park is open for guided tourism which

means that ÖBf AG employees organise tours and excursions as well as preserve bicycle and

hiking trails.504

Regarding the national park Kalkalpen, the company ÖBf AG has declared specific goals and tasks

that have to be accomplished. One refers to nature conservation projects which help in implement-

ing concrete measures to protect rare animals and trees.505 Connected to this is the task of combat

against the bark beetle which developed into a plague and consequently significant problem in

forests.506 This, indeed, represents an intervention into the natural developments within the na-

tional park; however, the company declares the need for certain regulations in order to maintain

the positive development of the habitats.507 This regulation also refers to the hunting of deer, roe

deer and chamois and hence in general the control of hoofed game.508 Similar to the national park

Donau-Auen, the national park Kalkalpen is also open for restricted tourism. There are over

220 kilometres of forestry streets which can be used as mountain bike trails, over 100 kilometres

of horse riding trails and several theme trails and wildlife watching platforms.509

In addition to the two natural parks, ÖBf AG is a partner in the management of the biosphere park

Wienerwald which represents a platform for education, research and development.510 It is conse-

quently open for visitors and an important partner in school projects, monitoring efforts and the

research on topics such as climate change, environmental issues and species extinction.511

499 cf. Homepage Österreichische Bundesforste AG: Nationalpark Donau-Auen. Unsere Aufgaben 500 Ibid. 501 Ibid. 502 There is no official translation 503 cf. Homepage Österreichische Bundesforste AG: Nationalpark Donau-Auen. Unsere Aufgaben 504 Ibid. 505 cf. Homepage Österreichische Bundesforste AG: Nationalpark Kalkalpen. Unsere Aufgaben 506 Ibid. 507 cf. Homepage Österreichische Bundesforste AG: Nationalpark Donau-Auen. Unsere Aufgaben; Nationalpark

Kalkalpen. Unsere Aufgaben 508 cf. Homepage Österreichische Bundesforste AG: Nationalpark Kalkalpen. Unsere Aufgaben 509 Ibid. 510 cf. Homepage Österreichische Bundesforste AG: Biosphärenpark Wienerwald. Unsere Aufgaben 511 Ibid.


55

As already indicated before, and within the law BGBl. 793/1996, one of the major tasks of the

company refers to the harvest and sale of wood.512 The company thereby also provides its service

of harvesting wood for private companies in Austria and abroad.513 80% of the sold wood refers

to coniferous wood, the other 20% to deciduous wood.514 The sale of wood is not only accom-

plished in person or via the phone, but also via an established B2B online platform where interested

parties can take part in an auction process.515

Another important task refers to the control of hoofed game and consequently hunting.516 ÖBf AG

is thereby responsible for the preservation of hunting areas, the balance of phases of hunting and

recreation as well as the control of animals hunted.517 Similar to this, the enterprise takes respon-

sibility over the fishery; by this means mainly referring to those 74 lakes and 2,000 kilometres of

rivers which are under public control and where fishing is allowed.518 Both hunting and fishing

inhibit the concept of sustainability and the philosophy that only an amount that can be recreated

can be retrieved.519 The responsibility over lakes also refers to the management and cultivation of

its shores by the establishment of bathing places, the leasing out of footbridges and anchorages

and attraction of tourists.520

In addition to the core tasks of wood, hunting and fishing, the company is one of the biggest Aus-

trian service providers in the area of forestry. Its portfolio includes, for example, the sustainable

forest management for private and municipal forests throughout Austria.521 This management also

contains the sustainable harvest of wood as well as its further commercialization, the cooperation

in unique part areas and the organization and management of other forestry companies.522

Moreover, the corporation offers forestry consulting which refers to the cartographic depiction of

forests, the planning of measures and a continuous inventory sampling procedure.523 Another im-

portant task applies to the sustainable forest management and therefore the planned construction

within forests.524 The company currently works on over 60 projects that have the goal of realising

ecologically and sustainably built trails, bridges and streets in difficult-to-access areas.525 This is

512 cf. Homepage Österreichische Bundesforste AG: Holz 513 cf. Homepage Österreichische Bundesforste AG: Holzernte 514 cf. Homepage Österreichische Bundesforste AG: Holzverkauf 515 cf. Homepage Österreichische Bundesforste AG: Holzauktionen 516 cf. Homepage Österreichische Bundesforste AG: Jagd 517 Ibid. 518 cf. Homepage Österreichische Bundesforste AG: Fischerei 519 cf. Homepage Österreichische Bundesforste AG: Jagd; Fischerei 520 cf. Homepage Österreichische Bundesforste AG: Seen 521 cf. Homepage Österreichische Bundesforste AG: Dienstleistungen. Waldbewirtschaftung 522 Ibid. 523 cf. Homepage Österreichische Bundesforste AG: Dienstleistungen. Forstliche Beratung 524 cf. Homepage Österreichische Bundesforste AG: Dienstleistungen. Forstliches Bauwesen 525 Ibid.


56

closely related to the core task of technical planning which refers to the principle that nature and

technique do not have to be counterparts but can be balanced in a sustainable and efficient way.526

According to ÖBf AG, hiking and mountain bike trails as well as theme trails and riding paths

have to be planned carefully and subsequently established in consistence with the surrounding

nature.527 Another service of the company refers to the cultivation and care of trees in settlement

areas; a task which also includes orchard registers and concepts of tree designs.528

Besides the job as a service provider, the company fulfils the task of natural resources manage-

ment; i.e. the cooperation with nature protection project initiators, the operation of ecological spon-

soring, the preservation of protective areas as well as the implementation of compensation and

renaturation measures.529 The entity moreover applies its know-how in the construction and

maintenance of forestry streets and trails530 and is responsible for over 4,200 real estates which are

leased out to interested parties.531 The task of consulting is the only one explained in English on

the homepage and basically refers to customers abroad who want to make use of the corporation’s

expertise and diversified experience.532 Based on the philosophy of sustainability, the company

also engages in the latest and most sustainable production of energy through water, wind, photo-

voltaics and forest biomass.533


The law BGBl. Nr. 793/1996 declares under paragraph ten that the company’s structure has to

include a Management Board and a Supervisory Board; the former needs to consist of two mem-

bers and the latter of six whereas three of them need to be appointed by the Federal Minister of

Agriculture and Forestry, one by the Federal Minister of Finance and two by the works council.534

The diverse portfolio and variety of tasks of the company indicate the need for a range of qualified

employees in addition to the management structure. According to the financial and sustainability

report of ÖBf AG, the company had an average of 2,916 employees in 2013.535 The report indicates

a steady reduction of employees since 2011; from 3,105 to 2,954 and thereafter

526 cf. Homepage Österreichische Bundesforste AG: Dienstleistungen. Technische Planung 527 Ibid. 528 cf. Homepage Österreichische Bundesforste AG: Dienstleistungen. Baumpflege / Baumkataster 529 cf. Homepage Österreichische Bundesforste AG: Naturraummanagement 530 cf. Homepage Österreichische Bundesforste AG: Straßenbau & Instandhaltung 531 cf. Homepage Österreichische Bundesforste AG: Immobilien 532 cf. Homepage Österreichische Bundesforste AG: Consulting 533 cf. Homepage Österreichische Bundesforste AG: Erneuerbare Energie 534 cf. BGBl. Nr. 793/1996 § 10(1); (2) 535 cf. Öbf AG: Kombinierter Geschäfts- und Nachhaltigkeitsbericht (2013): 31


57

2,916 employees.536 It can be assumed that the reduction of employees roots in the economic crisis

and its consequences; a circumstance analysed separately within section 6.2.4.5.


Despite the fact that the Austrian government continuously confirms the independence of Super-

visory Board members in public companies, the circumstance that four out of six members are

appointed by federal ministries indicates a close connection to politics. The chairman of the

Supervisory Board Werner Wutscher is not only known for his position as former top manager in

companies such as Agrana or Rewe, he is also a former Cabinet employee of the Federal Ministers

of Agriculture and Forestry Franz Fischler and Wilhlem Molterer; both of them representatives of

the People’s Party.537 He was appointed as chairman by the former Federal Minister of Agriculture

and Forestry.538 Similar to this, the vice-chairman of the Supervisory Board Michael Höllerer is

also connected to the People’s Party through his former job as general secretary at the Raiffeisen

Zentralbank and his relations to Maria Fekter; a representative of the People’s Party and former

Austrian Minister of Finance from the period of 2011 to 2013.539 Hence, his appointment as vice-

chairman was conducted by the Federal Minister of Finance. The other two members of the

Supervisory Board Michael Esterl and Maria Sauer were both appointed by the Federal Ministry

of Agriculture and Forestry and can be connected to the People’s Party as well.540 Michael Esterl

can be characterized as being close to the People’s Party primarily because of his former job as

office manager of the People’s Party parliamentary group and subsequent job as head of the

Federal Ministry of Agriculture and Forestry’s Office.541 Maria Sauer’s relations to the People’s

Party root in her job as director of the Upper Austrian Farmer’s Association.542

Consequently, all four Supervisory Board members appointed by Austrian ministries can be con-

nected to the People’s Party. The two members appointed by the works council, Josef

Reisenbichler and Lukas Stepanek both represent foresters and were assigned with the role of

worker’s representatives.543 Reisenbichler inhibits, amongst others, the positions as vice president

536 Ibid. 537 cf. Homepage Die Presse: Enttäuschte Hoffnungen: Minister für eine Stunde (14.12.2013) 538 cf. Homepage Österreichische Bundesforste AG: Management; Homepage APA-OTS: Werner Wutscher

Aufsichtsrat in der Kärntner Landesholding (11.08.2012) 539 cf. Homepage Die Presse: Proporz: Postenschacher in OeNB und FMA (07.01.2013) 540 cf. Homepage Österreichische Bundesforste AG: Management 541 cf. Homepage APA OTS: Landwirtschafts- und Umweltminister holt erfahrene Experten ins Ministerbüro

(16.12.2013) 542 cf. Homepage Bauern Zeitung: Nachhaltiges Wirtschaften prägt auch die Landschaft (05.02.2013); Homepage

OÖ Bauernbund: Präsidium 543 cf. Homepage Österreichische Bundesforste AG: Management


58

of the Upper Austrian Landarbeiterkammer544 and chairman of the trade union ÖGB545

Gmunden546 and can be characterized as closely connected to the Social Democratic Party.

Stepanek is already employed over 15 years at the company ÖBf AG and holds the continuous

position as forester and area manager.547 His close connections to Reisenbichler and their conjoint

engagement for the Austrian Foresters Association548 support the assumption of relations to the

Social Democratic Party; however, this cannot be clearly identified.

The Management Board consists of the two members Georg Erlacher as CEO and Georg Schöppl

as CFO; the first appointed in 2001 and the latter in 2007.549 Erlacher will resign his position as

CEO in March 2015 and, after three periods of management, not extend his contract again.550 As

already manifested within the law BGBl. Nr. 793/1996, the two Management Board members have

to be appointed by official tenders and should neither be appointed by federal ministries, nor con-

nected to political parties.551 Schöppl and Erlacher can therefore not be identified as having official

political connections.


According to ÖBf AG, the year 2009 was characterized by the consequences of the global eco-

nomic crisis which manifested for the company in a declining demand of wood and subsequently

deteriorating production in the wood industry.552 However, the shortages on the commodities mar-

ket evolved beneficial for the company by the end of 2009 as the company was able to increase

the prices for wood; thereby compensating negative numbers in other business areas.553 The oper-

ative revenues of the holding dropped by 13.6% from 257.5 million euros in 2008 to 222.6 million

euros in 2009.554 The EBIT worsened from 28.5 million euros in 2008 to 18.1 million euros in

2009; similar to the EBITDA which declined from 38.5 million euros to 28.3 million euros.555

However, the cash flow from operating activities decreased only slightly from 34.6 million euros

in 2008 to 33.8 million euros in 2009 and the company even managed to decrease its liabilities by

544 There is no official translation 545 ÖGB stands for Österreichischer Gewerkschaftsbund – There is no official translation 546 cf. Homepage Sozialdemokratische Partei Oberösterreich: Nationalratskandidat und ÖGB-Regionalvorsitzender

Josef Reisenbichler; Landesliste Josef Reisenbichler 547 cf. Homepage Der Standard: Ein naturverbundener Manager (18.05.2009) 548 cf. Homepage Verband Österreichischer Förster: Österreichische Försterzeitung 100. Jahrgang 2 (2012): 7 549 cf. Homepage Österreichische Bundesforste AG: Management 550 cf. Homepage Bauern Zeitung: Bundesforste: Erlacher zieht sich aus dem Vorstand zurück (29.09.2014); Wiener

Zeitung: Bundesforste suchen neues Vorstandsmitglied (29.09.2014) 551 cf. BGBl. Nr 793/1996 § 10(1) 552 cf. ÖBf AG: Kombinierter Geschäfts- und Nachhaltigkeitsbericht (2009): 19 553 Ibid. 554 Ibid. 555 Ibid.


59

eight million euros.556 Overall, the balance sheet total fell around 29.2 million euros to

414.5 million euros.557

In 2010, the company introduced a new sustainability Balanced Scorecard which aimed at the

depiction of three factors; namely the economy, the society and the nature.558 The concept of the

Balanced Scorecard was first introduced by Kaplan and Norton in 1992; the main question was

how to appropriately evaluate the performance of a company.559 The motivation behind the publi-

cation was therefore an overall dissatisfaction with the fact that the value of a company used to be

evaluated almost exclusively by means of financial measures; a circumstance that could lead an

entity into wrong decisions about the future performance.560 The authors were convinced that com-

panies want both; the presentation of financial as well as operational measures and consequently

designed the concept of the Balanced Scorecard which aims at the depiction of internal as well as

external and financial as well as non-financial measures.561 In this sense, ÖBf AG implemented

the depiction of those financial and operational measures that are important for the performance

of the company; sustainability and environmental friendliness thereby playing a major role due to

the business of the corporation.562 When having a look at the financial data provided in the report

2010, it can be retrieved that the company managed to hold its results and, except for the operative

revenues which further declined to around 210.0 million euros, not report any more decreases.563

The company itself stated that the economic situation for the wood industry improved slightly

during 2010 and through long-term contracts with lessees, the corporation was not affected by the

real estate crisis and could even manage to improve its course of growth.564 EBIT, EBITDA and

the cash flow of operational activities stayed on the same level as the previous year; thereby indi-

cating the ability of the company to counteract to the crisis by focusing on core competences.565

The company additionally managed to further decrease its liabilities by around 7.9 million

euros.566

556 Ibid. 557 Ibid. 558 cf. ÖBf AG: Kombinierter Geschäfts- und Nachhaltigkeitsbericht (2010): 6 559 cf. Kaplan, R. & Norton, D.: Using the Balanced Scorecard as a Strategic Management System. Harvard

Business Review, Vol. 85, Issue 7/8, (2007): 150 560 cf. Kaplan, R. & Norton, D.: The Balanced Scorecard – Measures that Drive Performance. Harvard Business

Review, January-February (1992): 71ff. 561 cf. Kaplan & Norton (1992): 71ff.; Amado, C. A. F., Santos, S. P. & Marques, P. M.: Integrating the Data

Envelopment Analysis and the Balanced Scorecard Approaches for Enhanced Performance Assessment (2012):

390ff. 562 cf. ÖBf AG: Kombinierter Geschäfts- und Nachhaltigkeitsbericht (2010): 6 563 Ibid.: 10 564 Ibid. 565 Ibid.: 11 566 Ibid.


60

In 2011, the entity declared its satisfaction with the developments within the wood industry; a

circumstance that can also be retrieved from its financial data. ÖBf AG managed to slightly in-

crease its operative revenues again from 209.9 million euros in 2010 to 213.7 million euros in

2011.567 Moreover, the EBIT increased from 18.1 million euros to 25.4 million euros; as well as

the EBITDA which increased from 28.7 million euros to around 36.0 million euros.568 The ampli-

fied earnings reflect the steadily enhancing production and demand of wood in 2011.569 However,

the combination of inventory built-ups and simultaneous usage of provisions connected to partic-

ipation risks, led to a heavy decline of the cash flow from operational activities from 32.1 million

euros in 2010 to 19.8 million euros in 2011.570 Also, the liabilities increased by 4.4 million euros.571

The year 2012 was, again, satisfactory for the company and it managed to improve the major

financial measures. The operative revenues increased by 6.2% from 213.7 million euros in 2011

to 226.9 million euros in 2012.572 Both the EBIT and the EBITDA improved again; the first from

25.4 million euros to 36.0 million euros and the latter from 36.0 million euros to 45.7 million

euros.573 Different to the previous year, the company handled to significantly augment its cash

flow from operational activities from 19.8 million euros in 2011 to 37.4 million euros in 2012.574

According to ÖBf AG, the major reason behind this augmentation lies in the very good business

development and performance of the company combined with an optimized management of obli-

gations.575 Moreover, the enterprise accomplished to decrease its liabilities from 140.3 million

euros to 109.9 million euros.576

The very positive trend could not be continued throughout the year 2013 and, even though the

company declares its satisfaction with the demand and business in general, the financial data mar-

ginally worsened again. The operative revenues improved only slightly from 226.9 million euros

to 227.5 million euros; thus, the EBIT decreased to 24.5 million euros and the EBITDA declined

to 32.3 million euros; the first representing a decline of 31.0% and the latter of 29.3%.577 The cash

flow from operational activities decreased from 37.4 million euros to 30.3 million euros; a fact

that roots in changes of tax provisions and the payment of income taxes.578

567 cf. ÖBf AG: Kombinierter Geschäfts- und Nachhaltigkeitsbericht (2011): 9 568 Ibid. 569 Ibid. 570 Ibid. 571 Ibid. 572 cf. ÖBf AG: Kombinierter Geschäfts- und Nachhaltigkeitsbericht (2012): 9 573 Ibid. 574 Ibid. 575 Ibid. 576 Ibid. 577 cf. ÖBf AG: Kombinierter Geschäfts- und Nachhaltigkeitsbericht (2013): 9 578 Ibid.


61

Overall, ÖBf AG, as one of only few, handled the crisis and subsequent phase of recession in a

way that the company did not have to report drastically worsened numbers. Decreases in major

financial and operational measures were compensated by the focus on core competences, the con-

centration on significant strategic instruments and appropriate market observation. These tactics

led to the fact that the company could already report amplified results in the year 2010; a year in

which, for most other companies, the consequences of the recession period started to hit them.

The following part deals with the depiction of one of the most important public Austrian compa-

nies; namely the industrial holding company Österreichische Industrieholding AG579 which is re-

sponsible for the public stakes management.

6.2.5 Österreichische Industrieholding AG

The industrial holding company ÖIAG is a public corporation in charge of managing the state-

owned participations and stakes in enterprises as well as privatization efforts for the public sector

of Austria.580 The purpose of the company is to act close to the economy and manage the stakes of

the Republic in an efficient way by adding value.581 Moreover, if the state decides to privatize

some of its stakes or whole organizations, the entity will be responsible for the act of planning and

implementing the appropriate steps.582

6.2.5.1 Legal base

The industrial holding company was initially based on the legal background ÖIG-Gesetz, BGBl.

Nr. 23/1967583 and subsequently amended through the law BGBl. Nr. 439/1984584 whereas both

of them represent the original legal background of the company.585 In 2000, the law ÖIAG-Gesetz

2000 BGBl. I Nr. 24/2000586 came into force which regulates the legal aspects of the company as

well as its connections to the Austrian Post Group and the Austrian organization Telekom-

beteiligungsverwaltungsgesellschaft587 in more detail.588 The company’s headquarter is located in

Vienna and its initial share capital was 363,365,000 euros separated into 5,000 shares.589 The law

determines not only the fact that the Austrian Minister of Finance is responsible for the owning

579 There is no official translation 580 cf. Homepage ÖIAG: Unternehmen 581 Ibid. 582 Ibid. 583 There is no official translation 584 There is no official translation 585 cf. ÖIAG Geschäftsbericht (2009): 36 586 There is no official translation 587 There is no official translation 588 cf. BGBl. I Nr. 24/2000 589 cf. BGBl. I Nr. 24/2000 § 1(1); (3)


62

rights of the state at the annual general meetings but also the amount and constituency of the

Supervisory Board which consists of 15 members.590 Ten out of 15 members need to be reputable

entrepreneurs and CEOs of commercial enterprises or people with a long-standing experience in

economic topics.591 Five members are appointed by the Austrian Federal Chamber of Labour and

include people that are members of the works council or staff association within an enterprise the

industrial holding company ÖIAG is directly or indirectly holding a stake in.592 All members need

to be elected and endorsed at the annual general meetings.593

6.2.5.2 Main tasks

The core tasks of the company refer to efforts of privatizations as well as the management of state-

owned participation rights.594 Moreover, the organization is responsible for the buying of stakes

and implementation of measures to manage them.595

The task of privatization management mainly aims at the partial or full privatization of public

stakes in companies the entity is responsible for as well as the appropriate implementation of this

act.596 An important aspect of privatizations is the repayment of debt and redemption of liabilities

of ÖIAG.597 Moreover, the partial or full privatizations aim at adding value to the organizations

privatized as well as the long-term securing of research and development capacities, high earnings

and the creation of work places.598 Privatization efforts by ÖIAG require the special order of the

Austrian federal government.599 However, within the current legislative period there is neither a

present order for privatizations, nor the attempt to privatize stakes in the near future.600

The duty of managing the participations of the state is handled under the aspect of Corporate

Governance which means to actively consider public interests and subsequently the securing of

work places and creation of value in order to ensure the importance of Austria as an attractive

business location.601 Of special importance thereby is the aspect of holding at least 25% and one

share to the voting share capital or contractual rights over third parties in order to guarantee the

590 cf. BGBl. I Nr. 24/2000 § 2; § 3 591 cf. BGBl. I Nr. 24/2000 § 4(1) 592 cf. BGBl. I Nr. 24/2000 § 5(1) 593 cf. BGBl. I Nr. 24/2000 § 4(3); §5(2) 594 cf. BGBl. I Nr. 24/2000 § 1(2) 595 Ibid. 596 cf. BGBl. I Nr. 24/2000 § 7(1) 597 cf. BGBl. I Nr. 24/2000 § 7(3) 598 cf. BGBl. I Nr. 24/2000 § 7(4) 599 cf. Homepage ÖIAG: Privatisierungsmanagement 600 Ibid. 601 cf. BGBl. I Nr. 24/2000 § 9(1); Homepage ÖIAG: Beteiligungsmanagement


63

influence of the industrial holding company in the long run.602 Moreover, the enterprise is entitled

to participate in capital increases in order to keep its stakes and influence.603


As already indicated before, the organizational structure of ÖIAG depicts as follows. The Super-

visory Board consists of 15 members; ten of them being reputable representatives of major com-

panies in Austria and five of them representing the workers.604 Until the end of 2014, the workers’

representatives within ÖIAG are people from the companies A1 Telekom Austria Group, Austrian

Post Group, OMV Group and OMV Refining and Marketing GmbH605; indeed, all of them com-

panies in which ÖIAG holds stakes in.606 The contemporary executive manager of ÖIAG is the

engineer Rudolf Kemler.607

ÖIAG is currently handling participations in eight companies which are depicted in the following

table 1. Those in which the enterprise manages 100% are portrayed in alphabetical order first.

Thereafter, those companies the entity holds only part of the shares are mentioned in descending

order. For the purpose of consistency, these organizations are described concisely afterwards.

ÖIAG stakes608

Organization Participation in %

FIMBAG Finanzmarktbeteiligung Aktiengesellschaft des Bundes609 100%

GKB Bergbau GmbH610 100%

IMIB Immobilien- und Industriebeteiligungen GmbH611 100%

Schoeller-Bleckmann GmbH612 100%

Austrian Post Group 52.85%

OMV Group 31.50%

APK Pensionskasse Aktiengesellschaft613 29.95%

Telekom Austria Group 28.42%

Table 1: ÖIAG stakes

602 cf. BGBl. I Nr. 24/2000 § 9(2) 603 cf. BGBl. I Nr. 24/2000 § 9(3) 604 cf. BGBl. I Nr. 24/2000 § 2; § 3; § 4(1); § 5(1) 605 There is no official translation 606 cf. Homepage ÖIAG: Aufsichtsrat 607 cf. Homepage ÖIAG: Vorstand 608 cf. Homepage ÖIAG: Beteiligungen 609 There is no official translation 610 There is no official translation 611 There is no official translation 612 There is no official translation 613 There is no official translation


64

The corporations FIMBAG, GKB, IMIB and Schoeller-Bleckmann GmbH are 100% owned by

ÖIAG. While IMIB is responsible for the handling of outstanding business units,614 FIMBAG is

responsible for measures of re-capitalization of Austrian insurance or credit institutions by the

state.615 Its legal background builds the law Finanzmarktstabilitätsgesetz BGBl. I Nr. 136/2008616

which regulates the state interventions and measures to stabilize the financial market.617 GKB is

in charge of the controlled withdraw of the Austrian mining industry and simultaneous reculti-

vation.618 The limited liability company Schoeller-Bleckmann GmbH is, after the privatization of

all major business areas, in charge of processing the rest activities within the management of envi-

ronmental components as well as real estates.619

The Austrian Post Group represents the leading logistics and mail provider in Austria and with

52.80% the industrial holding company ÖIAG possesses the major part of this entity.620

The OMV Group is the biggest industrial company in Austria and operates in the area of oil and

gas and therefore the long-term delivery of energy for Austria.621 After the free float of 43.30% of

shares, the industrial holding company ÖIAG holds the second biggest portion of the company

with 31.50%.622

The company APK was first established in 1989 as the first Austrian pension fund and until today

represents one of the leading pension funds in Austria.623

The telecommunications company Telekom Austria Group is currently operating in eight coun-

tries; in Austria with the provider A1.624 Again, ÖIAG holds with its 28.42% the second biggest

portion of the company after the free float of 48.81%.625


ÖIAG is managed by one director, namely Rudolf Kemler. He was appointed in 2012 and through

this position is, since then, also chairman of the Supervisory Boards in the companies OMV Group,

Telekom Austria Group and Austrian Post Group.626 His appointment traces back to Maria Fekter

614 cf. Homepage ÖIAG: IMIB Immobilien- und Industriebeteiligungen GmbH 615 cf. Homepage ÖIAG: FIMBAG – Finanzmarktbeteiligung Aktiengesellschaft des Bundes 616 There is no official translation 617 cf. BGBl. I Nr. 136/2008 618 cf. Homepage ÖIAG: GKB Bergbau GmbH 619 cf. Homepage ÖIAG: Schoeller-Bleckmann GmbH 620 cf. Homepage: Österreichische Post AG 621 cf. Homepage ÖIAG: OMV AG 622 Ibid. 623 cf. Homepage ÖIAG: APK 624 cf. Homepage ÖIAG: Telekom Austria AG 625 Ibid. 626 cf. Homepage ÖIAG: Vostand


65

who then held the position as Minister of Finance and represents a member of the People’s Party.627

However, by now, both the People’s Party and the Social Democratic Party are not satisfied with

Kemler’s performance and management so far.628 In 2013, the Telekom Austria Group lost

65 million euros in a SWAP-deal in which the company betted on rising interests while they

actually fell.629 The causa was barely communicated and in the Supervisory Board meeting not

presented as something urgent by Kemler.630 Another thing is the very expensive decision on the

early dismissals of the two OMV Management Board members Gerhard Roiss and Hans-Peter

Floren in 2014 who both have to leave the company by mid-2015 and therefore have to be paid

several million euros in compensation.631 The ÖIAG Supervisory Board has unilaterally decided

that Kemler has to leave ÖIAG after his official managing period in October 2015 and will not be

granted a two-year contractual extension.632 Chairman Siegfried Wolf additionally declared that if

the concept of reformation for the ÖIAG holding, which is discussed within the following para-

graph, is fixed earlier, a new managing director could be appointed even before that.633

Internal problems as well as the problems with the Management Board of the OMV Group, led to

increasing media presence in August and September 2014 and subsequently the demand from gov-

ernmental side to finally reform the structure of ÖIAG. In the year 2000, the government constel-

lation of the People’s Party and Freedom Party decided upon a self-perpetuating Supervisory

Board and therefore control medium.634 This indicates that if one member of the Supervisory

Board leaves, the other members are allowed to appoint his or her successor by themselves; a

system that initially aimed at making ÖIAG free from any political influence.635 Thus, over time

this system led to the circumstance that the Supervisory Board consisted of private friends and

those that relate to each other in business.636 Since late 2013 the coalition of the People’s Party

and Social Democratic Party tries to reform the structure of the entity and change the self-

perpetuating way of appointing the Supervisory Board; thereby ultimately aiming at gaining in-

creasing political control again.637 In addition to this, the current discussions about a new structure

627 cf. Homepage Die Presse: Politische Planspiele in der ÖIAG (14.02.2014) 628 Ibid. 629 cf. Homepage Der Standard: Telekom Austria-Aufsichtsrat kritisiert Intransparenz des Vorstandes (22.11.2013) 630 cf. Homepage Die Presse: Politische Planspiele in der ÖIAG (14.02.2014) 631 Ibid. 632 cf. Homepage Kurier: ÖIAG: Aus für Rudolf Kemler (22.10.2014) 633 cf. Homepage Wirtschaftsblatt: ÖIAG: Kemler-Vertrag endet mit 31. Oktober 2015 – oder noch früher, falls

Reform kommt (24.10.2014) 634 cf. Homepage Wiener Zeitung: ÖIAG-Reform droht in Sackgasse zu geraten (15.12.2014) 635 cf. Homepage Die Presse: Politische Planspiele in der ÖIAG (14.02.2014) 636 Ibid. 637 cf. Homepage Wirtschaftsblatt: ÖIAG-Reform zurück am Start – Ausgang offen (17.09.2014); Homepage Die

Presse: Analyse: ÖIAG-Reform spießt sich (14.12.2014); Homepage Wiener Zeitung: ÖIAG-Reform droht in

Sackgasse zu geraten (15.12.2014); Homepage Kurier: Koalition bringt Reform der ÖIAG nicht auf Schiene

(16.12.2014)


66

include speculations about the concept of the People’s Party which intends the complete restruc-

turation of the enterprise into two sections; one participation-holding and one infrastructure-

holding.638 While the first would include the already under ÖIAG control existing companies

OMV Group, Telekom Austria Group and Austrian Post Group, the latter would include new com-

panies like Verbund AG, ÖBf AG, Casinos Austria and the ARE part of BIG.639 Other speculations

even include the incorporation of ASFINAG or the rail network division of ÖBB; a circumstance

which the trade unions of both companies publicly stated against.640

In any case, the participants of the working group around a reformation of ÖIAG are the Federal

Chancellor Werner Faymann from the Social Democratic Party and the Vice-Federal Chancellor

Reinhold Mitterlehner from the People’s Party as well as the Minister of Finance Hans Jörg

Schelling and Minister of Justice Wolfgang Brandstätter; both of them representatives of the

People’s Party.641 In addition to the official political representatives, the director of the Austrian

Chamber of Labour Werner Muhm, the director of the Austrian Trade Union Erich Foglar, the

ÖBB president Brigitte Ederer and the industrialist Norbert Zimmermann participate in the refor-

mation discussions.642 Originally, the final reformation concept and subsequent restructuration

should be finished by the end of November 2014; however, according to the government, the work

on the reformation will take longer.643


Due to the fact that the company is 100% state-owned and responsible for the management of the

shares of the Republic of Austria in other companies, for example the Austrian Post Group, the

OMV Group or the Telekom Austria Group, its annual report is separated into an overall financial

statement as well as individual financial statements for each participation.644 Based on the circum-

stance that the companies Austrian Post Group, OMV Group and Telekom Austria Group are an-

alysed separately within this Thesis, a closer look is taken at their individual annual reports within

their sections and is therefore not depicted further within this ÖIAG section.

Similar to other companies examined within this Thesis, the global economic crisis hit the entity

in 2009 and consequently the income statement shows a decline in operative revenues from around

638 cf. Homepage Die Presse: Analyse: ÖIAG-Reform spießt sich (14.12.2014); 639 Ibid. 640 cf. Homepage Wiener Zeitung: ÖIAG-Reform droht in Sackgasse zu geraten (15.12.2014); Homepage Kurier:

Koalition bringt Reform der ÖIAG nicht auf Schiene (16.12.2014) 641 Ibid. 642 Ibid. 643 cf. Homepage Industriemagazin: ÖIAG neu – Reform-Arbeitsgruppe hat bis Ende November Zeit (16.10.2014);

Homepage Kurier: Koalition bringt Reform der ÖIAG nicht auf Schiene (16.12.2014) 644 cf. ÖIAG Geschäftsbericht (2009-2013)


67

29,000 euros to 28,000 euros.645 Moreover, the net profit reduced drastically from over 573 million

euros in 2008 to only 367 million euros in 2009; a decline of almost 36.0%.646

The recession hit the company in 2010 when the operative revenues declined from around

28,000 euros to around 9,000 euros; a reduction of 67.8%.647 However, through the dissolution of

capital reserves and retained and carried forward profits from 2009, the enterprise was able to

slightly increase its net profit from around 367 million euros to over 406 million euros.648

The economic situation generally worsened throughout 2011 as the year was characterized by

financial insecurities and rating disasters.649 It was the year when the European Union decided

upon the ESM650 as successor of the in 2010 implemented European Financial Stability Facility.651

Despite the fact that Austria could increase its gross domestic product by 3.1%, the average in-

crease within the European Union zone was only 1.5%;652 thereby posing a challenging situation

on all companies acting in an international surrounding; like those companies ÖIAG holds signif-

icant stakes in. Moreover, the stock markets show significant negative tendencies during that time;

the ATX, for instance, fell around 35%.653 ÖIAG subsequently decided upon a capital increase

which was implemented in June 2011 and comprised of 27,272,727 shares for 27.5 euros each.654

The gained capital was ultimately reinvested in the preservation of 31.5% of shares in the OMV

Group which itself implemented a capital increase.655 Despite the fact that the Austrian Post Group

decided to reduce its dividends, the OMV Group and Telekom Austria Group slightly increased

theirs; thereby increasing the income from shareholdings a touch from 243,000 euros in 2010 to

over 247,000 euros in 2011.656 The company furthermore managed to increase its net profit from

406 million euros to over 458 million euros; however, it did not report any operative revenues for

the year 2011 which indicates a decline of around 8,000 euros to zero.657

Throughout the year 2012, the European Central Bank continued its course of expansion and kept

the key interest rate low.658 Economic activities within the European Union further decreased to

0.6%; however, Austria could, at the same time, increase its economic activities by 0.8% and the

645 cf. ÖIAG Geschäftsbericht (2009): 34 646 Ibid.: 35 647 cf. ÖIAG Geschäftsbericht (2010): 32 648 Ibid.: 33 649 cf. ÖIAG Geschäftsbericht (2011): 41 650 ESM stands for Europäischer Stabilitätsmechanismus 651 cf. ÖIAG Geschäftsbericht (2011): 40 652 Ibid.: 41 653 Ibid. 654 Ibid. 655 Ibid. 656 Ibid.: 51 657 Ibid.: 50f. 658 cf. ÖIAG Geschäftsbericht (2012): 42


68

ATX enhanced again by 27%.659 For ÖIAG, the income from shareholdings declined from around

247 million euros to around 224 million euros as well as the annual net profit which decreased

from 233 million euros to 211 million euros.660 However, through retained and carried forward

profits from 2011, the company managed to significantly enhance its net profit from around 458

million euros to almost 520 million euros.661 Again, the company did not report any operative

revenues.662

The latest annual report available is the year 2013; a time characterized by a weak economic re-

covery and a further increase of economic activities by 0.4% in Austria.663 However, in the Euro-

pean Union zone the economic activities further declined by 0.4% and unemployment rates stayed

high.664 Despite the fact that the income from shareholdings decreased again to 195 million euros,

the company managed to slightly increase its net profit to 552 million euros through retained and

carried forward profits from 2012.665 However, again ÖIAG does not report any operative

revenues.666

In addition to the financial developments within the company, the government attempts to restruc-

ture the enterprise since fall 2013; thus more intensively recently; a circumstance already discussed

within the previous section.

The subsequent part of the Thesis deals with the Austrian postal service Austrian Post Group and

consequently a company the entity ÖIAG holds a significant amount of shares in.

6.2.6 Österreichische Post AG

The Austrian Post Group667 is characterized as the leading logistics and mail delivery service in

Austria.668 It is responsible for the safe and universal supply of postal services to all Austrians;

thereby also considering conditions of fair competition.669

659 Ibid.: 43 660 Ibid.: 53 661 Ibid. 662 Ibid. 52 663 cf. ÖIAG Geschäftsbericht (2013): 44 664 Ibid. 665 Ibid.: 53 666 Ibid.: 52 667 Official translation for Österreichische Post AG 668 cf. Homepage Österreichische Post AG: Die Österreichische Post AG – Konzerninformationen 669 cf. BGBl. I Nr. 123/2009 § 1(1)


69

6.2.6.1 Legal base

The history of the post traces back to the year 1490 when the first standardised postal connection

was established in Europe.670 In 1887, the K.K. Post- und Telegraphenverwaltung671 represented

the responsible organization for postal and telecommunications services in Austria and it was not

until 100 years later that these two services separated.672 In 1996 the law Poststrukturgesetz673 was

amended and consequently transferred the public administration of the company into a public lim-

ited company which was named Post- und Telekom Austria AG (PTA AG)674.675 Its shares were

completely held by the public holding company Post und Telekommunikationsbeteiligungsver-

waltungsgesellschaft (PTBG)676 which represented a holding corporation in which the postal and

telecommunications part could co-exist under state-control.677 However, in 1998 both services

split and became individual businesses.678 Currently, the Austrian Post Group is based on the law

Bundesgesetz mit dem ein Postmarktgesetz erlassen wird und das KommAustria Gesetz geändert

wird, BGBl. I Nr. 123/2009679 which regulates the structure, tasks, duties and rights of the com-

pany.680 An essential part of the law is the postal secret which all former, actual and past employees

of the postal company have to guarantee.681

6.2.6.2 Main tasks

The prior task of the organization is the universal postal service; i.e. the nationwide basic supply

of postal services to affordable prices.682 This includes the collection, sorting, transportation and

delivery of mail up to two kilograms and parcels up to ten kilograms as well as the consignment

of valuables.683 However, this service does not include possible returns of mails or parcels as this

falls into the legal concern of sender and recipient and costs of returning articles need to be dis-

cussed and handled between those two.684 In addition, the service of postal delivery needs to be

accomplished within five work days nationwide; thereby excluding Saturdays.685

670 cf. Homepage Österreichische Post AG: Geschichte der Post 671 There is no official translation 672 cf. Homepage Telekom Austria Group: Geschichte 673 There is no official translation 674 There is no official translation 675 cf. Homepage Telekom Austria Group: Geschichte 676 There is no official translation 677 cf. Homepage Telekom Austria Group: Geschichte 678 Ibid. 679 There is no official translation 680 cf. BGBl. I Nr. 123/2009 681 cf. BGBl. I Nr. 123/2009 § 5(1); (2) 682 cf. BGBl. I Nr. 123/2009 § 6(1) 683 cf. BGBl. I Nr. 123/2009 § 6(2) 684 cf. BGBl I Nr. 123/2009 § 6(4) 685 cf. BGBl I Nr. 123/2009 § 10(1)


70

With the law BGBl I Nr. 123/2009 coming into force, the Austrian Post Group is determined as

the primary universal service for postal delivery in Austria.686 However, after five years, i.e. in

2014, the regulatory authority has to examine whether there are other companies that can provide

the same universal service at better conditions; e.g. for a better price which would decrease the

overall costs for this service.687

In addition to the universal service, the organization sees itself as the service provider of commu-

nication and information technology as well as data processing.688 This also includes the step-wise

adaptation to new developments, like the invention of the post card or the introduction of Express

Mail Service and subsequently the guarantee of up-to-date services for Austrian citizens.689

In addition to financial measures, a major part of the performance of the company consists of non-

financial criteria such as the satisfaction of customers, employees and other stakeholders.690 In

order to find out more about the concerns of the different stakeholder groups, the Austrian Post

Group, for the third time, held a stakeholder conference in 2013 and invited about 30 representa-

tives of different groups to discuss a variety of topics.691 With regard to this conference, the com-

pany thereafter published a materiality matrix which gives an overview over what is important to

stakeholders and the Austrian Post Group; especially where they overlap and where they differ in

their priorities.692 Topics which are considered to be very important for both sides are the avoid-

ance of waste, e-mobility, efficiencies in the areas of energy and costs, climate and health related

issues, the entity’s value and an increase in revenues.693 However, topics such as sponsorship in

cultural and sportive events, further acquisitions, retraining and the promotion of women as well

as multicultural issues play an important, but not very important role for both the stakeholders and

the company.694

In addition to this, the postal organization attempts to implement the strategic vision of sustaina-

bility and a Code of Conduct which determines, in a compulsory way, the ethical and legal aspects

on how employees of the Austrian Post Group are expected to act and interact on an internal as

well as external base.695 Values within this Code of Conduct include the appropriate treatment of

686 cf. BGBl I Nr. 123/2009 §12(1) 687 Ibid. 688 cf. Homepage Österreichische Post AG: Die Österreichische Post AG – Konzerninformationen 689 cf. Homepage Österreichische Post AG: Geschichte 690 cf. Homepage Österreichische Post AG: Nachhaltig in jeder Hinsicht 691 cf. Homepage Österreichische Post AG: Die wichtigsten Stakeholder 692 Ibid. 693 cf. Homepage Österreichische Post AG: Wesentlichkeitsmatrix 694 Ibid. 695 cf. Österreichische Post AG: Code of Conduct (2011): 2


71

customers, transparency, good communication and special rules applied in case of bribery, gifts,

donations and invitations.696


The postal organization is divided into the Supervisory Board and the Management Board.697 The

first currently consists of 12 members; four of them are appointed by the staff association.698 Due

to the fact that the Austrian state-owned ÖIAG holds the majority of shares, in more detail 52.8%,

the chairman of the Supervisory Board is the current CEO of ÖIAG; i.e. Rudolf Kemler.699 The

Management Board consists of four members; each of them being responsible for a different area

within the company.700 The contemporary CEO Georg Pölzl was appointed in 2009 and is in

charge of the overall strategic vision of the company, as well as the internal and external commu-

nication, risk management, corporate governance measures and online innovation management.701

The current CFO Walter Oblin was appointed in 2012 and is responsible for all financial aspects

of the organization as well as legal aspects connected to them.702 Since 2011 the company is

divided into two operative divisions, namely “Brief, Werbepost und Filialen”703 and “Paket und

Logistik”704 the first thereby representing the main generator of revenues and therefore the division

that works on continuous improvements.705 Since 2004 Walter Hitzinger is the director of the

division “Brief, Werbepost und Filialen” and since 2005 Peter Umundum is responsible for the

division “Paket und Logistik”.706

Before this, the company had a three-division-model which separated between the mail, parcel and

logistics services.707 However, the merger of the parcel and logistics department as well as the

fusion of the mail and branch network responsibilities led to the advantage of synergies and the

attempt to save costs.708 In 2013, the division “Brief, Werbepost und Filialen” generated revenues

of 1,510.8 million euros and the division “Paket und Logistik” of 857.3 million euros.709

696 Ibid.: 6 697 cf. Homepage Österreichische Post AG: Jahresbericht (2011): Die Österreichische Post im Überblick 698 cf. Homepage Österreichische Post AG: Die Österreichische Post AG – Konzerninformationen 699 Ibid. 700 Ibid. 701 cf. Homepage Österreichische Post AG: Unternehmensstruktur; Vorstand 702 Ibid. 703 There is no official translation 704 There is no official translation 705 cf. Homepage Österreichische Post AG: Jahresbericht (2011): Die Österreichische Post im Überblick 706 cf. Homepage Österreichische Post AG: Unternehmensstruktur; Vorstand 707 Ibid. 708 Ibid. 709 cf. Homepage Österreichische Post AG: Jahresbericht (2013): Die Österreichische Post im Überblick


72

The company holds multiple amounts of shares in a variety of subsidiaries; not only in Austria but

also in countries such as Bosnia-Herzegovina, Bulgaria, Croatia, Germany, Hungary, Montenegro,

Romania, Serbia, Slovakia and Turkey.710


The former T-Mobile manager Georg Pölzl was appointed as CEO of the Austrian Post Group in

2009 by the eight capital representatives; despite the fact that the four works council members

voted against him.711 He is known for having relations to the People’s Party; however, in compar-

ison to other possible managers, he is not directly identifiable with this party and therefore seen as

rather independent.712 Former managers of the Austrian Post Group used to be close to the Social

Democratic Party; however, in this case the party did not suggest any new manager for the period

of 2009 to 2014.713 It can be assumed that this is also related to the period of recession and conse-

quently difficult future lying ahead in the year 2009; in addition to the consequences of the crisis

and the upcoming recession period, the Austrian Post Group had to be prepared for the planned

post market liberalization in Austria in 2011.714

The contract of the CFO Walter Oblin was recently extended until 2018 due to declared good

performance throughout struggling past years.715 The Management Board member Walter Hitziger

was first appointed as a member in 2004 and subsequently took responsibility over the division

“Brief und Logistik” and in 2011 over the new merged division “Brief, Werbepost und Filialen”.716

Also since 2011, the division “Paket und Logistik” is carried out by the Management Board mem-

ber Peter Umundum who is part of the board since 2005.717 Both Hitziger and Umundum are in

charge of the quality and efficiency within their areas and consequently responsible for the future

development and growth of the entity.718 Similar to Pölzl, the other Management Board members

Oblin, Hitziger and Umundum cannot be related directly to any political party; a circumstance that

impedes the in-depth analysis of connections to Austrian political parties and their influence on

internal management tactics.719

710 cf. Homepage Österreichische Post AG: Ausgewählte Beteiligungen des Konzerns Österreichische Post 711 cf. Homepage Der Standard: Pölzl neuer Post-Chef (15.06.2009) 712 Ibid. 713 cf. Homepage Die Presse: Neuer Postchef: Der SPÖ gehen die Manager aus (15.06.2009); Homepage Der

Standard: Pölzl neuer Post-Chef (15.06.2009) 714 cf. Homepage Der Standard: Pölzl neuer Post-Chef (15.06.2009) 715 cf. Homepage APA OTS: Walter Oblin als Finanzvorstand der Post wiederbestellt (11.11.2014) 716 cf. Homepage Österreichische Post AG: Vorstand 717 Ibid. 718 Ibid. 719 cf. Homepage Die Presse: ÖIAG-Chef: „Steirerblut“ für die Österreichische Post (04.03.2011)


73

With regard to the Supervisory Board, the Austrian Post Group has declared its compliance with

the Corporate Governance Codex and its C-rule 53 which states that the members of the Supervi-

sory Board have to be independent in the sense that they are not family members of a Management

Board member, they are not part of the Supervisory Board for longer than 15 years, they are not

in the Management Board of another company and have not been part of audits of other companies

within the last three years.720 Moreover, the members are neither allowed to have business con-

nections to the company or its subsidiaries, nor is the company allowed to grant them any

credits.721 However, one has to recognize that the independence of members does not refer to con-

nection to political parties which indicates that it is not prohibited to be part of a political party

and simultaneously hold a position within the Supervisory Board of the Austrian Post Group. The

capital representatives are therefore all announced to be “independent”; however, due to the fact

that the state-owned ÖIAG holds the majority shares of the Austrian Post Group, the chairman of

the Supervisory Board is also the managing director of ÖIAG and therefore Rudolf Kemler.722 As

already indicated before within this Thesis, Kemler cannot be easily connected to any political

party; despite his connections to the Austrian industry and his leadership in the Viennese industrial

association.723 All other capital representatives cannot be connected directly to any political party.


In 2009 the effects of the global financial crisis also hit the Austrian Post Group. The Management

Board decided to increase efficiency and rationalization efforts by reducing the material expendi-

tures by about 30 million euros and cutting back around 20% of planned investments for the year

2009.724 In addition to this, the company aimed at saving costs by deciding not to expand or to

replace expiring contracts but rather make use of external partners.725 Thus, the organization in-

tended to save costs by keeping the collection and sorting but outsourcing the delivery of mails

and parcels through the integration of private organizations into its postal system.726 This change

concerned about 5% of the 11,000 employees and included 24 communities.727

720 cf. Homepage Österreichische Post AG: Aufsichtsrat 721 Ibid. 722 Ibid. 723 cf. Homepage Kurier: Rudolf Kemler neuer Chef der ÖIAG (07.09.2012) 724 cf. Homepage Österreichische Post AG: Pressearchiv: Hauptversammlung der Österreichischen Post AG

(06.05.2009) 725 cf. Homepage Österreichische Post AG: Post: Pressearchiv: Keine Kündigungen – 2009 wirtschaftlich

schwieriges Umfeld erzwingt Einstellstopp (14.05.2009) 726 cf. Homepage Österreichische Post AG: Pressearchiv: Freiwerdende Stellen werden in der Briefzustellung durch

Zustellpartner ausgeglichen (14.05.2009) 727 Ibid.


74

During the first months in 2009, the Austrian Post Group reported significant reductions in both

operative revenues and EBIT; the first declined by around 2.4% and the latter by around 4.3%.728

Moreover, the daily business of the company reduced due to the recession and its consequences

which manifested in a decline of 4.6% in business in the division “Brief”.729 The corporation fur-

thermore claims that the agreed wage increase of 3.7% in 2008 led to high costs and therefore

increasing problems in 2009.730 Nevertheless, the balance sheet of the Austrian Post Group in 2009

shows, compared to other public companies during the time of recession, a rather positive picture

of financial resources of 340.4 million euros and liabilities of only 143.8 million euros.731

In an attempt of restructuring the situation for its employees, the campaign “Postler zum

Bund”732was announced and intended to shift employees from the postal service to other public

service companies on a voluntary base; however, with the financial incentive of granting them a

one-time payment of 10,000 euros.733 The general director of the Austrian Post Group Rudolf

Jettmar furthermore announced the intention of sending hundreds of employees from the postal

service to the local police; thereby aiming at the possibility of creating a win-win situation for both

sides.734 After several weeks of testing this pilot project, the police reported its satisfaction and

more employees followed and were shifted from the postal service to the local police stations.735

The necessary educational background was provided by the Austrian Post Group.736 However, in

order to achieve the goals of increasing efficiencies by reducing costs, the Austrian Post Group

not only restructured its employees but also increased its efforts in the promotion and expansion

of the Post.Partner model which generally aims at the creation of synergies and new partner-

ships.737 Shops throughout Austria can increase their portfolio by partnering up with the Austrian

Post Group and offering postal services in addition to their usual products within their stores.738

The aim of Post.Partner is to create a win-win situation by saving costs on the side of the Austrian

Post Group as well as diversifying the offering and increasing the amount of customers on the side

728 cf. Homepage Österreichische Post AG: Pressearchiv: Österreichische Post AG: Schwieriges Marktumfeld 2009

durch schlechte Konjunkturlage (19.05.2009) 729 Ibid. 730 Ibid. 731 Ibid. 732 There is no official translation 733 cf. Rechnungshof: Personalmaßnahmen im Rahmen der Reorganisation der Österreichischen Post AG, Bericht

(2014/6): 285 734 cf. Homepage Österreichische Post AG: Pressearchiv: Postler zur Polizei: Post-Generaldirektor Jettmar sieht

Potential für mehr Übertritte (02.09.2009) 735 cf. Homepage Österreichische Post AG: Pressearchiv: „Post-Polizisten“ bald bundesweit im Einsatz (22.10.2009) 736 Ibid. 737 cf. Homepage Österreichische Post AG: Post.Partner; Rechnungshof: Österreichische Post Aktiengesellschaft –

Schließung von Postfilialen, Bericht (2011/12): 103ff. 738 Ibid.


75

of the shops.739 In 2009 the establishment of new partnerships and subsequent opening of new

Post.Partners all over Austria was heavily fostered by the management.740

The Austrian Post Group aims at a risk-averse strategy by attempting the lowest risk possible in

business and holding an equity ratio of around 40%, high accruals and no borrowing require-

ments.741 Nevertheless, the effects of the recession hit the company; a fact that can be retrieved

from its financial statements and balance sheets. While the operative revenues increased by 5.4%

from 2007 to 2008742 they declined by 3.5% in 2009.743 Moreover, the EBIT rose by 4.1% from

2007 to 2008744 but decreased heavily by 11.9% in 2009.745

The subsequent years were characterized by significant developments within the postal and logis-

tics market such as the planned market liberalization in 2011 and the increasing use of electronic

mailing instead of letters.746 Moreover, the internationalization of commercial streams as well as

the increasing possibilities to shop online brought both challenges and opportunities for the Aus-

trian Post Group.747 In order to react to new tendencies and different customer expectations while

simultaneously conquering the effects of the recession, the company decided to install an online

portal, simplify its offerings, reduce complexity, increase availability and protect customer

privacy.748 These attempts were built on four strategic pillars; namely the defence of its core com-

petences, the growth in defined markets, the increasing efficiency and flexibility in its cost struc-

ture as well as innovations and customer orientation.749 In addition to this, the Austrian Post Group

intensively focused on the further expansion of its Post.Partner model which aimed at the instal-

ment of one Post.Partner in each Austrian community.750 This goal aligned with the strategy of

gradually focusing on the customers’ needs and demands in a more flexible way.751 In April 2010,

the company reported 1,752 post offices; 1,125 self-operated and 627 operated by partners.752 In

order to achieve the goal of saving costs, the organization aimed at redesigning the structure of the

739 Ibid. 740 cf. Homepage Österreichische Post AG: Pressearchiv: 34 neue Post.Partner starten in dieser Woche (06.07.2009);

Rechnungshof: Österreichische Post Aktiengesellschaft – Schließung von Postfilialen, Bericht (2011/12): 103ff. 741 cf. Österreichische Post AG: Österreichische Post Geschäftsjahr 2008, Investorenpräsentation (2009): 13f. 742 Ibid.: 10 743 cf. Homepage Österreichische Post AG: Pressearchiv: Österreichische Post AG Geschäftsjahr 2009 (16.03.2010) 744 cf. Österreichische Post AG: Österreichische Post Geschäftsjahr 2008, Investorenpräsentation (2009): 10 745 cf. Homepage Österreichische Post AG: Pressearchiv: Österreichische Post AG Geschäftsjahr 2009 (16.03.2010) 746 cf. Homepage Österreichische Post AG: Pressearchiv: Post will mittelfristig wieder wachsen und setzt

Konzernumbau konsequent fort (18.02.2010) 747 Ibid. 748 Ibid. 749 Ibid. 750 cf. Homepage Österreichische Post AG: Pressearchiv: Mehr Post für Österreich (25.01.2010) 751 cf. Homepage Österreichische Post AG: Pressearchiv: Mehr Post für Österreich (25.01.2010); Rechnungshof:

Österreichische Post Aktiengesellschaft – Schließung von Postfilialen, Bericht (2011/12): 103ff. 752 Ibid.


76

post offices by striving to close those self-operated offices which involved losses and replace them

with new partners.753 As a result, the company reported an increase of 0.3% in operative revenues

and an increase of 5.0% in EBIT by the end of 2010.754

In 2011 the Austrian Post Group opened up the prototype of a post office that included a bank in

Innsbruck and hence represented the new collaboration with the bank BAWAG P.S.K.755 which

aimed at the intensified cooperation between the banking and postal sector in Austria.756 The in-

tention behind this connection was not only to save costs and achieve synergies but also to bundle

competences and increase customer satisfaction by offering a professional and comprehensive

service in addition to longer opening hours.757 Besides, the company decided to save costs by

making use of synergies and internally reorganizing its divisions by reducing them from three to

two; namely “Brief, Werbepost und Filialen” and “Paket und Logistik”.758 Furthermore, the enter-

prise increased its sustainability attempts by introducing its concept of delivering mail and parcels

in e-cars, e-moped and e-bicycles in order to achieve the strategic goal of CO2-neutral delivery.759

The idea behind this is the fact that the company needs about 15 million litres of fuel and

180 million kilowatts energy each year which contribute not only to the cost structure of the

organization but also to its environmental balance.760 Moreover, its employees travel about

200,000 kilometres per day in order to deliver the mail and parcels to customers; an amount which

needs to be tackled appropriately according to the Austrian Post Group.761 As a result, the company

managed to increase its operative revenues and EBIT again in the year 2011; the first by 4.2% and

the latter by 7.3%.762

In addition to cost savings through changes in internal and external structures and partnerships,

the company gradually focused on its online presence and the development of online tools and

services for customers throughout the years 2011 and 2012.763 Examples include the information

of customers via e-mail and text message when their mail or parcel arrived as well as services such

753 Ibid. 754 cf. Homepage Österreichische Post AG: Pressearchiv: Österreichische Post 2010 (15.03.2011) 755 There is no official translation 756 cf. Homepage Österreichische Post AG: Pressearchiv: Offizielle Eröffnung der ersten Filiale neuen Typs von

BAWAG P.S.K. und Post in Innsbruck (13.01.2011) 757 Ibid. 758 cf. Homepage Österreichische Post AG: Pressearchiv: Aufsichtsrat stellt Weichen für zukunftsorientierte

Führungsstruktur (20.01.2011); cf. Homepage Österreichische Post AG: Pressearchiv: Nächster Schritt bei der

Neuausrichtung (01.09.2011) 759 cf. Homepage Österreichische Post AG: Pressearchiv: Die Österreichische Post nimmt die ersten E-Autos in

Betrieb (05.10.2011) 760 cf. Homepage Österreichische Post AG: Pressearchiv: Österreichische Post stellt CO2 neutral zu (07.07.2011) 761 Ibid. 762 cf. Homepage Österreichische Post AG: Pressearchiv: Österreichische Post 2011 (15.03.2012) 763 cf. Homepage Österreichische Post AG: Pressearchiv 2011; 2012


77

as online tracking, tariffs calculators and format templates for letters and parcels.764 Subsequently

the entity reported positive results for 2012; i.e. an increase in operative revenues of 0.7% and an

upsurge in EBIT of around 8.9%.765

Overall, the company managed to manoeuvre through the phase of recession by implementing cost

saving measures, using synergies, organizational restructuring attempts, collaborations and the

establishment of new partnerships through concepts like the Post.Partner model or the bank

alliance.766 However, the Austrian Audit Court indicates in its report that the Austrian Post Group

had only limited scope of activity due to the high dismissal protection of around 75% of its em-

ployees.767 Moreover, the report designates that the policy of sending employees in early retire-

ment throughout the years 2002 until 2011, the average age of retirement thereby being between

51 and 55 years, led to costs of around 39.3 million euros in 2012 and 2013.768 Criticism is raised

by the Austrian Audit Court that both the ÖIAG as owner of the Austrian Post Group as well as

its Management Board did not specify enough efforts to keep employees but rather focused on the

model of sending them into retirement early; a model which ultimately aims at the upheaval of

costs from the company to the state and will cost approximately 187.66 million euros more in the

years from 2014 until 2021.769 The report specifies that the average age of retirement for an

employee of the Austrian Post Group is 53.6 years while the average age of retirement of a usual

civil servant lies at 60.5 years and the legal retirement age at 65 years.770 The time between 53 years

and 65 years of a former Austrian Post Group employee costs the state around 450,000 euros.771

The Austrian Audit Court therefore recommends to implement stricter criteria for retirement;

especially early retirements.772 Moreover, quite contrary to the positive view of the Austrian Post

Group, the Austrian Audit Court sees the campaign “Postler zum Bund” and its subsequent

implications as verification needed and therefore recommends to check on whether there is an

actual need for those people in other public areas and how their tasks are designed.773 Indeed, the

764 cf. Homepage Österreichische Post AG: Pressearchiv: Post kündigt Paket-Zustellung per SMS und Mail an

(05.10.2011); cf. Homepage Österreichische Post AG: Über uns 765 cf. Homepage Österreichische Post AG: Pressearchiv: Österreichische Post 2012 (14.03.2013) 766 cf. Rechnungshof: Österreichische Post Aktiengesellschaft – Schließung von Postfilialen, Bericht (2011/12):

103ff.; Rechnungshof: Personalmaßnahmen im Rahmen der Reorganisation der Österreichischen Post AG, Bericht

(2014/6): 273ff. 767 cf. Rechnungshof: Personalmaßnahmen im Rahmen der Reorganisation der Österreichischen Post AG, Bericht

(2014/6): 275; cf. Homepage Österreichische Post AG: Pressearchiv: Klarstellung (14.05.2009) 768 Ibid.: 273; 279ff. 769 Ibid.: 281 770 Ibid.: 282 771 Ibid. 772 Ibid.: 358f. 773 Ibid.


78

company should attempt a collaboration with the Austrian Employment Service AMS in order to

prevent high unemployment rates in the near future.774

The subsequent section of the Thesis deals with the detailed analysis of the Austrian broadcasting

company ORF.

6.2.7 Österreichischer Rundfunk ORF

The Austrian foundation ORF is the biggest media company in Austria and fulfils the public order

of terrestrial broadcasting.775 It is responsible for the neutral public information about economic,

political and social topics through its established platforms.776 By now these platforms built a

broad media network and include not only TV but also radio channels and online platforms.777

6.2.7.1 Legal base

The legal background of the organization is the law Bundesgesetz über den Österreichischen

Rundfunk (ORF-Gesetz, ORF-G), BGBl. Nr. 379/1984778 which regulates not only the duties and

rights, but also the tasks, competitive aspects, control areas and structure of the organization.779

The media company represents a federal public law foundation with legal personality and is head-

quartered in Vienna.780

In 2010, the comprehensive amendment BGBl. I Nr. 50/2010781 of several laws such as the

Bundes-Verfassungsgesetz782, Komm-Austria-Gesetz783, Telekommunikationsgesetz 2003784,

Verwertungsgesellschaftengesetz 2006785, ORF-Gesetz, Privatfernsehgesetz786, Privatradioge-

setz787 and Exklusivrechtegesetz788 led to significant changes within the Austrian broadcasting

business.789 The company KommAustria790 was assigned with the legal control over ORF and its

subsidiaries thereafter.791

774 Ibid. 775 cf. BGBl. Nr. 379/1984 § 1; 2 776 cf. BGBl. Nr. 379/1984 § 4(1) 777 cf. Homepage ORF: Offenlegung 778 There is no official translation 779 cf. BGBl. Nr. 379/1984 780 cf. BGBl. Nr. 379/1984 § 1(1) 781 There is no official translation 782 There is no official translation 783 There is no official translation 784 There is no official translation 785 There is no official translation 786 There is no official translation 787 There is no official translation 788 There is no official translation 789 cf. BGBl. I Nr. 50/2010 790 There is no official translation 791 cf. Rundfunk & Telekom Regulierungs-GmbH: Österreichischer Rundfunk


79

6.2.7.2 Main tasks

The company is responsible for the distribution of contents via three Austrian-wide and nine pro-

vincial radio stations as well as two Austrian-wide television programmes.792 Its major tasks are

regulated in the law BGBl. Nr. 379/1984 and build the foundation of the behaviour of the people

employed there.793

The core task of ORF lies in the public service which manifests in the information of the Austrian

citizens about relevant topics in all areas; especially economic, political and social ones.794 More-

over, the company has to secure the understanding of democratic cohabitation and European inte-

gration.795 In addition to the fostering of public understanding and joint living, the foundation has

to consider a broad spectrum of interest groups; thereby mainly referring to people at all ages and

in all kinds of health conditions.796 The latter primarily denotes to the equal treatment of disabled

people and the promotion of their integration into the labour market.797 The appropriate public

information of the Austrian citizens, according to the law, also includes the information about

health, sports, nature, the environment and its protection as well as the principals of

sustainability.798 In addition to all these tasks, the law regulates that the media company has to

consider the importance of the legally recognized churches and religions.799

All these single tasks contribute to the overall mission of the company to pay attention to a diverse

design of its programmes; i.e. to offer the appropriate mixture of entertainment, information,

culture and sports for every Austrian citizen.800 Of special importance is the main evening pro-

gramme from 8pm to 10pm in which the law regulates the duty of broadcasting only sophisticated

content.801 According to the law, this should also contribute to the distinctiveness of the organiza-

tion compared to private and commercial broadcasting networks and consequently manifest the

quality of the transmitted contents.802 Besides, the responsible people and journalists employed at

the media company have the right of independence; thereby not only referring to the independent

media reporting but also to the independence of political influence and state intervention.803

792 cf. BGBl. Nr. 379/1984 § 3 (1) 793 cf. Homepage ORF: Der ORF 794 cf. BGBl. Nr. 379/1984 § 4 (1) 795 cf. BGBl. Nr. 379/1984 § 4 (2); (4) 796 cf. BGBl. Nr. 379/1984 § 4 (9); (10) 797 cf. BGBl. Nr. 379/1984 § 4 (10); (19) 798 cf. BGBl. Nr. 379/1984 § 4 (14); (15) 799 cf. BGBl. Nr. 379/1984 § 4 (12) 800 cf. BGBl. Nr. 379/1984 § 2 801 cf. BGBl. Nr. 379/1984 § 3 802 Ibid. 803 cf. BGBl. Nr. 379/1984 § 4 (6)


80

In addition to these tasks, connected to rights and duties within the broadcasting network, the law

regulates special orders concerning different areas of public interest. This includes the orders of

special interest channels within the areas of sports, culture, content relevant on a European level

and online offerings.804 Moreover, since 1996 the media organization is working closely together

with the Ministry of Education and Women and signed an Educational Media Agreement which

designates the transmission of knowledge in educational institutions for children and adults.805


The Austrian broadcasting organization ORF consists of three major institutions, namely the Foun-

dation Board806, the general director and the viewers’ and listeners’ council807 which, together,

form the management of the foundation.808

The members of the Foundation Board are appointed by a variety of people. Six of them are

appointed by the federal government under the consideration of the circumstance that each politi-

cal party has to be represented by at least one member in the Foundation Board.809 Nine members

are appointed by the provinces and nine again by the federal government.810 In addition to this, six

members are appointed by the viewers’ and listeners’ council and five by the works council which

aims at assigning people that have either the appropriate educational background or an outstanding

reputation among the Austrian society.811 The Foundation Board and its members have to act in

the sense of a Supervisory Board of a public limited company and therefore consider due diligence

and responsibility towards the foundation.812 Hence the board has to accomplish tasks such as the

supervision of the management, the approval of transmitted contents in accordance with the quality

system, the approval of contracts, the control of the annual financial statement, consulting duties

in case of problems and the approval of regulations concerning the programme designs and coor-

dination.813

When it comes to the general director of the organization, the Foundation Board has the task of

appointing this position and subsequently, with the advice of the appointed general director, the

further directors and provincial directors.814 The general director is appointed for the period of five

804 cf. BGBl. Nr. 379/1984 § 4(b); 4(c); 4(d); 4(e) 805 cf. Homepage ORF: Bildungsmedienabkommen ausgeweitet 806 Official translation for Stiftungsrat 807 Official translation for Publikumsrat 808 cf. BGBl. Nr. 379/1984 § 19(1); Homepage ORF: Der ORF 809 cf. BGBl. Nr. 379/1984 § 20(1) 810 Ibid. 811 Ibid. 812 cf. BGBl. Nr. 379/1984 § 20(2) 813 cf. BGBl. Nr. 379/1984 § 21(1); (2) 814 cf. Homepage ORF: Stiftungsrat


81

years and has to set general regulations for the design and coordination of the programmes on

television, radio and online platforms.815 Moreover, the position contains tasks of controlling other

directors, establishing long-term plans and visions in the areas of programmes, technic and finance

and contributing to the preservation of the quality system.816 The additional directors and

provincial directors are in their position for the same time period as the Foundation Board which

appointed them.817 They are hierarchically directly subordinated to the control of the general

director and each of them is responsible for the financial, economic and social aspects of the

television, radio and online programme within his or her area of concern.818 Table 2 provides a

brief overview over the current directors of the broadcasting company.

ORF management819

Name: Position / Area:

Dr. Alexander Wrabetz General Director

Directors

Name: Position:

Mag. Richard Grasl Commercial Director

Mag. Kathrin Zechner Television Director

Mag. Karl Amon Radio Director

Ing. Michael Gätzhaber Technical, Online and

New Media Director

Provincial directors

Karlheinz Papst Burgenland

Karin Bernhard Carinthia

Norbert Gollinger Lower Austria

Roland Brunhofer Salzburg

Gerhard Draxler Styria

Helmut Krieghofer Tyrol

Mag. Kurt Rammerstorfer Upper Austria

Dr. Brigitte Wolf Vienna

Markus Klement Vorarlberg

Table 2: ORF management

815 cf. BGBl. Nr. 379/1984 § 23(1); (2) 816 Ibid. 817 cf. BGBl. Nr. 379/1984 § 24(1) 818 cf. BGBl. Nr. 379/1984 § 25(1); (2) 819 cf. Homepage ORF: ORF-Geschäftsführung


82

In order to provide a brief overview over the ORF network, the following table 3 includes its seven

subsidiaries which are, for the purpose of completeness, described shortly thereafter.

ORF subsidiaries820

GIS Gebühren Info Service GmbH821

ORF-Enterprise GmbH & Co KG822

ORF Fernsehprogramm-Service GmbH823

ORF Marketing & Creation GmbH & Co KG824

ORF-Mediaservice GmbH & Co KG825

ORF Online und Teletext GmbH & Co KG826

ORS Österreichische Rundfunksender GmbH & Co KG827

Table 3: ORF subsidiaries

The limited liability company GIS Gebühren Info Service GmbH is 100% owned by ORF and

employs about 200 employees.828 Its overall task is the charging of fees for the use of the public

broadcasting service; however, the entity is furthermore responsible for the distribution of the fees

among the provinces as well as public relations work to increase the number of users as stated

within the Rundfunkgebührengesetz (RGG) BGBl. I Nr. 159/1999829 which represents its legal

background.830 The company ORF-Enterprise GmbH & Co KG is responsible for the selling of

advertising time in the networks of ORF; thereby mainly referring to radio and television adver-

tising.831 The subsidiary ORF Fernsehprogramm-Service GmbH is in charge of producing an offer

of information, entertainment and service that fits the needs of electronic distribution on a national

as well as international base.832 The company Marketing & Creation GmbH & Co KG is respon-

sible for the production of material which accompanies the usual media content such as, for exam-

ple, tickets for events prepared by the organization.833 The subsidiary ORF-Mediaservice GmbH

820 Homepage ORF: Offenlegung 821 There is no official translation 822 There is no offical translation 823 There is no official translation 824 There is no official translation 825 There is no official translation 826 There is no official translation 827 There is no official translation 828 cf. Homepage GIS: Impressum 829 There is no official translation 830 cf. BGBl. I Nr. 159/1999 § 4(1) 831 cf. Homepage ORF-Enterprise GmbH & Co KG: Impressum 832 cf. Homepage ORF III: Impressum Online-Angebot ORF III; ORF Fernsehprogramm-Service GmbH 833 cf. Homepage ORF Ticketservice: Impressum und Kontakt nach § 5 ECG; ORF Marketing & Creation GmbH &

Co KG


83

& Co KG is in charge of consulting those responsible for media and information technology.834

Similar to the subsidiary ORF Fernsehprogramm-Service GmbH, the company ORF Online und

Teletext GmbH & Co KG is responsible for the production of a national and international enter-

tainment, information and service offering which fits the needs of electronic distribution.835 The

last subsidiary ORS Österreichische Rundfunksender GmbH & Co KG is characterized as a service

company in the area of broadcasting and additional broadcasting services. It is, amongst others,

based on the BGBl. Nr. 379/1984 and a member of the Austrian Chamber of Commerce.836


The connections of ORF to the government are most prevalent through the ORF Foundation

Board837 which consists of 35 members and acts in the sense of a Supervisory Board and General

Assembly of a usual public limited company.838 Six of those members are appointed by the Aus-

trian federal government under consideration of the political parties currently sitting in the Aus-

trian National Council.839 At least one member of each party represented in the Austrian National

Council has to be appointed in the ORF Foundation Board; 840 thereby consequently representing

the political interests of the party. Additional nine members are appointed by the Austrian federal

government itself and another nine are selected by the nine Austrian provinces each.841 Six mem-

bers are appointed by the ORF viewers’ and listeners’ council and the remaining five are selected

by the central works council.842 The regular term of office for the Foundation Board is four

years.843

The current members of the ORF Foundation Board and their political connections can be depicted

as follows. In May 2014 the chairwoman Brigitte Kulovits-Rupp was replaced by Dietmar

Hoscher. 844 Politically, this did not lead to any changes as both of them are known for being part

of the Social Democratic Party.845 Similar to Hoscher, the re-appointed vice-chairman Franz

Medwenitsch was chosen by the Austrian federal government; thus, he does not show any official

834 cf. Homepage ORF Mediaservice: Impressum 835 cf. Homepage ORF: Offenlegung 836 cf. Homepage Österreichische Rundfunksender GmbH & Co KG: Impressum 837 Official translation for ORF Stiftungsrat 838 cf. Homepage ORF Kundendienst: Stiftungsrat 839 cf. BGBl. Nr. 379/1984 § 20(1) 840 Ibid. 841 Ibid. 842 cf. BGBl. Nr. 379/1984 § 20(1) 843 cf. BGBl. Nr. 379/1984 § 20(4) 844 cf. Homepage ORF Kundendienst: ORF: Konstituierung des Stiftungsrats 845 cf. Homepage Der Standard: ORF-Chef Wrabetz hat „keine Wahrnehmungen“ über Vorgaben aus Parteien

(06.05.2014)


84

political connections.846 The member Thomas Zach was appointed by the Austrian federal gov-

ernment on proposal of the People’s Party, the member Norbert Steger on proposal of the Freedom

Party, the member Hans Peter Haselsteiner on proposal of the NEOS, Günter Leitold on proposal

of Team Stronach and Wilfried Embacher on proposal of the Green Party.847

The replacement of Brigitte Kulovits-Rupp by Dietmar Hoscher led to the resigning of Kulovits-

Rupp in the SP-“Freundeskreis”848.849 According to Kulovits-Rupp, the major reason behind the

resigning is the presentation of Hoscher as new chairman of the Foundation Board; a circumstance

which the former chairwoman cannot reproduce.850 Before his appointment, Dietmar Hoscher held

a variety of positions within the Social Democratic Party, amongst others, as Minister Secretary,

member of the Federal Council and member of the National Council.851 His connections to the

Social Democratic Party are, indeed, strong.

Thomas Zach is mainly known for his management function in the Austrian State Printing Office

which ended in 2013 and his collaboration with Christoph Ulmer with whom he founded the con-

sulting company Gradus Proximus Advisory.852 Since his appointment in the Foundation Board,

Zach is furthermore head of the ÖVP-“Freundeskreis”.853

The member Norbert Steger held a variety of positions within the Freedom Party over his lifetime.

He was party chairman, Austrian vice-chancellor and member of the Austrian Parliament.854 He is

furthermore known for having additional connections to members of the Social Democratic and

People’s Party and cached media attention in 2013 when he voted in favour of the re-appointment

of Wrabetz as general director; despite the order of Strache not to do so.855 The position in the

ORF Foundation Board is officially the last and only position the already over 70 years old Steger

holds for the Freedom Party.856

Hans Peter Haselsteiner is mainly known for his career in the company Strabag, his support in the

launch of the private railway Westbahn857 and his committment in arts.858 His political engagement

with the NEOS started with private investments in the new party and its medial presence and after

846 cf. Homepage ORF Kundendienst: ORF-Stiftungsrat: Die Mitglieder; ORF: Konstituierung des Stiftungsrats 847 cf. Homepage ORF Kundendienst: ORF-Stiftungsrat: Die Mitglieder 848 There is no official translation.

„Freundeskreis” stands for the unofficial name of the parliamentary groups within the Foundation Board. 849 cf. Homepage Kurier: Kulovits-Rupp verlässt SP-Freundeskreis (05.05.2014) 850 Ibid. 851 cf. Homepage Parlament Republik Österreich: Mag. Dietmar Hoscher 852 cf. Homepage Profil: Wie gedruckt (16.03.2013) 853 cf. Homepage OÖ Nachrichten: Zach übernimmt Leitung von ÖVP-„Freundeskreis“ (06.05.2014) 854 cf. Homepage Parlament Republik Österreich: Dr. Norbert Steger 855 cf. Homepage Profil: Norbert Steger: Wie der Ex-FPÖ-Obmann in der Partei umrührt (01.08.2013); Homepage

Kurier: FPÖ nominiert Norbert Steger erneut für den Stiftungsrat (18.03.2014) 856 Ibid. 857 There is no official translation 858 cf. Homepage Salzburger Nachrichten: Hans Peter Haselsteiner: Baulöwe mit Herz für Kunst (04.09.2014)


85

the entry of the party into the Austrian National Council, Haselsteiner was proposed as ORF Foun-

dation Board member; thereby continuously claiming the contradicting personal attempt to de-

politicize the media company ORF.859 The party and Haselsteiner recently faced heavy criticism

for defending the political course of striving for the legalization of marihuana and soft drugs in

Austria.860

The member Günter Leitold was chosen by Team Stronach after the initial appointment of Willy

Haslitzer, former ORF provincial director of Carnthia in the period from 2009 to 2011, failed due

to inconsistencies with the law.861 The law indicates that a possible member of the Foundation

Board is not allowed to inhibit the political position as Provincial Member of Parliament within

the past four years to date of his appointment.862 Haslitzer held the position of Substitute Provincial

Member of Parliament and even though discussions about whether the position as substitute and

not real Provincial Member of Parliament is an actual political position, this job led to the refusal

of appointing him into the ORF Foundation Board.863 Haslitzer, who expected more support from

Team Stronach, resigned from the party and subsequently went to the party Unabhängige Liste864

where he currently puts his effort in.865 His successor Leitold exhibits not as much media attention

and is basically known as investment banker for Capital Bank.866

Wilfried Embacher is a lawyer and since 2010 not only an appointed member of the ORF Foun-

dation Board but also partner in the lawyer company Ecker Embacher Neugschwendtner.867 So

far, there has not been much media attention about him and his political commitment to the Green

Party.

In addition to the members appointed by the parties within the Austrian National Council, the

Austrian federal government is in charge of appointing nine members into the Foundation Board.

One of them is the re-appointed vice-chairman Franz Medwenitsch who, as well as Franz Küberl,

does not exhibit any official connections to political parties and therefore acts independently.868

From the Social Democratic side, the members Andrea Brem, Rudolf Ertl and Andrea Schellner

859 Ibid. 860 cf. Homepage Kurier: Cannabis: Haselsteiner verteidigt Kurs der Neos (30.10.2014) 861 cf. Homepage ORF News: Haslitzer aus Team Stronach ausgetreten (05.04.2014) 862 cf. BGBl. Nr. 379/1984 § 20(3) 863 cf. Homepage Kleine Zeitung: Willy Haslitzer zum Stiftungsrat bestellt (28.03.2014); Homepage ORF: Haslitzer

darf nicht in den ORF-Stiftungsrat (01.04.2014) 864 There is no official translation 865 cf. Homepage ORF News: Haslitzer aus Team Stronach ausgetreten (05.04.2014); Homepage Kleine Zeitung:

Haslitzer will für Unabhängige Bürgermeister werden (20.10.2014) 866 cf. Homepage Der Standard: Bestätigt: Banker Leitold zieht für Team Stronach in den ORF-Stiftungsrat

(10.04.2014) 867 cf. Homepage Ecker Embacher Neugschwendtner: Mag. Wilfried Embacher 868 cf Homepage Die Presse: Die Neuen im ORF-Stiftungsrat stehen fest (23.04.2014)


86

were appointed.869 Also from the Social Democratic side, but not willing to take the position, was

the vice-director of the Medical University Vienna Karin Gutierrez-Lobos who also resigned from

the SP-“Freundeskreis”.870 Instead of Gutierrez-Lobos, the speaker of the Austrian Samaritan

Association Martina Vitek-Neumayer took the position.871 Despite the fact that the Austrian

Samaritan Association roots in the concept of social democracy, it officially declared its independ-

ence from any political party in 2012; thereby also including the Social Democratic Party and

referring to the associations Kinderfreunde872 and ASKÖ873 which, contrary to the Samaritan

Asscociation, are manifested in the statutes of the party.874 From the side of the People’s Party,

Herbert Fechter and Herwig Hösele were newly chosen; Rainer Rößlhuber was re-appointed.875

Furthermore, the ORF viewers’ and listeners’ council is responsible for the appointment of six

members into the Foundation Board.876 In 2014, the council’s members declined from 36 to 31

and the position of the chairman changed from Hans Preinfalk to Ilse Brandner-Radinger who

formerly held the position as vice-chairwoman and is known for being close to the Social Demo-

cratic Party.877 Four out of six members appointed by the viewers’ and listeners’ council are close

to the Social Democratic Party; namely Erich Fenninger, Willi Mernyi, Sigfried Meryn and

Daniela Zimmer.878 The remaining two appointed members Walter Marschitz and Petra Stolba are

connected to the People’s Party.879

Additional nine members are appointed by each of the Austrian provinces.880 The governor of the

province Vorarlberg Markus Wallner, who is a member of the People’s Party, appointed Alfred

Geismayr as a member of the Foundation Board.881 Geismayr is a business economist and lawyer

and known for being a partner of PricewaterhouseCoopers in Vorarlberg.882 For the province

Tyrol, Josef Resch was already appointed in 2011 when the former chosen member Helmut

Krieghofer resigned for the chance to apply as ORF provincial director.883 Both were appointed

869 Ibid. 870 cf. Homepage Die Presse: ORF-Stiftungsrat: SPÖ-„Freundeskreis“ verliert Leiterin (20.05.2014) 871 cf. Homepage OÖ Nachrichten: Personalrochade nach zwei Wochen im Stiftungsrat (20.05.2014) 872 There is no official translation 873 There is no official translation 874 cf. Salzburger Nachrichten: Auch Samariter verabschieden sich von SPÖ (14.09.2012); Homepage Der Standard:

Transparenzgesetz: Auch Samariter-Bund will nicht mehr Teil der SPÖ sein (14.09.2012) 875 cf Homepage Die Presse: Die Neuen im ORF-Stiftungsrat stehen fest (23.04.2014) 876 cf. BGBl. Nr. 379/1984 § 20(1) 877 cf. Homepage Die Presse: Die Neuen im ORF-Stiftungsrat stehen fest (23.04.2014) 878 Ibid. 879 Ibid. 880 cf. BGBl. Nr. 379/1984 § 20(1) 881 cf. Homepage Der Standard: Landeshauptmann und neuer Stiftungsrat „verkennen Aufgabe“ (14.03.2014) 882 Ibid. 883 cf. Homepage Der Standard: Josef Resch folgt Krieghofer im ORF-Stiftungsrat nach (09.09.2011)


87

by the Tyrolian governor Günther Platter who is a member of the People’s Party.884 In the province

Salzburg, the social democrat Wolfgang Wörter was followed by Matthias Limbeck who is known

for being close to the People’s Party.885 Since 2001 the province Upper Austria is represented

within the Foundation Board by Margit Hauft who was appointed for the new period starting in

2014 by Josef Pühringer; a member of the People’s Party.886 The representative for the province

Lower Austria is Alberich Klinger who was appointed by the governor of Lower Austria and mem-

ber of the People’s Party Erwin Pröll.887 For Vienna, the tourism director Norbert Kettner, who is

known for being close to the Social Democratic Party, was appointed in the Foundation Board.888

The province Burgenland is represented by Brigitte Kulovits-Rupp who is close to the Social Dem-

ocratic Party and has already been described before.889 She held the position as chairwoman of the

Foundation Board and after her replacement resigned from the SP-“Freundeskreis”.890 The prov-

ince Carinthia is represented by Siggi Neuschitzer who was initially appointed by the party BZÖ

and has been re-appointed by the Social Democratic governor of Carinthia Peter Kaiser in 2014.891

The appointments of the nine provinces show a mixture of people related to the Social Democratic

Party as well as People’s Party, even though some of the representatives are not officially con-

nected to political parties.

The remaining five members are appointed by the central works council.892 In comparison to other

public companies, where about half of the Supervisory Board members are appointed by the works

council, the circumstance that only five out of 35 members of the Foundation Board are selected

by the works council shows a rather vague connection to the workers. However, the media com-

pany ORF does not officially have a Supervisory Board and compensates this by the Foundation

Board. It can therefore be assumed that this is one reason, amongst others, why the constitution of

the board members is different to usual Supervisory Boards. Overall, the political presence and

also dominance within this company is apparent; both officially and unofficially. On the one hand,

the appointment of political representatives as arranged within the actual National Council into the

Foundation Board is legally manifested in the law BGBl. Nr. 379/1984; on the other hand, the

unofficial nomination of political representatives happens through the appointment of provincial

884 cf. Homepage Amt der Tiroler Landesregierung: Landeshauptmann Günther Platter 885 cf. Homepage ORF News: Limbeck folgt Wörter als ORF-Stiftungsrat (15.11.2013) 886 cf. Homepage Bezirksrundschau: Margit Hauft bleibt im ORF-Stiftungsrat (2014) 887 cf. Homepage Amt der NÖ Landesregierung: Dr. Erwin Pröll Landeshauptmann, ÖVP; Homepage ORF: ORF-

Stiftungsrat: Die Mitglieder 888 cf. Homepage Kurier: ORF-Stiftungsrat „ermattet“ (11.12.2013) 889 cf. Homepage ORF: ORF-Stiftungsrat: Die Mitglieder 890 cf. Homepage Kurier: Kulovits-Rupp verlässt Sp-Freundeskreis (05.05.2014) 891 cf. Homepage Der Standard: ORF-Stiftungsrat: Neuschitzer sichert Landeshauptmann Kaiser Solidarität zu

(06.05.2014) 892 cf. BGBl. Nr. 379/1984 § 20(1)


88

governors and representatives of the federal government; both sides characterized by political

structures.


The year 2008 marks the beginning of a period of necessary cost savings and the establishment of

actions and measures to accomplish them.893 Already in 2007 the company faced troubles due to

declining viewer rates, the need to set-off a variety of television series and subsequently a de-

creasing market share; the attempt to reform the programmes failed and general director Wrabetz

was confronted with new challenges.894 In addition to this, the organization faced severe competi-

tion from new media like YouTube, online movie portals, private podcast offerings and video-on-

demand offerings which can be transmitted via telephone lines.895 In October 2008 the company

searched for a new mission by the attempt to combine the new Web 2.0 technology with its clas-

sical tasks of radio and television programmes while at the same time having to deal with an op-

erative loss of around 60.5 million euros.896 In competition with private and commercial television

programmes, ORF was confronted with huge criticism when adapting their programme by in-

tegrating an increasing amount of US-based commercial series throughout 2009.897 Despite the

crisis and declining viewer rates for the previously designed programmes in 2007 and 2008, the

public criticised the company for not having a clear strategy and having to re-focus on its core

competences which, especially but not exclusively, also include its statutory obligation.898 More-

over, associations and representatives of the Austrian filming industry heavily criticised the cor-

poration for not sending enough Austrian material but rather series and programmes from

abroad.899

When it comes to the effects of the Great Recession, the report of the Austrian Audit Court in the

year 2012 indicates that the organization has accomplished to react accordingly by attempting to

save costs through decreasing the number of employees by 9.9% in the period from 2008 until

2011.900 This manifests in a reduction of about 700 employees.901 In the same time period the

foundation reduced its wage supplements by around 28.6% and between 2010 and 2011 it managed

893 cf. Homepage ORF Kundendienst: ORF-Stiftungsrat: ORF bilanziert zum vierten Mal in Folge positiv (n.d.) 894 cf. Homepage News: Reform der ORF-Reform kommt: Wrabetz spricht in NEWS exklusiv über neue Pläne!

(05.06.2007) 895 cf. Homepage Format: TV ist in der Krise. Und bekommt eine neue Chance (17.05.2007) 896 cf. Homepage Der Standard: Leidbild ORF sucht Leitbild (12.10.2008) 897 cf. Homepage Format: ORF ist am Weg zum Spartenkanal für US Serien (26.03.2009) 898 Ibid. 899 cf. Film Austria: Pressekonferenz: Die Krise des ORF und die massiven negativen Auswirkungen auf die

österreichische Filmwirtschaft (23.03.2009); Homepage Der Standard: Ö-Film und ORF-Krise: Den Kanzler beim

Wort nehmen (10.09.2009) 900 cf. Rechnungshof: Bericht Österreichischer Rundfunk; Follow-up-Überprüfung (2012): 449 901 cf. Homepage ORF: ORF-Stiftungsrat: ORF bilanziert zum vierten Mal in Folge positiv (n.d.)


89

to save around 22 million euros by changing the contractual service rights.902 The change of the

bonus system also contributed to cost savings. It implied that bonus payments in the future will

only be approved for goals that can realistically be reached and contribute in a positive way to the

overall organization in the long-run as well as consist of measurable components.903 Besides, regu-

lations for severance payments were reformed and those directors signing contracts for the period

from 2012 until 2016, for the first time, did not receive the offer of severance payments after the

end of their period.904 This regulation roots in the new principle of only receiving something if

there is an appropriate consideration involved.905

In addition to cost savings, the organization intended to flatten its hierarchical structure by reduc-

ing the organizational levels from five to four; thereby re-structuring the responsibilities and short-

ening the decision-making procedures.906 As a result, it managed to accomplish its economic goals

and achieve a positive balance sheet four years in a row for the years 2010, 2011, 2012 and 2013.907

In consistency with the alphabetical order, the following part deals with the analysis of the OMV

Group as major Austrian enterprise where a significant amount of shares is held by the, already

depicted, public industrial holding company ÖIAG.

6.2.8 OMV AG

The OMV Group is the biggest publicly listed industrial corporation in Austria and specialized in

the extraction and commercialization of oil and gas.908 With over 27,000 employees in four core

business units, the company does business on a global level.909

6.2.8.1 Legal base

The company was initially founded in 1956 as so called Österreichische Mineralölverwaltung

Aktiengesellschaft (ÖMV AG)910 and since its establishment represents one of the most successful

industrial companies in Austria.911 In 1965 the law Übertragung der Anteilsrechte des Bundes an

der “Martha” Erdöl Gesellschaft m.b.H. und an der „ÖROP“ Handels-Aktiengesellschaft für öster-

reichische Rohölprodukte, BGBl. Nr. 194/1965912 manifested the transmission of shares from the

902 cf. Rechnungshof: Bericht Österreichischer Rundfunk; Follow-up-Überprüfung (2012): 455 903 Ibid.: 456 904 Ibid. 905 Ibid. 906 Ibid.: 451 907 cf. Homepage ORF: ORF-Stiftungsrat: ORF bilanziert zum vierten Mal in Folge positiv (n.d.) 908 cf. Homepage OMV AG: Über OMV 909 Ibid. 910 There is no official translation 911 cf. Homepage OMV AG: Geschichte 912 There is no official translation


90

two companies „Martha“ and „ÖROP“ to the public limited company Österreichische Miner-

alölverwaltung Aktiengesellschaft.913 The years thereafter were characterized by several openings

of gas pipelines and beginning internationalization.914 In 1987 the company decided to partly pri-

vatize for the first time and started the emission of 15% of its share capital.915 It was already in

1989 when the company decided to privatize additional 10% of shares.916 During the 1990s, OMV

heavily fostered its international expansion and opened up gas stations in the Czech Republic,

Germany, Hungary, Italy and Slovakia.917 In 1994 the Abu Dhabi based company IPIC918 bought

19.6% of shares and in 1996 additional 15% of shares were issued at the stock exchange. 919 The

company itself also bought shares; 25% from the chemical company Borealis in 1998, 10% of the

Hungarian oil company MOL in 2000, 25.1% of the Romanian oil company Rompetrol in 2002,

45% of shares of the corporation Bayernoil-Raffinierverbund920 in 2003 as well as 313 BP gas

stations and 139 Avanti gas stations in several countries in 2003.921 2004 marks an important year

for OMV as this was the year when the company decided a capital increase and subsequently more

than 50% of shares were in free float for the first time.922 In 2005 the company, conjointly with

IPIC, determined to buy 100% of shares of the chemical company Borealis and simultaneously

sell all Romanian Rompetrol shares.923 In 2008 the consortium ÖIAG and IPIC increased their

shares to hold 50.7% of the company;924 today the actual percentage held by the public ÖIAG is

31.5% and the percentage held by IPIC is 24.9%.925 In 2008 the company sold all acquired MOL

shares and in 2014 all acquired Bayernoil Raffinierverbund shares.926 With its increasing interna-

tionalization efforts, the company decided to change the name ÖMV into OMV in order to simplify

the term for global circumstances;927 a fact which also manifests the reason behind the declaration

of the company as solely with its abbreviation OMV instead of a full name like in other cases

within this Thesis. Subsequently, the major tasks of the OMV Group are depicted in more detail.

913 cf. BGBl. Nr. 194/1965 § 1(1); (2) 914 cf. Homepage OMV AG: Geschichte 915 Ibid. 916 Ibid. 917 Ibid. 918 IPIC stands for International Petroleum Investment Company, Abu Dhabi 919 cf. Homepage OMV AG: Geschichte 920 There is no official translation 921 cf. Homepage OMV AG: Geschichte 922 Ibid. 923 Ibid. 924 Ibid. 925 cf. Homepage ÖIAG: OMV AG 926 Ibid. 927 cf. Homepage OMV AG: Geschichte


91

6.2.8.2 Main tasks

The 2014 statutes of the company regulate not only the duties and responsibilities but also major

tasks of the company. Hence the company is responsible for its subsidiaries; i.e. their management

and eventual sale.928 Furthermore, the company’s major business is the production and extraction

of hydrocarbon and other mineral resources as well as their storage and commercialization for

third persons, stationary power sources, vehicles and heating installations.929 Complementary to

these tasks, the OMV Group is responsible for adequate services in relevant industries; i.e. the

planning, consulting and implementation in the areas of chemistry, electrical engineering, infor-

mation technology, insurances, licencing, mechanical engineering, transportation as well as tour-

istic areas like gastronomy and hotel business.930 All this also includes the instalment of appropri-

ate machinery, reinsurances, lines and pipelines as well as adequate waste management which is

also in the responsibility of the entity.931 In addition to the company’s business of installing, main-

taining and managing gas stations, it provides garages, car washes and authorized repair centres.932

Indeed, each business unit within the company is specialized on specific tasks and their appropriate

implementation; a circumstance explained in more detail within the following section of organi-

zational structure.


The oil and gas company OMV Group is structured in a simple functional way; the Management

Board thereby consisting of five members, including the CEO and CFO.933 The corporation is

designed among four internal business divisions; namely OMV Exploration and Production,

OMV Gas and Power, OMV Refining and Marketing and OMV Global Solutions.934

The limited liability company OMV Exploration and Production GmbH935 represents the first busi-

ness unit and is concerned with the goal of searching, finding and exploring oil and gas all over

the world.936 The global activities include, amongst many more, countries like the Arabic Emirates,

Australia, Austria, Bulgaria, Libya, Madagascar, Namibia, Norway and Romania.937 The com-

pany’s strategic goals for 2021 include growth and the most efficient use of existing assets.938

928 cf. OMV AG: OMV Aktiengesellschaft Satzung 2014 § 2(1) 929 Ibid.: § 2(2); (3) 930 Ibid.: § 2(4) 931 Ibid.: § 2(6); (7); (8); (9) 932 Ibid.: §2 (10) 933 cf. Homepage OMV AG: Organigramm 934 cf. Homepage OMV AG: Geschäftsfelder 935 There is no official translation 936 cf. Homepage OMV AG: Exploration & Production. Was ist E&P? 937 cf. Homepage OMV AG: Exploration & Production. Weltweite Aktivitäten 938 cf. Homepage OMV AG: Exploration & Production. E&P Strategie 2021


92

Moreover, the company aims at further acquisitions, intensified exploration tactics and increasing

integration with the OMV division Gas and Power.939

The OMV Gas and Power business unit focuses on the value-added chain of gas; thereby mainly

referring to gas as the cleanest fossil energy source and, next to coal, among the most important

producers of electricity in Europe.940 The strategy for 2021 concentrates on the maximization of

the value-added chain and thorough portfolio optimizations and expansions which should be

achieved by fostering the most attractive markets and building supportive infrastructure like pipe-

lines and storages.941 According to the OMV Group, Austria was among the first countries to

actively participate in the liberalisation of the gas market in 2002 and the EU subsequently fostered

the liberalisation by regulating that the gas trade is organized among juristically independent gas

providers in order to foster competition.942 Due to this the OMV Group decided to re-structure its

company and, despite the fact that the business division OMV Gas and Power is responsible for

the fossil energy source gas, it decided to demerge the business of gas transportation and storage

to specialized subsidiaries.943 For the purpose of completeness, the following table 4 provides an

impression of those subsidiaries; a short description of them follows thereafter.

OMV Gas & Power subsidiaries

Adria LNG d.o.o.

Central European Gas Hub AG

EconGas GmbH

Enerco Energy Inc

Gas Connect Austria

Gate Terminal b.v.

Nabucco Gas Pipeline International GmbH944

OMV Enerji Ticaret Ltd Sti

OMV Power International GmbH

OMV Petrom S.A.

OMV Samsun Elektrik Üretim Sanayi ve Ticaret A.S.

OMV Trading GmbH

Table 4: OMV Gas & Power subsidiaries

939 Ibid. 940 cf. Homepage OMV AG: OMV Gas & Power 941 cf. Homepage OMV AG: OMV Gas & Power. G&P Strategie 2021 942 cf. Homepage OMV AG: OMV Gas & Power. Tochtergesellschaften 943 Ibid. 944 Still listed on the Homepage but already closed in 2013


93

The Adria LNG d.o.o.945 represents a joint venture between the limited liability company OMV

Gas and Power GmbH, the E.OM Ruhrgas946 and Total und Geoplin947 and aims at the construction

of a re-gasification terminal on the Island Krk in Crotia.948 The public limited company Central

European Gas Hub AG949 represents the most important gas hub in Continental Europe and offers

a platform for the trade of gas via a virtual trading point.950 It is therefore of special importance to

the OMV Group and particularly the company OMV Gas and Power GmbH. The limited liability

company EconGas GmbH951 is responsible for the direct sale of gas to European business custom-

ers and international trading places; the limited liability company OMV Gas and Power GmbH

holds the majority of 50% of its shares while other Austrian energy companies hold the rest; i.e.

EVN AG952 owning 16.51%, Wien Energie953 possessing 16.51%, EGBV954 holding 14.25% and

Energie Burgenland955 possessing 2.73%.956 The company Enerco Energy Inc957 was established

with the sole purpose of simplifying the import and trade of gas in Turkey and the limited liability

company OMV Gas and Power GmbH holds 40% of its shares.958 The limited liability company

Gas Connect Austria GmbH959 is 100% owned by the OMV Group and represents the Austrian

transportation partner of gas for Europe; thereby taking responsibility over the commercialization

of transportation capacities and the maintenance of the gas-transit-network.960 The project Gate

Terminal b.v.961 again represents a joint venture; however this time not initiated by the OMV

Group but by the companies Gasunie962 and Vopak963 whose representatives aimed at the estab-

lishment of a terminal for liquefied natural gas in Rotterdam.964 The limited liability company

OMV Gas and Power GmbH decided to take part in the joint venture in 2007 by acquiring 5% of

it and consequently manifesting itself a good strategic position for liquefied natural gas in

945 There is no official translation 946 There is no official translation 947 There is no official translation 948 cf. Homepage OMV AG: OMV Gas & Power. Tochtergesellschaften. Adria LNG d.o.o. 949 There is no official translation 950 cf. Homepage OMV AG: OMV Gas & Power. Tochtergesellschaften. Central European Gas Hub AG 951 There is no official translation 952 EVN stands for Energieversorgung Niederösterreich – There is no official translation 953 There is no official translation 954 EGBV stands for EconGas Beteiligungsverwaltung 955 There is no official translation 956 cf. Homepage OMV AG: OMV Gas & Power. Tochtergesellschaften. EconGas GmbH 957 There is no official translation 958 cf. Homepage OMV AG: OMV Gas & Power. Tochtergesellschaften. Enerco Energy Inc 959 There is no official translation 960 cf. Homepage OMV AG: OMV Gas & Power. Tochtergesellschaften. Gas Connect Austria GmbH 961 There is no official translation 962 There is no official translation 963 There is no official translation 964 cf. Homepage OMV AG: OMV Gas & Power. Tochtergesellschaften. Gate Terminal b.v.


94

Europe.965 The subsidiary Nabucco Gas Pipeline International GmbH966 is still listed on the

homepage; however, as already indicated before, the company was closed in 2013 due to financial

troubles.967 The corporation OMV Enerji Ticaret Ltd Sti968 is a 100% OMV Gas and Power sub-

sidiary located in Turkey for the purpose of using chances in the increasing liberalized Turkish

market.969 The establishment of the limited liability company OMV Power International GmbH970

in 2007 marks the entry of OMV into the electricity business and includes all activities related to

electricity.971 In 2004, the OMV Group acquired the majority shares in the Romanian Petrom and

subsequently established OMV Petrom S.A.972 for the purpose of serving big business custom-

ers.973 The subsidiary OMV Samsun Elektrik Üretim Sanayi ve Ticaret A.S.974 is 100% owned by

the OMV Group and is located in Istanbul for the purpose of satisfying the increasing energy

demand in Turkey.975 The last subsidiary OMV Trading GmbH976 is also 100% owned by the

OMV Group and aims at the optimization of electricity trade by combining a diversity of markets

in order to increase the net value added.977

The business unit Refining and Marketing is responsible for around 4,200 gas stations in more

than eleven countries worldwide; in addition to owned refineries.978 According to the company,

gas stations nowadays represent multifunctional services centres in which refuelling the tank is

only one of a variety of possibilities.979 The strategy for 2021 refers to increasing operative rev-

enues through measures of de-investments, growing through the integration of the petrochemicals

business and optimizing the financial performance through re-organization and improved integra-

tion.980

The business unit OMV Global Solutions represents the shared service centre of the whole OMV

Group and, as internal service provider, aims at the fostering of professional consulting actions.981

In addition to David C. Davies, who is a member of the Management Board and responsible for

965 Ibid. 966 There is no official translation 967 cf. Homepage Format: Aus für Nabucco Gesellschaften werden geschlossen (21.08.2013) 968 There is no official translation 969 cf. Homepage OMV AG: OMV OMV Gas & Power. Tochtergesellschaften. Enerji Ticaret Ltd Sti 970 There is no official translation 971 cf. Homepage OMV AG: OMV Gas & Power. Tochtergesellschaften. OMV Power International GmbH 972 There is no official translation 973 cf. Homepage OMV AG: OMV Gas & Power. Tochtergesellschaften. OMV Petrom S.A. 974 There is no official translation 975 cf. Homepage OMV AG: OMV Gas & Power. Tochtergesellschaften. OMV Samsun Elektrik Üretim Sanayi ve

Ticaret A.S. 976 There is no official translation 977 cf. Homepage OMV AG: OMV Gas & Power. Tochtergesellschaften. OMV Trading GmbH 978 cf. Homepage OMV AG: OMV Refining & Marketing 979 Ibid. 980 cf. Homepage OMV AG: OMV Refining & Marketing. R&M Strategie 2021 981 cf. Homepage OMV AG: OMV Global Solutions. Positionierung


95

the OMV Global Solutions division, the business unit has its own management structure with two

additional members; namely Ana-Barbara Kuncic and Johannes Lainer.982 The unit employs over

1,500 employees and aims at the provision of services in the areas of Human Resources, Finance,

Facility Management, IT and even Occupational Healthcare; both nationally and internationally

for the whole OMV Group.983

The CEO, currently Gerhard Roiss, is solely responsible for business units related to the overall

functioning of the group itself; i.e. the business departments Human Resources, Technology

Office, Legal, Strategy, Development, Public Affairs and Communications and sustainability.984

He is not connected to any operative business units of the company.985 The CFO, currently David

C. Davies, is responsible for both overall group business units and operative business units.986 The

first, indeed, refer to finance based topics like Investor Relations, Internal Audit, Controlling,

Finance and Compliance while the latter refer to the business units OMV Global Solutions and

OMV Insurance Broker.987 The remaining three Management Board members are each responsible

for one business unit and connected operative fields.988 Manfred Leitner is responsible for the

business department OMV Refining and Marketing, thereby also including the department petro-

chemicals.989 Jaap Huijskes is in charge of the business department OMV Exploration and Pro-

duction and Hans-Peter Floren of the OMV Gas and Power department.990

For the purpose of clarity, this structure is depicted within the following figure 3.991

982 Ibid. 983 cf. Homepage OMV AG: OMV Global Solutions. Positionierung 984 cf. Homepage OMV AG: OMV Organigramm; Homepage OMV AG: Vorstand 985 Ibid. 986 Ibid. 987 Ibid. 988 Ibid. 989 Ibid. 990 Ibid. 991 Ibid.


96

Figure 3: OMV Group organizational structure

In addition to the Management Board, the structure of OMV contains a Supervisory Board con-

sisting of 15 members; ten of them appointed by the capital representatives and five appointed by

the works council.992 Due to the fact that the Austrian industrial holding company ÖIAG possesses

over 30% of the OMV Group, Kemler represents the chairman of the Supervisory Board; just like

in the Austrian Post Group and Telekom Austria Group.993 His political connections are analysed

in a separate part within this Thesis. According to the OMV Group, all members of the Supervisory

Board represent notable and qualified people within a vast variety of branches on a national and

international level.994

992 cf. Homepage OMV: Aufsichtsrat 993 Ibid. 994 Ibid.

Management Board

Gerhard Roiss

CEO

David Davies

CFO

Manfred Leitner

Refining, Marketing

Petrochemicals

Jaap Huijskes

Exploration &

Production

Hans-Peter Floren

Gas & Power

Operative

Business Areas:

OMV

Global

Solutions

OMV

Insurance

broker

Operative

Business Areas:

OMV

Refining &

Marketing

Petrochemicals

Operative

Business Areas:

OMV

Exploration

&

Production

Operative

Business Areas:

OMV Gas

& Power

Holding Business

Areas:

Development

Strategy

HR

Public Affairs

Legal

Technologic

Office

Communications

& Services

Holding Business

Areas:

Investor

Relations

Controlling

Internal Audit

Finance

Compliance


97

The subsequent section of the Thesis refers to a closer analysis of the people within the Manage-

ment Board and their possible political connections.


There have been a lot of discrepancies and problems recently within the OMV Management Board.

First, the member Jaap Huijskes, who is in charge of the department OMV Exploration and Pro-

duction, announced his early withdrawal of the corporation in September 2014; officially solely

due to private reasons.995 Instead of staying until 2018, as fixed within his contract, he communi-

cated to ÖIAG managing director Kemler that he attempts to leave the company already by mid-

2016.996

Also in September 2014, Kemler talked to Gerhard Roiss about an early removal; however in this

case by mid-2015.997 Roiss has already been working within the company for 25 years; he holds

the position as CEO since 2011 and his contract officially lasts until spring 2017.998 The possibility

of an early dismissal of the CEO caught a lot of media attention due to probable compensation

payments totalling several million euros.999 However, already in October the speculations about

an early dismissal of Roiss by June 2015 fixed.1000 The reasons behind this seem to be internal

discrepancies with other Management Board members as well as the stagnating and partly bad

financial figures of OMV since his appointment as CEO.1001 There are speculations about the bad

internal organizational climate and assumptions that Roiss’ management led to the voluntary early

withdrawal of Jaap Huijskes as well as troubles with the member Hans-Peter Floren who also has

to leave the company by mid-2015 and therefore before the official termination of his contract.1002

The additional dismissal of Floren roots in former discrepancies with Roiss who, in August 2014,

attempted to empower his Management Board member by sending a proposal to Kemler with the

concept of splitting up the department Gas and Power.1003 The impression of internal power plays

and consequently following early dismissals led to a significant drop in the value of the OMV

995 cf. Homepage Wirtschaftsblatt: OMV-Vorstand Jaap Huijskes geht vorzeitig (16.09.2014) 996 Ibid. 997 cf. Homepage Die Presse: Warum OMV-Chef Gerhard Roiss gehen muss (10.10.2014); Homepage Format:

Gerhard Roiss muss Mitte 2015 den OMV-Chefsessel räumen (14.10.2014) 998 cf. Homepage Die Presse: Warum OMV-Chef Gerhard Roiss gehen muss (10.10.2014) 999 cf. Homepage Die Presse: Warum OMV-Chef Gerhard Roiss gehen muss (10.10.2014); Homepage Format:

Gerhard Roiss muss Mitte 2015 den OMV-Chefsessel räumen (14.10.2014) 1000 Homepage Format: Gerhard Roiss muss Mitte 2015 den OMV-Chefsessel räumen (14.10.2014) 1001 cf. Homepage Die Presse: Warum OMV-Chef Gerhard Roiss gehen muss (10.10.2014) 1002 cf. Homepage Wirtschaftsblatt: OMV-Vorstände Roiss und Floren müssen vorzeitig gehen – Nachfolge noch

offen (10.10.2014) 1003 cf. Homepage Wirtschaftsblatt: OMV-Vorstände Roiss und Floren müssen vorzeitig gehen – Nachfolge noch

offen (10.10.2014); cf. Homepage Die Presse: Warum OMV-Chef Gerhard Roiss gehen muss (10.10.2014)


98

share.1004 In addition to this, Kemler generated the impression of inconsistencies due to the com-

munication of contradicting information. In the General Assembly that manifested the early dis-

missals, he emphasized that the reasons for them do not correlate with anything displayed in the

Stock Corporation Act; however, in an official interview with ORF he publicly justified the early

displacements by problems with the Stock Corporation Act.1005 These arguments led to further

troubles due to their indefensibleness. The Austrian Stock Corporation Act defines the reasons for

an early dismissal of members of the Management Board as the gross breach of duties, the inability

to manage the company properly or the vote of no-confidence from the side of the Supervisory

Board.1006 As neither of this happened officially, the arguments of Kemler turned out to be un-

tenable and had to be re-formulated; the Supervisory Board unanimously decided upon the early

dismissals based on the combination of negative internal developments and the bad financial situ-

ation of the OMV Group.1007

Connected to these troubles are problems with Kemler himself who was originally appointed as

ÖIAG managing director in 2012 by the then Minister of Finance Maria Fekter; a representative

of the Austrian People’s Party.1008 However, politicians from both sides, i.e. the Social Democratic

Party and the People’s Party, are not satisfied with his performance since the appointment and both

parties attempt to completely re-structure ÖIAG; thereby also appointing a new managing direc-

tor.1009 Indeed, this circumstance is discussed in more detail within the section 6.2.5 ÖIAG.


Similar to other companies, the financial success declined from the year 2008 to 2009; thereby

marking the consequences of the financial crisis. The company’s operative revenues dropped by

29.8% from 25.5 billion euros to 17.9 billion euros in 2009 and its EBIT dropped from 2.3 billion

euros to 1.4 billion euros.1010 Furthermore, the results from ordinary business activities dropped

by 47.8% from 2.3 billion euros to 1.2 billion euros and the annual net profit decreased from

1.6 billion euros to 716 million euros.1011 In addition to this, the cash flow from operative activities

declined significantly from 3.2 billion euros in 2008 to 1.8 billion euros in 2009.1012 According to

1004 cf. Homepage Wirtschaftsblatt: OMV-Vorstände Roiss und Floren müssen vorzeitig gehen – Nachfolge noch

offen (10.10.2014) 1005 cf. Homepage Kurier: Noch-ÖIAG-Vorstand Kemler: Probleme mit dem Aktiengesetz (29.10.2014) 1006 cf. BGBl. Nr. 98/1965 § 75(4) 1007 cf. Homepage Kurier: Noch-ÖIAG-Vorstand Kemler: Probleme mit dem Aktiengesetz (29.10.2014) 1008 cf. Homepage Die Presse: Politische Planspiele in der ÖIAG (14.02.2014) 1009 Ibid. 1010 cf. OMV AG: Geschäftsbericht (2009): 72 1011 Ibid. 1012 Ibid.: 78


99

the company, the global economic crisis led to lower oil prices and subsequently less profit mar-

gins; however the corporation indicates in its financial report that its integrated strategy manifested

in a stable financial position throughout 2009.1013

In 2010, however, the company managed to increase a majority of financial numbers again; despite

the upcoming recession phase. The operative revenues increased to 23.3 billion euros and the EBIT

stayed the same.1014 Moreover, the results from ordinary business activities improved slightly to

1.9 billion euros and the annual net profit enhanced significantly to 1.2 billion euros.1015 Also the

cash flow from operative activities increased from 1.8 billion to 2.9 billion euros;1016 thereby in-

dicating an improvement of the financial position of the company again.

In 2011, Gerhard Roiss was appointed as CEO and consequently responsible for the subsequent

performance of the company; i.e. its financial statements and balance sheets. The situation of the

corporation further improved as the operative revenues increased again by 46.0% from 23.3 billion

euros to 34.1 billion euros.1017 Furthermore the corporation managed to slightly increase its EBIT

to 2.5 billion euros.1018 Both the results from ordinary business activities and the annual net profit

enhanced slightly; the first from 1.9 billion euros to 2.2 billion euros and the latter from 1.2 billion

euros to 1.7 billion euros.1019 However, the cash flow from operative activities decreased from

2.9 billion euros to 2.6 billion euros.1020

In 2012 Roiss managed to proceed the good course and further increase the operative revenues

from 34.1 billion euros to 42.6 billion euros.1021 Also the EBIT improved again slightly to

3.1 billion euros; just like the results from ordinary business activities which increased from

2.2 billion euros to 2.9 billion euros.1022 The net annual profit enhanced by 7.1% to 1.8 billion

euros and the cash flow from operative activities improved by 45.9% to 3.8 billion euros.1023

2013 marks a rather challenging year for the company due to the planned and implemented trans-

formation of the company from a downstream focused corporation into an upward focused one; a

circumstance connected to significant investments for the purpose of growth.1024 The operative

1013 Ibid.: 9 1014 cf. OMV AG Geschäftsbericht (2011): 70 1015 Ibid. 1016 Ibid.:76 1017 Ibid.: 70 1018 Ibid. 1019 Ibid. 1020 Ibid.: 76 1021 cf. OMV AG Geschäftsbericht (2013): 70 1022 Ibid. 1023 Ibid.: 76 1024 Ibid.: 4


100

revenues stayed the same while the EBIT fell from 3.1 billion euros in 2012 to 2.7 billion euros.1025

Furthermore, the results from ordinary activities fell marginally from 2.9 billion euros to 2.3 billion

euros and subsequently the net annual profit also declined a touch to 1.7 billion euros.1026 Thus,

due to the adequate management of liabilities and provisions, the company was able to increase its

cash flow from operative activities from 3.8 billion euros in 2012 to 4.1 billion euros in 2013.1027

Due to the fact that the financial statement of 2014 is not published yet, there is no analysis on

financial data possible for this crucial year in which the early displacement of three out of five

Management Board members was announced; thus one of them voluntarily.

The following case of the SCHIG mbH shows a different picture and diverse developments con-

cerning the connections to the government and developments after the Great Recession.

6.2.9 Schienen-Infrastruktur-Dienstleistungsgesellschaft mbH

The company SCHIG mbH is considered as independent consulting and service provider in the

area of rail transport.1028 It is 100% state-owned and represented by the Federal Ministry of

Transport, Innovation and Technology.1029

6.2.9.1 Legal base

The legal background of the company builds the law Bundesgesetz über die Errichtung einer

Schieneninfrastrukturfinanzierungs-Gesellschaft, (Schieneninfrastrukturgesetz SCHIG), BGBl.

Nr. 201/19961030 which was introduced in 1996 and amended several times nearly every year since

its implementation.1031 Article 194 of the original Federal Law Gazette states the establishment of

the company for the purpose of financing investments in the area of public rail transport with an

initial share capital of 10 million Schilling and located in Vienna.1032 Throughout the years the law

was amended several times and in 2005, as part of the ÖBB reformation, the entity was trans-

formed from a financing company into a service and consulting provider; indeed, still 100% state-

owned.1033 The legal act of doing so was presented as a so called spin-out for the purpose of new

establishment and basically indicates that the SCHIG mbH was transformed into a new founded

1025 Ibid.: 70 1026 Ibid. 1027 Ibid.: 76 1028 cf. Homepage Bundesministerium für Verkehr, Innovation und Technik: Glossar: SCHIG mbH 1029 Ibid. 1030 There is no official translation 1031 cf. BGBl. Nr. 201/1996 1032 cf. BGBl. Nr. 201/1996 § 1 (30.04.1996) 1033 cf. Homepage SCHIG mbH: Aufgaben und rechtliche Grundlagen


101

corporation with an initial share capital of two million euros and still located in Vienna.1034 This

amendment also changed the tasks connected to the corporation; a circumstance discussed in more

detail within the following section.

Then and now, and in alliance with the legal background of the ÖBB Holding Group, the com-

pany’s legal background is connected to the law Eisenbahngesetz 1957, BGBl. Nr. 60/1957 and

the law Bundesbahngesetz, BGBl. Nr. 825/1992; both of them regulating the rail transport in Aus-

tria.1035

6.2.9.2 Main tasks

As already indicated before, the company is 100% state-owned and represented by the Federal

Ministry of Transport, Innovation and Technology.1036 Initially, the company was founded with

the sole thought of financing projects and necessary investments in the railway infrastructure for

the public rail transport in Austria.1037 In addition, the corporation was responsible for the provi-

sion of services under the aspect of increasing liberalization in the railway market and infrastruc-

ture.1038

However, in January 2005 the tasks of the company changed due to the organizational change

from a financing company into a service provider of the state;1039 a circumstance already dis-

coursed within the previous section. Before the change, the company was mainly responsible for

the financing of investments in the railway infrastructure which also manifested in the conclusion

of contracts with third parties for the conjoint-financing of projects.1040 Connected to this, the cor-

poration was not only responsible for the financing part per se but also for all tasks correlated or

connected to this part and subsequently also additional tasks that helped in improving the situation

for the public rail infrastructure in Austria.1041

After the legal and organizational change, the corporation is still responsible for all administrative

tasks connected to the daily business of railways as stated within the Eisenbahngesetz 1957, BGBl.

Nr. 60/1957;1042 i.e. the establishment of registers of licenses and driving permissions as well as

those for vehicle occupations.1043 However, the company also focuses on new areas; for example

1034 cf. BGBl. Nr. 201/1996 § 2 (04.11.2014) 1035 cf. BGBl. Nr. 201/1996; Homepage SCHIG mbH: Aufgaben und rechtliche Grundlagen 1036 cf. Homepage Bundesministerium für Verkehr, Innovation und Technik: Glossar: SCHIG mbH 1037 cf. Homepage SCHIG mbH: Aufgaben und rechtliche Grundlagen 1038 Ibid. 1039 Ibid. 1040 cf. BGBl. Nr. 201/1996 Artikel 194 § 1; § 3 (30.04.1996) 1041 cf. BGBl. Nr. 201/1996 Artikel 194 § 3 (30.04.1996) 1042 There is no official translation 1043 cf. BGBl. Nr. 201/1996 § 3(1) (04.11.2014)


102

the task of appearing as a central settlement agent in the rail transport; thereby primarily referring

to climate and energy funds, terminal and connecting railway support as well as the support of

freight traffic.1044 Moreover, SCHIG mbH is responsible for the conclusion of Public-Private Part-

nership projects with the purpose of conjoint financing of innovations in the area of railway

transport.1045 As of today, the entity is part of two PPP-projects; both of them accomplished

through the establishment of subsidiaries responsible for them.1046 The first project was accom-

plished by the subsidiary Rail Test & Research Gesellschaft mbH RTR1047 and refers to the

climate-wind-tunnel located in Vienna which is unique in its kind and fosters tests on rail vehicles

under extreme climate and aerodynamic circumstances.1048 The tests build the base for the certifi-

cation and licencing of railway vehicles.1049 The second PPP-project was accomplished by the

RoLa1050 Regensburg Projektgesellschaft mbH RPR1051 and refers to the RoLa-Terminal Regens-

burg which represents the first cross-border PPP-project of its kind in this area.1052

One of the most important tasks of the limited liability company is the control of infrastructure; an

assignment which is considered to be a major support for the Federal Ministry of Transport Inno-

vation and Technology as well as the Federal Ministry of Finance in the area of rail transport.1053

In this sense, the company is responsible for the accomplishment of its mission of acting according

to the criteria of thriftiness, efficiency and usefulness.1054

Additionally, the corporation acts in the sense of a so called Benannte Stelle1055 which refers to

the fact that SCHIG mbH can be considered as accredited inspection department and notified area

for interoperability in the area of railway traffic and transport.1056 The company thereby acts in an

independent way and guarantees its customers that those employees responsible for the develop-

ment, assembly and maintenance are not involved in the same for competitors.1057

The company also acts as an engineering office and provides expert opinions on all topics related

to the rail traffic and transport; e.g. the safety of tunnels, the traffic itself, the technical aspects and

1044 cf. Homepage SCHIG mbH: Aufgaben und rechtliche Grundlagen 1045 cf. BGBl. Nr. 201/1996 § 3(1) (04.11.2014) 1046 cf. Homepage SCHIG mbH: PPP-Projekte 1047 There is no official translation 1048 cf. Homepage SCHIG mbH: PPP-Projekte 1049 Ibid. 1050 Official translation for RoLa is Rollende Landstraße 1051 There is no official translation 1052 cf. Homepage SCHIG mbH: PPP-Projekte 1053 cf. Homepage SCHIG mbH: Infrastrukturkontrolle 1054 Ibid. 1055 There is no official translation 1056 cf. Homepage SCHIG mbH: Benannte Stelle 1057 Ibid.


103

employee protection.1058 In addition, and in cooperation with other engineering offices and experts,

SCHIG mbH offers opinion on hydraulic engineering, noise protection, architectural aspects and

waste management.1059


The service provider SCHIG mbH is structured in a rather formal way. The organization is 100%

state-owned and consequently represented by the Federal Ministry of Transport, Innovation and

Technology.1060 Internally, the company is structured among four departments; namely the divi-

sion of legal aspects, personnel and procurement, the division of the promotion and traffic financ-

ing control, the division of notified body and infrastructural control as well as the division of rail-

way infrastructure services. As already indicated before, the company additionally holds 100% of

the two subsidiaries RTR and RPR.1061

The controlling organs of this structure are the management, the Supervisory Board and the proc-

urators.1062 The management is performed by only one person; namely Ulrich Puz.1063 The Super-

visory Board currently consists of nine members; the chairman Roland Schuster and vice-chair-

woman Ursula Zechner as well as two regular members from the Federal Ministry of Transport,

Innovation and Technology.1064 One member originates from the holding company Vienna

Municipal Works1065 and one from the Federal Ministry of Finance.1066 Another member is the

chairman of the works council and two are appointed by the workers’ representatives of the works

council.1067 The responsible procurators consist of three members; two of them are male.1068


As already indicated before, the company’s mission is to act in the sense of thriftiness, efficiency

and usefulness when it comes to its role as service provider and supportive consultant in the area

of rail transport.1069 Moreover, SCHIG mbH acts in the sense of the Public Corporate Governance

Codex (B-PCGK) which was introduced by the Austrian government in 2012.1070 The Austrian

1058 cf. Homepage SCHIG mbH: Ingenieurbüro 1059 Ibid. 1060 cf. Homepage SCHIG mbH: Organigramm 1061 Ibid. 1062 cf. Homepage SCHIG mbH: Organe 1063 Ibid. 1064 Ibid. 1065 Official translation for Wiener Stadtwerke Holding AG 1066 cf. Homepage SCHIG mbH: Organe 1067 Ibid. 1068 Ibid. 1069 cf. Homepage SCHIG mbH: Infrastrukturkontrolle 1070 cf. Homepage SCHIG mbH: Compliance


104

Federal Chancellery claims that the codex aims at implementing international and national stand-

ards for the management and control of public Austrian companies and their subsidiaries.1071 The

ultimate goal of the codex is to increase transparency and make the role of the state more traceable

and comprehensible.1072

The connections to the Austrian government and politics are rather clear within this company. The

managing director Ulrich Puz entered the company ASFINAG in 2008 after his studies and sub-

sequent career as professor at the University of Natural Resources and Life Sciences Vienna.1073

He stayed only two years at ASFINAG before being employed at SCHIG mbH as managing

director.1074 He is known for being close to the People’ Party.1075

As already indicated before, the Supervisory Board consists of nine members; four of them, in-

cluding the chairman and the vice-chairman of the board, are also employed at the Federal Ministry

of Transport, Innovation and Technology.1076 Since the first of September 2014, the ministry is led

by Alois Stöger who replaced Doris Bures; both of them being members in the Social Democratic

Party.1077 One of the Supervisory Board members, Bernhard Bauer, is also employed as Ministerial

Counsellor at the Federal Ministry of Finance.1078 On the first of September 2014, Hans Jörg

Schelling, a member of the People’s Party, was appointed as the new Austrian Federal Minister of

Finance, thereby replacing Michael Spindelegger.1079 The Supervisory Board member Walter

Anderle is connected to the Wiener Stadtwerke Holding AG1080 a company responsible for the

sustainable energy supply and public transportation in Vienna.1081 The Management Board of this

company consists of a mix of people connected to both the Social Democratic as well as the Peo-

ple’s Party which indicates that both interests are supported in SCHIG mbH with the appointment

of Walter Anderle.1082

Overall it can be assumed that the two political parties, i.e. the Social Democratic Party and the

People’s Party, are equally well represented within the company SCHIG mbH; mainly due to the

constitution of the Supervisory Board which includes people with connections to both. Moreover,

1071 cf. Bundeskanzleramt Österreich: Public Corporate Governance Kodex (2012): 6 1072 Ibid. 1073 cf. Homepage SCHIG mbH: Organe 1074 Ibid. 1075 cf. Homepage Der Standard: Ein Herz für Hinterbänkler (23.07.2010) 1076 cf. Homepage SCHIG mbH: Organe 1077 cf. Homepage Bundesministerium für Verkehr, Innovation und Technologie: Liste der Verkersminister der

Zweiten Republik 1078 cf. Bundesministerium für Finanzen: Geschäfts- und Personaleinteilung, Stand: 15.10.2014 1079 cf. Homepage Bundesministerium für Finanzen: Finanzminister Dr. Hans Jörg Schelling 1080 There is no official translation 1081 cf. Homepage Wiener Stadtwerke Holding AG: Unternehmensprofil 1082 cf. Homepage Wiener Stadtwerke Holding AG: Vorstand


105

the appointment of three members by the works council, in addition to the six other members of

the Supervisory Board, denotes a well-defined relationship to its employees.1083


The company first struggled during the year 2009; a fact which can be retrieved from the income

statements of 2008 and 2009. While the net financial income decreased from 68,416 euros in 2008

to 40,785 euros in 2009, the remaining profit decreased even more drastically.1084 In the year 2008,

the negative profit from ordinary activities (EBT) of 319,587 euros could be compensated by prof-

its from the previous year of 626,739 euros which led to a positive net profit of 307,160 euros.1085

However, in 2009 the negative profit from ordinary activities (EBT) increased to 323,089 euros

and the remaining net profit from the previous year of 307,160 euros could not compensate the

augmentation; thereby leading to a negative net profit of 15,928 euros.1086

The Great Recession and its consequences worsened the situation for the company throughout

2010. The profit from ordinary activities (EBT) further increased to negative 473,132 euros which,

together with the negative net profit of 15,928 euros from the previous year, led to a negative net

profit of 489,061 euros in 2010.1087 The ongoing consequences of the financial crisis led to a de-

crease in transportation and subsequently less market share for the public railways.1088 Moreover,

the lack of harmonisation among the railway services throughout the European Union led to an

increase of market share for more flexible private railways; consequently also worsening the situ-

ation for the Austrian SCHIG mbH.1089

The year 2011 was characterized by the attempt of growth and investments for the purpose of

building work places and increasing railway traffic.1090 Collective efforts led to a significant im-

provement of the net profit from ordinary activities (EBT) which augmented to a positive number

of 124,594 euros.1091 This result could reduce the negative net profit from minus 489,061 euros to

minus 364,367 euros.1092 Restructuration efforts throughout the year 2012 led to further, but only

slight, improvements in the net profit which decreased to minus 332,883 euros; thereby indicating

that the net profit from ordinary activities (EBT) was significantly lower than the year before;

1083 cf. Homepage SCHIG mbH: Organe 1084 cf. SCHIG mbH: Geschäftsbericht (2009): 83 1085 cf. SCHIG mbH: Geschäftsbericht (2008): 89 1086 cf. SCHIG mbH: Geschäftsbericht (2009): 83 1087 cf. SCHIG mbH: Geschäftsbericht (2010): 85 1088 cf. Homepage Der Standard: Schiene verliert an Marktanteil (25.08.2010) 1089 Ibid. 1090 cf. SCHIG mbH: Geschäftsbericht (2011): 6ff. 1091 Ibid.: 79 1092 Ibid.


106

showing a positive number of only 31,583 euros.1093 This result could be improved by the end of

2013 when the income statement shows an increase in the net profit from ordinary activities (EBT)

to 63,071 euros.1094 This, indeed, further decreased the negative net profit and by the end of 2013

the income statement shows a negative number of 269,811 euros.1095

The developments in the income statements of the company SCHIG mbH since the financial crisis

in 2008 and the subsequent period of recession show that the company still struggles with the

consequences; i.e. the slump in railways traffic and transportation. The significant deterioration of

the net profit in 2009 still affects the corporation, its tasks and future measures and, as can be

retrieved from the depiction of the financial situation above, the company still needs to recover as

even the latest income statement shows a negative net profit.

The next depiction of a major Austrian enterprise refers to the Telekom Austria Group and there-

fore the biggest provider of telecommunications services in Austria.

6.2.10 Telekom Austria AG

The telecommunications company Telekom Austria Group1096 is the biggest of its kind in Austria

and positioned not only nationally but also internationally in seven more countries; namely Bela-

rus, Bulgaria, Croatia, Lichtenstein, Macedonia, Serbia and Slovenia.1097 However, in Austria the

Telekom Austria Group is represented with the provider A1; itself the leading communication

provider on the market with around 5.7 million customers in mobile telephony and 2.3 million

customers in fixed network telephony.1098

6.2.10.1 Legal base

In 1887 the responsibility for the telephone was transferred to the administration K.K. Post- und

Telegraphenverwaltung which represented the telecommunications and, since then, was under

public control for over 100 years.1099 It was in 1996 when the law Poststrukturgesetz was amended

and in this course, the administration company was transferred into a public limited company

named Post- und Telekom Austria AG (PTA AG).1100 The public holding company Post und

Telekommunikationsbeteiligungsverwaltungsgesellschaft (PTBG) owned 100% of the shares of

1093 cf. SCHIG mbH: Geschäftsbericht (2012): 75 1094 cf. SCHIG mbH: Geschäftsbericht (2013): 83 1095 Ibid. 1096 Official translation for Telekom Austria AG 1097 cf. Homepage Telekom Austria Group: Über uns 1098 cf. Homepage A1: Unternehmensprofil 1099 cf. Homepage Telekom Austria Group: Geschichte 1100 Ibid.


107

PTA AG and even though the postal and telecommunications part of the company each held their

own businesses, all of them were under state-control.1101

In 1998 the complete liberalisation of the telecommunications market in Austria led to the separa-

tion of PTA AG and subsequently the fact that the Telekom Austria Group turned into a separate

business.1102 The legal background for this was represented by the law Telekommunikationsgesetz

BGBl. I Nr. 100/19971103 which was amended several times over the years thereafter.

In January 2000 the PTBG was transferred into the ownership of the industrial holding company

ÖIAG which thereafter held 44.4% of shares in the Telekom Austria Group when its shares quoted

for the first time at the stock exchange in Vienna and New York.1104 After going public, the Tele-

kom Austria Group decided to expand its foreign presence and open up subsidiaries as well as

obtain shares in other telecommunications companies abroad.1105 Telecom Italia initially held 25%

of the Telekom Austria Group shares; however, it decided to sell its shares between 2002 and 2004

completely and therefore increased the free float of shares to 52.8%; the rest still owned by the

Austrian ÖIAG.1106 Yet, the industrial holding company itself decided to sell 85 million shares and

consequently increased the free float of shares again to 69.8% by the end of 2004.1107 Over the

following years, the company extensively focused on the expansion and growth abroad; especially

in East and South East Europe and in 2007 the company decided to delist its stocks from the New

York Stock Exchange.1108

By today, the company’s legal background is based on the law Telekommunikationsgesetz 2003,

BGBl I Nr. 70/20031109 which aims at the fostering of competitive surroundings in the telecom-

munications sector in Austria in order to support the cheap, reliable and fair pricing of telecom-

munications for everybody.1110 The law regulates specific measures which ultimately intend to

create a modern communication infrastructure as well as secure communication services and the

safeguard of the interests of the public.1111 The law furthermore specifies that everybody is entitled

to provide telecommunications services as long as the provider acts compliant to this law.1112 How-

ever, these providers are legally controlled and the competition is regulated in case one of them

1101 Ibid. 1102 Ibid. 1103 There is no official translation 1104 cf. Homepage Telekom Austria Group: Geschichte 1105 Ibid. 1106 Ibid. 1107 Ibid. 1108 Ibid. 1109 There is no official translation 1110 cf. BGBl. I Nr. 70/2003 § 1(1) 1111 cf. BGBl. I Nr. 70/2003 § 1(2); (3) 1112 cf. BGBl. I Nr. 70/2003 § 14


108

might get too powerful.1113 Of special importance for telecommunications companies is the limited

liability company KommAustria which is in charge of several tasks among the providers; like for

instance the distribution of frequencies, the approval of changes, the regulation of competition,

dispute settlements and the declaration of regulations.1114 KommAustria operates in cooperation

with the Telekom-Control-Kommission1115 which consists of three members appointed by the

Austrian federal government and the Austrian Federal Ministry of Transport, Innovation and Tech-

nology.1116 While the first member has to be a judge, the second one has to have a technical back-

ground and the third either an economical or juridical background.1117 The public appointers indi-

cate a strong relationship to the government; something discussed in more detail within a separate

section later within this Thesis.

6.2.10.2 Main tasks

One of the major tasks of the Telekom Austria Group is, indeed, the comprehensive provision of

telecommunications services in Austria and its subsidiaries abroad. However, the repression of

fixed telephone infrastructure by mobile telephony and other electronic media led the company to

forced adaptation to new circumstances and the establishment of innovations in its segments.1118

One of its business segments denotes the machine-to-machine communication (M2M) which rep-

resents the automatic data transfer of a variety of electronic devices such as the washing machine,

the bicycle, the vending machine, the printer, the surveillance camera or even the dog’s collar.1119

The company takes responsibility over the connection of different devices in the private and busi-

ness sector and therefore accomplishes the duty of offering a flawless connection.1120 In the busi-

ness sector this responsibility refers to the management of car and ship fleets as well as the auto-

mation and remote maintenance of whole industries or asset tracking of machinery and vehi-

cles.1121 In addition to this, the Telekom Austria Group works heavily within the wholesale and

international sales industries by providing its customers with flawless telecommunications ser-

vices.1122 This also includes tasks such as consulting, international mobile device management, the

1113 cf. BGBl. I Nr. 70/2003 § 34; §35 1114 cf. BGBl. I Nr. 70/2003 § 120(1) 1115 There is no official translation 1116 cf. BGBl. I Nr. 70/2003 § 118(1) 1117 Ibid. 1118 cf. Homepage Telekom Austria Group: Geschäftsfelder 1119 cf. Homepage Telekom Austria Group: M2M 1120 Ibid. 1121 cf. Homepage Telekom Austria Group: M2M Unser Angebot 1122 cf. Homepage Telekom Austria Group: Geschäftsfelder; International Sales, Wholesale


109

establishment of an international corporate network as well as global reporting and global account

management.1123

The strategy of the Telekom Austria Group is based on four pillars; namely the exploitation of

strategic chances, the optimization of its core businesses, operational excellence and convergence

in the offering of mobile and fixed telephony devices.1124


The Telekom Austria Group holds 100% of its eight subsidiaries; each of them telecommunica-

tions providers.1125 In Austria, this subsidiary is the provider A1 which itself holds 100% in

22 limited liability companies in Austria, Bosnia-Herzegovina, Czech-Republic, England,

Germany, Italy, Poland, Romania, Switzerland and Turkey.1126 In addition to A1, the Telekom

Austria Group possesses 100% of seven other major telecommunications providers; each of them

is depicted briefly within the following figure 4.1127

Figure 4: Telekom Austria Group subsidiaries

1123 cf. Homepage Telekom Austria Group: Products and Services 1124 cf. Homepage Telekom Austria Group: Strategie 1125 cf. Homepage Telekom Austria Group: Struktur; Struktur der Telekom Austria Group 1126 Ibid. 1127 Ibid.

Si.mobil

Slovenia

A1 Telekom

Austria

Mobiltel

Bulgaria

Telecom

Liechtenstein

Vipnet

Croatia

Vip operator

Macedonia

Velcom

Belarus

Vip mobile

Serbia


110

The Telekom Austria Group is furthermore structured among a Management Board and a Super-

visory Board.1128 While the first consists of three members, namely Hannes Ametsreiter as general

director, Sigfried Mayrhofer as CFO and Günther Ottendorfer as CTO,1129 the latter consists of

15 members; ten of them elected during the General Assembly, four of them appointed by the

works council and one appointed by the staff association of the Telekom Austria Group.1130 The

Supervisory Board has installed three committees which are responsible for the control of balance

sheets and income statements, as well as monetary benefits for members of the Management Board

and the proposal of new candidates for vacancies.1131


The telecommunications industry in Austria can be characterized as being influenced by public

control and power; a circumstance which is predominant despite the fact that the industrial holding

corporation ÖIAG successively developed to a minority shareholder of the Telekom Austria

Group. In April 2014 the industrial holding company ÖIAG signed a Syndicate Agreement with

the American billionaire Carlos Slim, thereby agreeing that the Mexican telecommunications pro-

vider América Móvil holds sole control over the Telekom Austria Group in the future.1132 The

contract led to a mandatory offer and América Móvil proposed all small shareholders 7.15 euros

per share; thereby aiming at acquiring as much of the 44% free float shares as possible.1133

Although not all shareholders agreed, Slim managed to acquire shares for around 57.6 billion euros

and conclusively over 50% of the Telekom Austria Group which makes América Móvil the ma-

jority shareholder.1134 In return for the Syndicate Agreement, ÖIAG received veto rights.1135 This

change leads to the following shareholder structure; América Móvil holding 59.7% of shares,

ÖIAG owning 28.4% of shares and 11.9% of shares which remain in free float.1136 The Syndicate

Agreement also included an increase in stock capital by the end of the year 2014 and in November

2014, the shareholders ÖIAG and América Móvil decided upon an increase of one billion euros;

604 million euros provided by Carlos Slim and 287 million euros provided by ÖIAG.1137 The rest

1128 cf. Homepage Telekom Austria Group: Group 1129 cf. Homepage Telekom Austria Group: Vorstand 1130 cf. Homepage Telekom Austria Group: Aufsichtsrat 1131 Ibid. 1132 cf. Homepage Der Standard: Österreich nicht mehr größter Telekom Aktionär (15.07.2014) 1133 Ibid. 1134 Ibid. 1135 Ibid. 1136 cf. Homepage Format: Kapitalspritze für die Telekom: ÖIAG und America Movil stemmen 891 Millionen Euro

(07.11.2014) 1137 Ibid.


111

of 109 million euros had to be provided by the free float shareholders in order not to decrease their

holding percentage.1138

When having a look at the internal controlling structure of the Telekom Austria Group, the

following can be communicated. The CEO Hannes Ametsreiter started his career in the private

industry before becoming product manager at the mobilkom Austria and managing director of

marketing and sales thereafter.1139 He worked his way up the hierarchy within the company and in

2009 became CEO of the Telekom Austria Group as well as CEO of A1 in 2010.1140 He received

several awards over the years and even though he is not officially related to any political party, he

is a member of the Management Board of the global industrial association GSMA1141 which indi-

cates connections to topics relevant for companies, rather than workers.1142

The CFO Sigfried Mayrhofer was appointed this year as predecessor of Hans Tschuden who was

eliminated by the Supervisory Board three years before the official end of his contract.1143 He

started his career in the company VOEST and, similar to the CEO, after entering the Telekom

Austria Group worked his way up the hierarchy by holding a variety of leading positions within

the company.1144 Just like Hannes Ametsreiter, he is not officially connected to any political party.

Günther Ottendorfer as the CTO possesses over 20 years of experience in the area of telecommu-

nications.1145 Before being appointed as CTO in the Management Board in 2013, he contributed

to the foundation of max.mobil in Austria and collected management experience as CTO for T-

Mobile Austria, Germany and technological director for T-Mobile international.1146 He further-

more worked in Australia in the Management Board of Optus Singtel; the second biggest telecom-

munications provider there.1147 Günther Ottendorfer was appointed as third member of the Man-

agement Board in an extraordinary meeting with the purpose of helping in the future development

of the fourth telecommunications generation LTE.1148

1138 Ibid. 1139 cf. Homepage Telekom Austria Group: Hannes Ametsreiter Chief Executive Officer, Telekom Austria Group

Chief Executive Officer A1 1140 Ibid. 1141 GSMA stands for Groupe Speciale Mobile Association 1142 cf. Homepage Telekom Austria Group: Hannes Ametsreiter Chief Executive Officer, Telekom Austria Group

Chief Executive Officer A1 1143 cf. Homepage Wirtschaftsblatt: Telekom Austria: Sigfried Mayrhofer neuer CFO für ein Jahr (06.05.2014) 1144 cf. Homepage Telekom Austria Group: Siegfried Mayrhofer Chief Financial Officer, Telekom Austria Group

Chief Financial Officer A1 1145 cf. Homepage Telekom Austria Group: Günther Ottendorfer Chief Technology Officer, Telekom Austria Group 1146 Ibid. 1147 Ibid. 1148 cf. Homepage APA OTS: Günther Ottendorfer zum CTO der Telekom Austria Group bestellt (04.04.2013);

Homepage Der Standard: Telekom-Vorstand nimmt Günther Ottendorfer auf (02.04.2013)


112

The Supervisory Board of the Telekom Austria Group constitutes of 10 general members and five

members appointed by the works council.1149 Since 2012, the chairman of the Supervisory Board

is Rudolf Kemler; the general manager of the industrial holding company ÖIAG and therefore also

the chairman of the Austrian Post Group and OMV Group.1150 Despite the fact that he holds several

additional positions, amongst others as a member of the Advisory Board at the Webster University

Vienna or as a member of the Management Board at the Viennese industrial association, he cannot

be clearly identified politically.1151 The vice-chairman is the CFO of América Móvil; Carlos García

Moreno Elizondo.1152 Further members of the Supervisory Board that are part of América Móvil

are Alejandro Cantú Jiménez as general counsel, Carlos Jarque as director for international rela-

tions and Oscar Von Hauske Solís as CEO of Telmex International and Chief-fixed-line-operations

officer at América Móvil.1153 Additional members are the consultant Elisabetta Castiglioni, the

director for asset management and privatizations at ÖIAG Günter Leonhartsberger, the investor

Ronny Pecik and two members of the Philip Morris Austria limited liability corporation Reinhard

Kraxner and Stefan Pinter.1154 Ronny Pecik is known for his deals with the Austrian companies

Böhler-Uddeholm and VA Tech where he sold his shares with significant profits; however, not

without heavy criticism about his strategy of aiming at the sole achievement of short-term prof-

its.1155 He was also a crucial part in the takeover of América Móvil as he, as one of the biggest

direct and indirect shareholders of the Telekom Austria Group, sold his shares completely to the

Mexican telecommunications provider.1156 He is not only part of the Supervisory Board at the

Telekom Austria Group but still a huge investor and involved in several new deals; most recently

he bought the 101 years old Palais in the Schottengasse in Vienna; the old centre for the bank Bank

Austria.1157 Additionally, and conjointly with René Beko from the Signa-Holding, he bought the

development-project of the Bank-Austria-Campus at the Viennese Praterstern.1158 Ronny Pecik

can therefore be described as highly powerful and influential person in Austria; even without a

clear political position from his side.

1149 cf. Homepage Telekom Austria Group: Mitglieder des Aufsichtsrats 1150 Ibid. 1151 Ibid.; Homepage Kleine Zeitung: Rudolf Kemler, ÖIAG-Chef, im Porträt (07.09.2012) 1152 cf. Homepage Telekom Austria Group: Mitglieder des Aufsichtsrats 1153 Ibid. 1154 Ibid. 1155 cf. Homepage Profil: Ronny Pecik: Der härteste Kapitalist Österreichs im Profil (05.05.2014); Homepage

Kurier: Ronny Pecik: Der Regisseur des Telekom-Deals (27.04.2014) 1156 Ibid. 1157 cf. Homepage Wirtschaftsblatt: Ronny Pecik jetzt Hausherr in der Bank Austria-Zentrale (20.02.2014) 1158 cf. Homepage Der Standard: Signa und Pecik übernehmen Campus-Projekt der Bank Austria (26.09.2014)


113

The relation to the works council is clearly defined and five members of the Supervisory Board

are appointed by it.1159 Only one member, namely Alexander Sollak, comes directly from the Tel-

ekom Austria Group and is employed as chairman of the Trust Committee.1160 All other members

are employed at the A1 subsidiary and either chairman, vice-chairman or members of the central

works council at the A1 Telekom Austria Group.1161

Despite the fact that the managing and controlling actors within the Telekom Austria Group are

not directly connected to politics, the overall management and control is. The circumstance that

the Austrian holding company ÖIAG still possesses over one quarter of shares of the Telekom

Austria Group leads to political influence in decisions over the future developments of the com-

pany; even though the majority shareholder is now the Mexican billionaire Carlos Slim. The

political connections of the company ÖIAG are discussed separately within the section 6.2.5 of

ÖIAG within this Thesis and are therefore not analysed further within this part. Instead, the fol-

lowing part deals with an analysis of the company’s financial and organizational developments

since the Great Recession.


In case of the Telekom Austria Group, the financial statements and data show that the recession

hit the company for the first time in 2010. Despite the fact that the operative revenues decreased

by 7.1% from the year 2008 to 2009, all other financial measures could be improved.1162 The

EBITDA margin increased by 40.1% from 1.3 billion euros in 2008 to 1.8 billion euros in 2009.1163

In addition, the operating result improved by 184.9% from 120.7 million euros in 2008 to

343.9 million euros in 2009 and the free cash flow increased by 10.9% from 756.2 million euros

to 674.0 million euros.1164 It was by the end of 2010 when the financial measures showed

decreasing tendencies for the first time. Not only the operative revenues decreased again by 3.1%

to 4.7 billion euros, also the EBITDA margin decreased by 9.1% to 1.6 billion euros and the free

cash flow dropped by 5.9% to 634.0 million euros.1165 Though, the company managed to increase

its operating result by 27.3% to 437.9 million euros; an outcome achieved mainly by the strategic

focus on quality, diversity, innovation and responsibility.1166 The Management Board declared in

its financial statement in 2010 that the consistent intense competitive situation as well as

1159 cf. Homepage Telekom Austria Group: Mitglieder des Aufsichtsrats 1160 Ibid. 1161 Ibid. 1162 cf. Telekom Austria Group: Geschäftsbericht (2009): 2 1163 Ibid. 1164 Ibid. 1165 cf. Telekom Austria Group: Geschäftsbericht (2010): 2 1166 Ibid.: 2ff.


114

consequences of the crisis on the monetary market, like for example the devaluation of the rouble

in Belarus, led to a difficult situation and worsening results for the company and its subsidiaries.1167

With regard to the subsidiaries in Belarus, Bulgaria, Croatia, Liechtenstein, Macedonia, Serbia and

Slovenia the financial reports of the Telekom Austria Group show that, while financial measures

such as the operative revenues, the EBITDA and the operative result exhibited consistently

positive numbers throughout 2008 and 2009, the year 2010 marks the beginning of negative results

for the subsidiaries.1168

The situation worsened dramatically throughout 2011. The operative revenues of the Telekom

Austria Group further declined by 4.2% to 4.5 billion euros, the EBITDA decreased by 7.2% to

1.5 billion euros, the free cash flow dropped by another 25.7% to 479.2 million euros and, above

all, the operative result dropped from positive 437.9 million euros in 2010 to negative 7.5 million

euros in 2011; the worst result since a long time.1169 The operative result of minus 7.5 million

euros has to be seen as the sum total of operative results of all subsidiaries; and in 2011, all of

them showed, again, negative results.1170 The operative result in Austria dropped by 42.3% due to

restructuration measures; in Bulgaria the operative result even dropped by 66.0% and in Croatia

by 18.0%.1171 All this, did not lead to negative overall operative results for the subsidiaries but the

declines led to significant worse situations for each of them.1172 Additionally, the devaluation of

the rouble in Belarus, led to the development of an operative result from 73.4 million euros in 2010

to minus 255.2 million euros in 2011.1173 All this contributed to the bad overall operative result of

negative 7.6 million euros for the Telekom Austria Group in 2011. However, the reasons for the

bad results are depicted within the financial report and specified as a further devaluation of the

rouble and hyperinflation in Belarus, restructuration efforts in Austria as well as increasing price

pressure and international competition.1174 Moreover, regulations on a national and EU-wide level

restricted the freedom of pricing by setting price ceilings and, in combination with the weak econ-

omy, this led to one of the worst financial statements since the foundation of the company.1175 In

order to tackle these negative influences accordingly, the company aimed at refocusing its strategy

by concentrating on the increase of fixed-line networks and acquisition of new customers by,

amongst others, diversifying the portfolio with the telecommunications providers bob and tomato

1167 Ibid. 1168 Ibid.: 4 1169 cf. Telekom Austria Group: Geschäftsbericht (2011): 6 1170 Ibid.: 52 1171 Ibid. 1172 Ibid. 1173 Ibid. 1174 Ibid.: 14 1175 Ibid.: 15


115

which offer cheap conditions by waiving additional services.1176 In combination with the concept

of strict cost management, active tariff policies, investments and the effort to secure the position

as innovation leader, the company attempted to counteract against the consequences of the crisis

and subsequent recession.1177

The Telekom Austria Group thereby managed to increase its overall operative result again and

progress from minus 7.6 million euros in 2011 to positive 456.8 million euros again in 2012.1178

Yet, the operative revenues slightly declined to 4.3 billion euros while the EBITDA stayed the

same.1179 However, the free cash flow decreased again by 32.1% to 325.4 million euros.1180 Similar

to 2011, the company declared the reasons to be the intense international competition, price pres-

sure and price regulations as well as bad economic situations; especially in Belarus and Serbia.1181

As a consequence, the corporation refocused its strategy and attempted to optimize its core busi-

ness in the mature markets Austria, Bulgaria and Croatia by simultaneously achieving convergence

in the telecommunications area within these markets.1182 Additionally, the Telekom Austria Group

focused on operational excellence and strict cost management which included a conservative

financial strategy and management according to priorities.1183

The most recent financial statement of 2013 focuses on past investments and the future of the

Telekom Austria Group. It shows a further worsening of the situation for the company under the

aspect of investments and the goal of future profitability.1184 The operative revenues continued

their steady decline and decreased by 3.4% to 4.2 billion euros.1185 Moreover, the EBITDA de-

clined to 1.3 billion euros and the operative result decreased by 17.4% to 377.6 million euros.1186

The most drastic deterioration can be seen in the free cash flow which decreased from positive

325.4 million euros in 2011 to negative 716.7 million euros in 2013; thereby indicating not only

the investments accomplished within the previous year but also the financial capacity of the com-

pany and the probable inability to repay debts within the near future.1187 The strategy behind this

is also declared within the report and stated as the need to adapt to international circumstances and

react to the intense competitive situation on the markets.1188 Moreover, the Management Board

1176 Ibid.: 14ff. 1177 Ibid. 1178 cf. Telekom Austria Group: Geschäftsbericht (2012): 2 1179 Ibid. 1180 Ibid. 1181 Ibid.: 13 1182 Ibid.: 20ff. 1183 Ibid. 1184 cf. Telekom Austria Group: Geschäftsbericht (2013) 1185 Ibid.: 3 1186 Ibid. 1187 Ibid. 1188 Ibid.: 5


116

declares in the report that the future trend of permanent connectivity and increasing demand for

data communication needs to be met with appropriate investments in technology, investor rela-

tions, innovations and compliance in order to achieve the goal of growth in the future.1189

The financial reports and income statements of the Telekom Austria Group show that the company

still struggles with the consequences of the crisis and subsequent recession and attempts to com-

pensate the negative results by further investments in order to meet future demands and trends.

Connected to this, the ownership structure plays a major role and even though the Austrian ÖIAG

is not the majority shareholder anymore, it exhibits influence through its positions in the Supervi-

sory Board.

The last case deals with one of the major public companies specialized in the generation of elec-

tricity; namely the corporation Verbund AG; in general simply designated as Verbund.

6.2.11 Verbund AG

This public limited company is focused on the area of electricity generation through hydro power

and can be considered as one of the leading electricity companies in Europe.1190 With the Danube

and a variety of rivers that flow throughout Austria, the country is known for being close to the

water and eager to make use of this water as energy source.1191 Verbund makes use of this and

generates over 90% of electricity through hydro power.1192

6.2.11.1 Legal base

The company’s history can be traced back to the period after World War II and restructuration

efforts thereafter.1193 1947 marks not only the year of the foundation of the company but herein

two important developments. As already depicted within the retrospection on major historical de-

velopments in Austria since the establishment of the First Republic in section 4.1, 1947 was the

year when George Catlett Marshall introduced the so called European Recovery Program, also

known as Marshall Plan, to conquer against poverty, hunger and chaos in Europe.1194 The exact

reasons behind the plan are still discussed today, but the foremost is regarded to be the interest of

the United States in the prevention of further communistic expansion throughout Europe.1195 At

that time, Austria was occupied by four victorious allies and can be regarded as a special case due

1189 Ibid. 1190 cf. Homepage Verbund AG: Über uns 1191 Ibid. 1192 Ibid. 1193 cf. Homepage Verbund AG: Unternehmensgeschichte 1194 cf. Bierling (1997): 17 1195 Ibid.: 15ff.


117

to the fact that it received, in relative terms per capita and in relation to the GDP, more money out

of the plan than other European countries.1196 However, the victorious powers claimed their por-

tion of Foreign German Assets in Austria and in an attempt to save essential industries, like coal,

steel, aluminium, ore and also electricity from falling into Soviet ownership, the Austrian govern-

ment decided upon two Nationalization Acts.1197 While the first Nationalization Act of 1946, also

known under the legal name BGBl. Nr. 168/1946, nationalized, directly and indirectly, 141 enter-

prises in the area of steel, coal, electronics, oil, aluminium and ore,1198 the second Nationalization

Act of 1947, also known under the legal name BGBl. Nr. 81/19471199, attempted the establishment

of a new organization within the electricity industry1200 and therefore marks the birth of the Öster-

reichische Elektrizitätswirtschafts-AG1201 or Verbundgesellschaft1202 today known as Verbund

AG.1203 The company was 100% state-owned and received the public mission of re-establishing

the electricity supply in Austria.1204 Despite the fact that the corporation was operating with a

significant lack of capital, it built two power plants until the end of the 1940s.1205

In 1987 the company experienced a significant turning point when the second Nationalization Act

was amended in the law BGBl. Nr. 321/19871206 and thus, changed organizational rules for com-

panies manifested within this Nationalization Act.1207 The amendment made it possible for the

company to go public in 1988 and sell 49% of its shares to investors;1208 in more detail to 50,000

domestic and 20,000 foreign investors.1209 Moreover, the law regulated the transmission of state-

owned shares of certain special companies into the ownership of Verbund for the amount of six

billion Schilling.1210

For the purpose of completeness, table 5 provides a brief overview over the special companies

transferred to Verbund in 1987.1211

1196 cf. Seidel (2005): 299 1197 cf. Weber (1964): 69; Langer (1966): 47; Deutsch (1978): 23ff.; Turnheim (2009): 31 1198 cf. Turnheim (2009): 34 1199 There is no official translation 1200 cf. Weber (1964): 268ff. 1201 There is no official translation 1202 There is no official translation 1203 cf. Homepage Verbund AG: Unternehmensgeschichte 1204 Ibid. 1205 Ibid. 1206 There is no official translation 1207 cf. BGBl. Nr. 321/1987; Homepage Verbund AG: Unternehmensgeschichte 1208 cf. BGBl. Nr. 321/1987 Artikel II (2) 1209 cf. Homepage Verbund AG: Unternehmensgeschichte 1210 cf. BGBl. Nr. 321/1987 Artikel II (1) 1211 cf. BGBl. Nr. 321/1987 Anlage zu Artikel II


118

Special companies1212

Österreichische Donaukraftwerke AG1213

Österreichische Draukraftwerke AG1214

Österreichisch-Bayerische Kraftwerke AG1215

Donaukraftwerk Jochenstein AG1216

Ennskraftwerke AG1217

Tauernkraftwerke AG1218

Verbundkraft Elektrizitätswerke GmbH1219

Table 5: Special companies transferred to Verbund AG

The joining of the European Union in 1995 and its inherent liberalization concept, led to increasing

competition and subsequent pressure on the company.1220 The law Rechtsvorschrift für Eigentums-

verhältnisse an den Unternehmen der österreichischen Elektrizitätswirtschaft, BGBl. I

Nr. 143/19981221 regulated the ownership structure of all companies in the area of electricity and

hydroelectric power generation in Austria.1222 In an attempt to react to the liberalization of the

former quasi regulated electricity market, the company heavily fostered internationalization and

expansion within Europe throughout the early 2000s.1223 By 2005, the corporation was represented

in more than 20 countries with 13 subsidiaries in Europe and one in Turkey.1224 In 2010, after

63 years of history, the company decided to change its official name Österreichische Elektri-

zitätswirtschafts-AG into Verbund AG1225 and increase its initial share capital.1226

6.2.11.2 Main tasks

In general, the company can be regarded as having five core tasks. One of the major tasks is the

generation of electricity, i.e. the provision of electricity for private households and businesses;

1212 cf. Homepage Verbund AG: Unternehmensgeschichte; BGBl. Nr. 321/1987 Anlage zu Artikel II 1213 There is no official translation 1214 There is no official translation 1215 There is no official translation 1216 There is no official translation 1217 There is no official translation 1218 There is no official translation 1219 There is no official translation 1220 cf. Homepage Verbund AG: Unternehmensgeschichte 1221 There is no official translation 1222 cf. BGBl. I Nr. 143/1998 § 4 1223 cf. Homepage Verbund AG: Unternehmensgeschichte 1224 Ibid. 1225 cf. Homepage Verbund AG: Unternehmensgeschichte 1226 cf. BGBl. I Nr. 86/2010 § 1


119

mainly generated by hydroelectric power plants.1227 The company thereby considers the environ-

ment not only as contributor but, moreover, as important part in the whole electricity circle.1228

Due to the fact that Verbund generates over 90% of electricity through water energy, the whole

philosophy circles around sustainability and environmental friendly methods.1229 One third of the

area around its power plants is considered as nature reserve and protected area and the company

annually invests around 45 million euros in environmental projects to protect the domestic fauna

and flora.1230 Core locations within this business area are Albania, France, Germany and

Romania.1231

The second key task refers to the transmission of electricity; a task accomplished by the fact that

the company owns the biggest and most efficient high-voltage grid in Austria.1232 The transporta-

tion of electricity is in the responsibility of the subsidiary Austrian Power Grid AG (APG)1233

which is 100% owned by Verbund.1234 APG transports around half of the electricity needed within

Austria.1235

The subsidiary Verbund Trading GmbH1236 is responsible for the third task, namely the trade of

electricity; domestically and throughout Europe.1237 The centre of the limited liability company is

located in Vienna and from there the subsidiary trades electricity at the most important energy

stock markets in London, Paris, Rome and others.1238 In addition to electricity, the company trades

with emission certificates and so called Green-certificates which are a tradable commodity and

represent the environmental value of renewable energy.1239

Since 2005, the company participates in the field of directly selling and distributing electricity in

the liberalized domestic electricity market.1240 Since then, it managed to acquire over 320,000 pri-

vate household customers who obtain their electricity 100% from hydroelectric power plants.1241

1227 cf. Homepage Verbund AG: Strom aus Wasserkraft 1228 Ibid. 1229 cf. Homepage Verbund AG: Wirksamer Schutz für Mensch & Natur 1230 cf. Homepage Verbund AG: Strom aus Wasserkraft 1231 cf. Homepage Verbund AG: Stromerzeugung

1232 cf. Homepage Verbund AG: Stromübertragung 1233 There is no official translation 1234 Ibid. 1235 Ibid. 1236 There is no official translation 1237 cf. Homepage Verbund AG: Stromhandel 1238 Ibid. 1239 Ibid. 1240 cf. Homepage Verbund AG: Stromvertrieb 1241 Ibid.


120

Indeed, in addition to private customers, the company also delivers electricity to businesses and

the industrial sector in Austria.1242

The last major task of Verbund refers to investments in innovations and the provision of electricity

services.1243 This mainly includes convenience services like home solutions for the control of light-

ning, heating and others, decentralized eco-packages like photovoltaic solutions, energy-optimi-

zations and energy consulting as well as e-mobility.1244 The latter denotes to a joint-venture with

Siemens Austria and the task of investing in research and development as well as the further im-

provement of electric vehicles.1245


The ownership of Verbund is separated as follows. The amendment of the second Nationalization

Act constitutes that 51% of shares have to stay in the ownership of the state and hence the Republic

of Austria which is represented by the Federal Minister of Economy, Family and Youth.1246

Around 25% of shares are owned by the company EVN AG which is 51% owned by the province

Lower Austria, and the company Wiener Stadtwerke Holding AG which is 100% owned by the

town Vienna.1247 Five percent are owned by the company TIWAG-Tiroler Wasserkraft AG1248

which is 100% owned by the province Tyrol.1249 This indicates that, after the majority ownership

of the Republic of Austria, the next big portion of shares is owned by several Austrian provinces.

The rest, and therefore the minority of shares, is in free float.1250

The core markets of the company are France, Germany, Italy and Romania and it is structured

among 12 subsidiaries which, for the purpose of completeness, are briefly depicted within the

following table 6.1251

1242 Ibid. 1243 cf. Homepage Verbund AG: Energiedienstleistungen 1244 Ibid. 1245 Ibid. 1246 cf. BGBl. Nr. 321/1987; Homepage Verbund AG: Impressum 1247 cf. Homepage Verbund AG: Impressum 1248 There is no official translation 1249 cf. Homepage Verbund AG: Impressum 1250 Ibid. 1251 cf. Homepage Verbund AG: Über uns; Impressum


121

Verbund AG subsidiaries1252

Verbund Hydro Power AG1253

Verbund-Innkraftwerke GmbH1254

Verbund Thermal Power GmbH & Co KG1255

Verbund Renewable Power GmbH1256

Verbund Trading GmbH1257

Verbund Trading & Sales Deutschland GmbH1258

Verbund Sales GmbH1259

Verbund International GmbH1260

Verbund Management Service GmbH1261

Verbund Telekom Service GmbH1262

Verbund Tourismus GmbH1263

Verbund Umwelttechnik GmbH1264

Table 6: Verbund AG subsidiaries

Each of the subsidiaries is controlled by two managers responsible for the overall business of the

companies.1265 The organization of the overall company is handled by a Management Board and

a Supervisory Board.1266 The first consists of four persons; Wolfgang Anzengruber as chairman,

Johann Sereinig as vice-chairman, Peter Kollmann as chief financial officer and Günther

Rabensteiner as additional member.1267 The Supervisory Board consists of nine capital represent-

atives and five representatives appointed by the works council.1268

1252 cf. Homepage Verbund AG: Impressum 1253 There is no official translation 1254 There is no official translation 1255 There is no official translation 1256 There is no official translation 1257 There is no official translation 1258 There is no official translation 1259 There is no official translation 1260 There is no official translation 1261 There is no official translation 1262 There is no official translation 1263 There is no official translation 1264 There is no official translation 1265 cf. Homepage Verbund AG: Impressum 1266 cf. Homepage Verbund AG: Management und Struktur 1267 cf. Homepage Verbund AG: Vorstand 1268 cf. Homepage Verbund AG: Aufsichtsrat


122


Verbund can be considered as a special case due to the fact that its foundation can be traced back

to the period of reconstruction after World War II and the attempt to save the Austrian economy

by legally manifesting major industries in the first and second Nationalization Act.1269 The second

Nationalization Act built the ground for the establishment of the company and also regulated its

public tenet of contributing to the reconstruction and improvement of the Austrian economy by

providing a functioning electricity network and subsequent supply.1270 It was not until the 1990s

that an amendment to the Nationalization Act was signed and the company could grow and raise

capital by going public and selling 49% of shares.1271 This history and the companies’ develop-

ments throughout the years raise the assumption that the relationship to the Austrian government

has always been close; even after its initial public offering and further internationalization.

Since 2009, the chairman of the Management Board, and therefore CEO of the company Verbund,

is Wolfgang Anzengruber; a manager known for being very communicative and with a broad net-

work in the areas of economy and politics on a regional, national and international level.1272 His

former positions in the Management Boards of the companies ABB Energie AG,1273 ABB Öster-

reich,1274 Salzburger Stadtwerke AG,1275 Salzburg AG1276 and his position as CEO in the company

Palfinger AG1277 lead to significant networks within the Austrian economy.1278 Moreover, his co-

operation with the Austrian Federation of Industry1279 leads to essential political connections.1280

His predecessor was Ulrike Baumgartner-Gabitzer, former chief of the cabinet of the Federal

Minister of Economy Wolfgang Schüssel who is a member of the People’s Party.1281

The vice-chairman of the Management Board, Johann Sereinig, is known for having strong con-

nections to the Social Democratic Party.1282 He used to be the consultant of the Federal Minister

1269 cf. Homepage Verbund AG: Unternehmensgeschichte 1270 Ibid. 1271 cf. BGBl. Nr. 321/1987 1272 cf. Homepage Industrie Magazin: Rang 5: Wolfgang Anzengruber (28.10.2013) 1273 There is no official translation 1274 There is no official translation 1275 There is no official translation 1276 There is no official translation 1277 There is no official translation 1278 cf. Homepage Industrie Magazin: Rang 5: Wolfgang Anzengruber (28.10.2013); Homepage Verbund AG:

Vorstand 1279 Official translation for Industriellenvereinigung 1280 cf. Homepage Industrie Magazin: Rang 5: Wolfgang Anzengruber (28.10.2013) 1281 cf. Homepage Die Presse: Ein Präsident als Kriegserklärung (30.03.2007) 1282 Ibid.


123

of Finance in 1984 as well as consultant and chief of the cabinet of the Federal Chancellor Franz

Vranitzky.1283

The position as CFO is the first job in Austria for Peter Kollmann who started working at renowned

companies such as Salomon Brothers International Ltd., Dumas West & Co, Lehman Brothers

International and Bank of America Merrill Lynch abroad after his studies at the University of

Economics in Vienna and London School of Economics.1284 Due to the fact that his appointment

was supported by the Austrian parliament member Wolfgang Katzian, who is connected to the

Social Democratic Party, it can be assumed that Kollmann is related to this party.1285 However, he

is officially a big trade unionist and not connected to any political party; although he was already

connected to the Austrian economy and politics before his job as CFO; for example the initial

public offering of the company Telekom Austria Group or the sale of the Austrian Airlines.1286

The fourth member of the Management Board, Günther Rabensteiner, was appointed in 2011 and

is responsible for the international agenda of the company.1287 Before this position he was the

manager of the subsidiary Verbund Trading AG.1288

As already indicated before, the Supervisory Board consists of nine capital representatives and

five members appointed by the works council.1289 The chairman of the Supervisory Board, Gilbert

Frizberg, was appointed in 2007.1290 Despite the fact that he resigned his job as financial referent

of the People’s Party Styria, he is still known for having strong connections to the People’s

Party.1291

The vice-chairman of the Supervisory Board, Peter Püspök, was appointed in 2000 and his contract

is valid until 2015.1292 He is the former CEO of the Raiffeisenlandesbank Niederösterreich-Wien

AG1293 where he served in the Management Board for nine years before retiring in 2007.1294 He

was appointed as financial referent for the People’s Party in 2006 and despite his retirement one

1283 cf. Homepage Verbund AG: Vorstand 1284 Ibid. 1285 cf. Homepage OÖ Nachrichten: Peter Kollmann: Von Wels in die große Finanzwelt (07.03.2013) 1286 cf. Homepage Die Presse: Verbund sucht eine eierlegende Wollmilchsau (01.03.2013) 1287 cf. Homepage Bloomberg: Verbund appoints Guenther Rabensteiner to Management Board (GER); Homepage

Der Standard: Rabensteiner vierter Verbund-Vorstand (10.03.2011) 1288 cf. Homepage Verbund AG: Vorstand 1289 cf. Homepage Verbund AG: Aufsichtsrat 1290 Ibid. 1291 cf. Homepage Die Presse: Ein Präsident als Kriegserklärung (30.03.2007) 1292 cf. Homepage Verbund AG: Aufsichtsrat 1293 There is no official translation 1294 cf. Homepage Der Standard: Raiffeisen-Püspök will mehr Qualität (03.09.2007)


124

year later, he still serves as the vice-chairman in the Supervisory Board of Verbund.1295 This indi-

cates that both, the chairman and the vice-chairman of the Supervisory Board, have strong political

connections to the People’s Party. The second vice-chairman Reinhold Süßenbacher is mainly

known for his engagement in the Austrian family-owned company Umdasch Group which he man-

aged for eleven years before changing his position.1296

The connection to the works council is visible at this company mainly due to the fact that the

Supervisory Board does not only include the nine capital managers but also five workers’ repre-

sentatives.1297 The head of the workers’ representatives, Anton Aichinger, is the chairman of the

group works council of Verbund itself.1298 One member, Ingeborg Oberreiner, is considered chair-

woman of the overall staff association and the three other members are part of the central works

council; two of them, Kurt Christof and Wolfgang Liebscher being in the position of a chairman

and one, Joachim Salamon, being solely a member.1299 The fact that three different forms of works

councils are represented within the Supervisory Board shows a distinct connection to its workers’

representatives.


The year 2009 marks the beginning of a troublesome time for the electricity provider; a fact which

can be retrieved from the annual report and the statement of the Management Board in 2009.1300

The record number of 2008 could not be met again and the main performance indicators fell. The

operative revenues declined from 3.7 billion euros to 3.5 billion euros and the operative result, i.e.

the EBIT, dropped by 9.1% from 1.1 billion euros to 1.0 billion euros.1301 The net result, i.e. the

consolidated income, fell by 6.2% from 686.6 million euros to 644.4 million euros.1302 Despite the

worsening of the financial situation, the Management Board emphasized the successful interna-

tional management and operations of the company; thereby mainly referring to the acquisition of

13 hydroelectric power plants at the Bavarian Inn from the energy company E.ON in Germany

and thus the biggest acquisition ever implemented in the history of Verbund.1303 Moreover, the

1295 Ibid. 1296 cf. Homepage Die Presse: Reinhold Süßenbacher (05.09.2008) 1297 cf. Homepage Verbund AG: Aufsichtsrat 1298 Ibid. 1299 Ibid. 1300 cf. Verbund AG: Geschäftsbericht (2009): 4ff. 1301 Ibid.: 2ff. 1302 Ibid. 1303 Ibid.: 5


125

company heavily invested in its additional core markets Italy and Turkey and re-focused its strat-

egy on the most important markets only.1304

However, the recession and its consequences led to a decreasing demand for alternative energy

and therefore decreasing business for the company. The financial situation did not improve

throughout 2010 and in order to further invest and keep its A-rating, the company decided upon

the increase of its initial share capital from 308.2 million euros to 347.4 million euros by the emis-

sion of new shares.1305 In addition to this, Verbund initiated several restructuration and savings

measures and sold some of its shares in power plants.1306 However, by the end of the year the

annual report shows that the operative revenues further fell to 3.3 billion euros and the EBIT de-

creased to 828.5 million euros.1307 Also the consolidated income declined significantly to

400.8 million euros and the free cash flow reached its worst figure of minus 1.0 billion euros.1308

While the company tried to calm its shareholders by increasing the dividend in 2009 from

1.05 euros to 1.25 euros, the recession and its consequences led to the collapse of the dividend in

2010; to a price of 0.55 euros per share.1309

By the end of 2011 the company managed to slightly increase its operative revenues again to

3.4 billion euros; however, the EBIT further worsened to 462.3 million euros.1310 In its annual

analysis, the company for the first time mentioned the difficult market situation and decreasing

economic developments; primarily due to factors such as the high debts of certain European coun-

tries and the US, as well as the nuclear accident in Japan which led to new debates about nuclear

power plants versus hydroelectric power.1311 Moreover, the company declares that mild weather

conditions and high energy prices in 2011 led to decreasing energy consumption; especially in the

alternative energy area hydroelectric power because over 70% of domestic energy consumption

can be traced back to oil, gas and coal.1312

In 2012 Verbund managed to increase its EBIT to 666.9 million euros and therefore improved the

result in comparison to 2011 and 2010.1313 Still, the operative revenues decreased significantly to

1304 Ibid.: 6 1305 cf. Verbund AG: Geschäftsbericht (2010): 6 1306 Ibid.: 7 1307 Ibid.: 3 1308 Ibid. 1309 Ibid.: 4 1310 cf. Verbund AG: Geschäftsbericht (2011): 3 1311 Ibid.: 15 1312 Ibid. 1313 cf. Verbund AG: Geschäftsbericht (2012): 4


126

2.7 billion euros.1314 The management declared the year 2012 as a difficult one; mainly character-

ized by the implementation of further savings and restructuration measures.1315 However, the com-

pany emphasized the positive development throughout the year, despite the complicated situation,

and highlights its environmental efforts in the electricity sector.1316

In the year 2013, the enterprise managed to keep its operative revenues on the same level; yet, it

significantly worsened a variety of other performance measures. The EBIT fell from positive

556.9 million euros in 2012 to negative 269.7 million euros and the profit from ordinary activities

dropped from positive 415.6 million euros in 2012 to negative 672.6 million euros.1317 According

to the annual report 2013, the conditions for the electricity market throughout Europe further wors-

ened in 2013.1318 Bad economic conditions, overcapacities in the electricity market and the mas-

sive support of new alternative energies led to a decreasing trade of emission certificates; one of

the core businesses of Verbund.1319 Moreover, the entity declares the domestic demand for elec-

tricity as only slightly higher than in 2012 and even though this indicates a slight increase, the

dependence on imports amplified as well, thereby worsening the situation for the domestic elec-

tricity producer Verbund.1320 Overall it can be assumed that the global financial crisis and its

subsequent consequences, including the period of recession and worsened economic situation for

almost all domestic companies, led to significant troubles for the electricity company Verbund.

Summing up the examples, it can be adhered that the majority of the enterprises is concerned with

goods that relate to the greater good of the public like for example transportation, the establishment

and maintenance of appropriate infrastructure, the provision of electricity and telecommunications

services as well as the broadcasting of information and provision of gas and oil. However, while

some of them are completely public, and therefore fulfil a stronger public tenet, others are influ-

enced by external shareholders and consequently subject to developments within the market.

Depending on its history and employees, political connections and governmental interventions

differ among the examples. In order to provide a holistic picture of the aspects important in public

management, its differences to private management as well as other important criteria related to

the examples discussed, the following part of the Thesis contains a discussion of those aspects;

lastly also related to the analysed enterprises again in a summarizing connection and conclusion.

1314 Ibid. 1315 Ibid.: 10 1316 Ibid. 1317 cf. Verbund AG: Geschäftsbericht (2013): 6 1318 Ibid.: 14 1319 Ibid. 1320 Ibid.: 15

Discussion Etienne Koo

127

7. Discussion

After having analysed each enterprise according to its legal background, main tasks and organiza-

tional structure as well as relationships to Austrian politics and financial developments throughout

the global economic crisis and subsequent phase of recession, this part deals with a final discussion

of addressed topics and further relevant aspects related to them.

In alliance with the requirements of CIRIEC, the discussion deals with a thorough analysis of

aspects related to major public or fully public enterprises and how they differ from fully private

ones. Due to the fact that CIRIEC aims at examining public companies and how they are affected

by politics, the subsequent section depicts not only similarities and differences between the man-

agement and performance of state-owned versus private enterprises, it also shows how policies

influence public companies and the internal organizational logic. For the purpose of completeness,

the importance of trade unions as well as their relation to state-owned enterprises is indicated

briefly before all previous aspects are combined and applied to form a picture of the situation in

Austria. Thereafter, each of the previously analysed major Austrian enterprises is connected to the

designated theoretical aspects in order to contribute to CIRIEC’s research accordingly.

7.1 State-owned vs. private enterprises

While Sayre (1948) and Weber (1976) support the point of view that there is no difference between

state-owned and private enterprises due to the fact that they root in the same social, economic and

managerial principles,1321 a variety of researchers defines clear contrasts between the two. The

need for state-owned enterprises, in both welfare and liberalistic state forms, is mostly justified by

the fact that there has to be an instrument that concerns itself with the greater well-being; i.e. non-

economic goals, social issues, the employment of citizens as well as the protection of natural re-

sources and regional habitats.1322 These tasks are accomplished by those employed within the pub-

lic sector and, according to Goldeng, Grünfeld and Benito (2008), consequently do not always

serve the greater good but often benefit an elitist minority that acts upon self-stated ideological

reasons.1323

1321 cf. Sayre, W. S.: An outline of American government, 10th edition, Barnes & Noble, New York (1948): 100f.;

Weber (1976): 825f. 1322 cf. Grout, P. A. & Stevens, M.: The assessment: Financing and managing public services. Oxford Review of

Economic Policy, Vol. 19 (2003): 215f. 1323 cf. Goldeng, E., Grünfeld, L. A & Benito, G. R. G.: The Performance Differential between Private and State

Owned Enterprises: the Roles of Ownership Management and Market Structure. Journal of Management Studies,

Vol. 45, No. 7 (2008): 1245

7. Discussion Etienne Koo

128

In order to give a better overview, the differences and similarities of state-owned versus private

enterprises are categorized among related topics of concern and discussed subsequently; thereby

starting with peculiarities in the management and performance of both.

7.1.1 Peculiarities in management and performance

Contrary to Weber (1976) and in alignment with Sawyer (1948), the researcher Jann (1998) created

an assumption on how managers in public and private enterprises can be similar and different at

the same time. While managers of state-owned enterprises have to deal with the same issues as

private ones; like for instance issues concerning suppliers, customers, personnel, subordinates,

media, the public and other surrounding organizations, public managers, additionally, have to deal

with public courts, representatives of political parties, civil servants, different interest groups, sen-

ates of the National Council and committees.1324 Jann (1998) assumes that this makes both man-

agers alike and different at the same time; however, recent research includes a component not

considered thus far; namely competition. According to Goldeng, Grünfeld and Benito (2008) the

aspect of competition needs to be tackled when having a look at the management of state-owned

versus private enterprises; mainly because it affects the tactics applied.1325 Despite the fact that

competition is usually more present in private than public industries, managers whose incentives

are based on performance will actively foster competition in order to enhance the performance of

the company; an act usually accomplished within private companies.1326 Connected to competition

are different views on the learning process from competitive surroundings. While Barnett, Greve

and Park (1994) assume that those managers facing high competition have a higher potential for

learning,1327 researchers like Tan (2002) and Tan and Peng (2003) indicate that state-owned enter-

prises have a higher chance of learning even though they might not face heavy competition simply

due to the fact that they have a longer life-expectancy as they will not exit the market even in hard

times.1328

1324 cf. Jann (1998): 35 1325 cf. Goldeng, Grünfeld & Benito (2008): 1245 1326 cf. Cuervo, A. & Villalonga, B.: Explaining the variation in the performance effects of privatization. Academy of

Management Review, Vol. 25 (2000): 582f.; Villalonga, B.: Privatization and efficiency: differentiating ownership

effects from political, organizational and dynamic effects. Journal of Economic Behaviour and Organization,

Vol. 42 (2000): 45f. 1327 cf. Barnett, W. P., Greve, H. R. & Park, D. Y: An evolutionary model of organizational performance. Strategic

Management Journal, Vol. 15 (1994): 12f. 1328 cf. Tan, J.: Impact of ownership type on environment-strategy linkage and performance: evidence from a

transitional economy. Journal of Management Studies, Vol. 39 (2002): 335f.; Tan, J. & Peng, M. W.: Organizational

slack and firm performance during economic transitions: two studies from an emerging economy. Strategic

Management Journal, Vol. 24 (2003): 1250f.


129

Notwithstanding the assumptions about learning, a majority of research indicates the inferiority of

state-owned enterprises to private ones due to internal management problems and a lack of appro-

priate incentives as well as suitable benchmarks.1329 While managers in private enterprises are able

to monitor their performance by benchmarking, i.e. comparing their tactics and performance with

those of its competitors, the public managers often face a quasi-monopoly position in which there

are no other companies to benchmark with.1330 Moreover, managers of private enterprises are usu-

ally compensated according to their individual performance and the development of indicators like

the return on assets or EBIT; yet, managers of public companies generate returns that often flow

into a public budget which does not benefit any specific individual.1331 The fact that there are not

as many bonus systems and performance incentives is often compensated by the circumstance of

job security within public enterprises.1332 In addition to individual incentives, public and private

managers face differences in organizational incentives in the sense that the private industry is con-

stantly monitored by the market; e.g. investors and other participants that control if resources are

allocated efficiently and if not, replace the responsible manager.1333 In alliance with this, Cuervo

and Villalonga (2000) designate that the reasons for the usually inferior performance of state-

owned enterprises to private ones do not only lie in inappropriate incentives but also in the possi-

bilities of applying a more decentralized structure, broader business strategies, innovative

approaches as well as the easy replacement of top managers.1334 Subsequently, state-owned enter-

prises are not directly affected by the disciplining measures of markets as their existence, and

connected to this the possible dismissal of managers, is related to politicians rather than the mar-

ket.1335 This also indicates that managers of public companies have to have a different set of skills

which also includes the competence of networking and dealing with politicians;1336 a circumstance

discussed in more detail within the following section 7.1.2.

7.1.2 Governmental influences and policies

A variety of researchers indicate that the value of a politically closely connected company is

affected by changes in the political landscape and henceforth, assume that the relation between

1329 cf. Goldeng, Grünfeld & Benito (2008): 1247f. 1330 cf. Grout & Stevens (2003): 215; Goldeng, Grünfeld & Benito (2008): 1248 1331 cf. Goldeng, Grünfeld & Benito (2008): 1248f. 1332 Ibid. 1333 cf. Goldeng, Grünfeld & Benito (2008): 1249 1334 cf. Cuervo & Villalonga (2000): 583 1335 cf. Megginson, M. & Netter, J.: From state to market: a survey of empirical studies on privatization. Journal of

Economic Literature, Vol. 39 (2001): 323f. 1336 cf. Tan & Peng (2003): 1251


130

politicians and the corporation can add significant value.1337 Connected to this relation, however,

is the risk of uncertain future policies; thereby designating that possible political connections of

companies can change with the political landscape and subsequently, the companies face the chal-

lenge of dealing with future policy uncertainty.1338 Despite the fact that this circumstance is usually

applied to private companies bonding with governmental officials, this condition can also affect

state-owned enterprises as the right to vote and change the political map can lead to significant

deviations in the way the public enterprises are managed. A logical continuation is made by Fowler

(2006) who states that divided governments reduce the uncertainty of policy risk due to the fact

that the parties need to negotiate terms and conditions of possible future policies; a circumstance

that inhibits governmental control by solely one party.1339 Füss and Bechtel (2008) expand this

assumption by indicating that the chances of policy changes are significantly lower under divided

governments than they are under unified or single-party ones.1340 With regard to this, Kim,

Pantzalis and Park (2012) pose the assumption that the degree of intervention between the state

and the government is a determinant of uncertainty about future policies which, in other words,

means that the proximity to political parties is essential for stock returns.1341

Connected to this is the, already in section 4.2.3.2 discussed, topic of rent-seeking and possible

negative tendencies related to it. Krueger (1974) defines rent-seeking in means of competition and

indicates that government officials might increase their expected rent officially by, for example,

locating a company in the capital of a country, or unofficially by, for instance, employing friends

or relatives.1342 Moreover, due to the fact that there is significant competition over government

jobs, bribery might decide upon possible careers.1343 With regard to this, Acemoglu and Robinson

(2006) distribute the statement that political elites have an interest in keeping a certain status-quo

in order to grant an advantage over strangers who try to intervene from outside.1344 Additionally,

Bellettini, Ceroni and Prarolo (2014) pose the assumption that political barriers through bureau-

1337 cf. Fisman, R.: Estimating the value of political connections. American Economic Review, Vol. 91 (2001):

1096f.; Goldman, E., Rocholl, J. & So, J.: Do politically connected boards affect firm value. Review of Financial

Studies, Vol. 22 (2009): 2332f.; Goldman, E., Rocholl, J. & So, J.: Political Connections and the Allocation of

Procurement Contracts (2010): 2 1338 cf. Kim, C. F., Pantzalis, C. & Park, J. C.: Political geography and stock returns: The value and risk implications

of proximity to political power. Journal of Financial Economics, Vol. 106 (2012): 196f. 1339 cf. Fowler, J. H.: Elections and markets: the effect of partisanship, policy risk and electoral margins on the

economy. Journal of Politics, Vol. 68 (2006): 91f. 1340 cf. Füss, R. & Bechtel, M. M.: When investors enjoy less policy risk: divided government, economic policy

change and stock market volatility in Germany, 1970-2005. Swiss Political Science Review, Vol. 14 (2008): 288f. 1341 cf. Kim, Pantzalis & Park (2012): 226 1342 cf. Krueger (1974): 292 1343 Ibid. 1344 cf. Acemoglu, D. & Robinson, J. A.: Economic backwardness in political perspective. American Political

Science Review, Vol. 100 (2006): 116f.


131

cracy and regulations are used strategically for the purpose of establishing a network of compul-

sory members that prevent others from entering.1345 Indeed, within this politicians fear political

competition and the possibility of not being re-elected due to inefficient policies.1346 As a conse-

quence, they use the support of the built network to acquire electoral advantages and enhance the

probability of being re-elected.1347 This aligns with the fact that the turnover rate of politicians in

developed countries is rather low.1348

Subsequently, the role of trade unions and their connections to politics are analysed briefly.

7.1.3 The role of trade unions

The microeconomic theory of trade unions by Oswald (1982) is one of the basic works on how

trade unions can be characterized and which role they play in society. Oswald (1982) indicates

that they can be assumed as coalition of workers who have similar skills and seek the fair distri-

bution of wages by applying negotiation power.1349 This means that they are able to bargain about

the amount of hours worked as well as the minimum wage paid to workers.1350 An important issue

in the membership of a trade union, especially in big groups, is the free-rider problem; i.e. efforts

will not only apply to members but to all workers.1351 Convincing others of the demand for union-

ism is therefore often a difficult issue.1352 According to Olson (1965) big groups as trade unions

are only formed because they are either part of the employment, and therefore mandatory, or be-

cause the unionized individuals offer others incentives for joining.1353 However, Booth (1985) and

later Schnabel (2003) address this by applying the theory of social custom which indicates that

individuals join groups with possible free-rider problems due to the reputation gained when being

a part of the group.1354 Workers may be even more eager to join the union if already a lot of people

are part of the union and the group is large; a circumstance contradicting Olson’s (1965) incentives

approach for unionism as it addresses independence in the decision of joining.1355 Connected to

1345 cf. Bellettini, G., Ceroni, C. B. & Prarolo, G.: Knowing the right person in the right place: Political connections

and resistance to change. Journal of the European Economic Association, Vol. 12, No. 3 (2014): 642 1346 cf. Acemoglu & Robinson (2006): 116f.; Bellettini, Ceroni & Prarolo (2014): 642 1347 cf. Bellettini, Ceroni & Prarolo (2014): 642 1348 Ibid.: 643 1349 cf. Oswald, A. J.: The Microeconomic Theory of the Trade Union. The Economic Journal, Vol. 92 (1982): 577 1350 Ibid. 1351 cf. Schnabel, C.: Determinants of Trade Union Membership. In Addison, J. T. & Schnabel, C. (eds.):

International Handbook of Trade Unions. Edward Elgar Publishing, Cheltenham (2003): 13 1352 Ibid.: 13f.; 16 1353 cf. Olson, M.: The Logic of Collective Action. Public Goods and the Theory of Groups. Harvard University

Press, Cambridge MA (1965): 5f. 1354 cf. Booth, A. L.: The Free Rider Problem and a Social Custom Model of Trade Union Membership. Quarterly

Journal of Economics, Vol. 100 (1985): 255f. ; Schnabel (2003): 16 1355 cf. Schnabel (2003): 16f.


132

this, Kladermans (1986) developed three models of the reasons why people join unions. The frus-

tration-aggression approach indicates that workers join the union due to their dissatisfaction with

the overall situation and because they see the chance to actively change something.1356 The

rational-choice approach designates the rational weighing of benefits against costs and thereafter

deciding in favour or against a membership.1357 The interactionist approach sees the membership

in the light of the social context of the individual; i.e. the private and work surrounding as well as

family and friends and their influence on the person.1358 In any case, Streeck and Hassel (2003)

indicate that nowadays, members of trade union have to intervene in two different surroundings;

namely the state and therefore political area as well as the market and therefore liberalistic area of

collective bargaining.1359 While the 1980s and 1990s in Europe were characterized by the circum-

stance that unions were seen in the context of social progress, they subsequently focused more on

economic policies and collective bargaining again.1360 However, especially in the democratic

European countries, their connection to politicians is still prevalent.1361 Streek and Hassel (2003)

thereby differentiate between the liberalistic and the social welfare state.1362 While unions within

the first state form are quite independent and focused on economic activities, they are rather sub-

ordinated to political parties in the second state form due to the fact that the intervention of the

government plays an essential role in the establishment of social well-being and developments

within the industry.1363 Consequently the relation of political parties and trade unions is fairly

close.1364

After having depicted additional theoretical aspects of importance when wanting to analyse major

primarily fully public enterprises and their internal logics as well as political relations, the follow-

ing final part deals with the illustration of the situation in Austria. This includes not only the por-

trayal of Austria as a special case, but also the application of theoretical aspects to the recent situ-

ation. In addition, each chosen public enterprise is reflected separately according to the discussed

aspects thereafter.

1356 cf. Kladermans, B.: Psychology and Trade Union Participation: Joining, Acting, Quitting. Journal of

Occupational Psychology, Vol. 59, No. 1 (1986): 199f. 1357 Ibid. 1358 Ibid. 1359 cf. Streeck, W. & Hassel, A.: Trade unions as political actors. In Addison, J. T. & Schnabel, C. (eds.):

International Handbook of Trade Unions. Edward Elgar Publishing, Cheltenham (2003): 335 1360 Ibid.: 336 1361 Ibid. 1362 Ibid.338 1363 Ibid. 1364 Ibid.


133

7.2 Situation in Austria

According to Parris, Pestieau and Saynor (1987), the Austrian parliament exercises significant

control over public enterprises; especially in the area of railway and postal services.1365 However,

tasks of monitoring and control are, in general, not accomplished by the federal cabinet or com-

mittees but are rather formalized in specific laws and acts; thereby including those ministries

responsible for the public enterprise and its performance.1366 Peculiarities in the management of

Austrian public enterprises can be traced back to historical roots and the socialization concept of

the social democrat Otto Bauer who initiated the notion of managing public companies with a fair

distribution of representatives of workers, consumers and the state.1367 The basic idea behind this

type of management is still present in today’s state-owned companies and even though they had

to adapt to different external conditions and a more liberalized market, the influence of political

representatives is still high; a circumstance depicted in more detail within the analysis of each

company as well as the subsequent reflection on selected enterprises.

When it comes to the relationship with trade unions, the Austrian ÖGB1368 is the representative

institution to deal with. It can be considered as a holding institution responsible for seven individ-

ual trade unions; each of them related to a different industry.1369 The union GPA1370 is responsible

for private people and journalists while the union GÖD1371 is in charge of public services and

GDG-KMSFB1372 responsible for civil servants and those employed in arts, sports and media.1373

GBH1374 is in charge of the construction and wood industry and GPF1375 responsible for the post

and telecommunications industry.1376 The union PROGE1377 takes care of those employed in the

production and the union vida1378 is responsible for everything related to traffic and the services

industry.1379 The overall organization ÖGB sees itself as the independent representative of workers

in all industries and therefore central point of contact for employers, the state and politicians.1380

In its mission statement, the company underlines its efforts to accomplish a fair distribution of

1365 cf. Parris, H., Pestieau, P. & Saynor, P.: Public Enterprise in Western Europe. Croom Helm, London (1987): 86 1366 cf. Parris Pestieau & Saynor (1987): 101 1367 cf. Weber (1964): 27 1368 ÖGB stands for Österreichischer Gewerkschaftsbund 1369 cf. Homepage ÖGB: Gewerkschaften 1370 GPA stands for Gewerkschaft der Privatangestellten, Druck, Journalismus, Papier 1371 GÖD stands for Gewerkschaft Öffentlicher Dienst 1372 GDG-KMSFB stands for Gewerkschaft der Gemeindebediensteten – Kunst, Medien, Sport, freie Berufe 1373 cf. Homepage ÖGB: Gewerkschaften 1374 GBH stands for Gewerkschaft Bau-Holz 1375 GPF stands for Gewerkschaft der Post- und Fernmeldebediensteten 1376 cf. Homepage ÖGB: Gewerkschaften 1377 PROGE stands for Produktionsgewerkschaft 1378 vida stands for Verkehrs- und Dienstleistungs-Gewerkschaft 1379 cf. Homepage ÖGB: Gewerkschaften 1380 cf. Homepage ÖGB: Über uns


134

wealth and consequently social justice for every worker.1381 This does not only include collective

bargaining, but also the legal aspects of working conditions as well as sustainable developments

in the economy and society.1382

Yet, it has to be considered that, similar to Germany, there are two formally separated interest

groups for employees in Austria which are the works council and the trade union.1383 While the

first constitutes of four to five members of the internal company staff and is responsible for the

representation of the own colleagues in the company; the latter is in charge of representing the

interests of the workers in the whole industry; for example metal processing.1384 Despite the fact

that works councils are often part of the Supervisory Board and have an information and hearing

right, it is the trade union that has the power to bargain for collective wage increases and prescribed

working conditions in collective agreements.1385 In Austria, the system of collective agreements

can be characterized as broad and efficient as 95% of employees are subject to a branch collective

agreement within their employment.1386 Yet, only 14% of those companies possess a works council

which indicates a regulation-gap when it comes to negotiated collective agreements and the

representation at site.1387 However, all state-owned companies discussed within this Thesis have a

works council that is also represented within the Supervisory Board; a circumstance discussed in

more detail within the following section of final reflection.

7.2.1 Final reflection on selected enterprises

This last part of the Thesis deals with the final reflection of selected major enterprises in Austria.

For the purpose of simplification, the order of analysing the companies stays the same alphabetical

order as previously within this Thesis; thereby starting with the company ASFINAG and ending

with Verbund. In order to provide a holistic picture, each case is reflected upon its individual

peculiarities concerning its background, tasks, structure and political connections, as well as its

connection to theoretical concepts and assumptions.

1381 cf. Homepage ÖGB: Mission Statement 1382 Ibid. 1383 cf. Guger, A., Runggaldier, U. & Traxler, F.: Lexikon der Arbeitsbeziehungen, Beschäftigung und sozialen

Sicherung Österreich. Manz Verlag, Wien (2001): 90ff. 1384 Ibid. 1385 Ibid. 1386 cf. Traxler, F. & Behrens, M.: Collective bargaining coverage and extension procedures. In EIRO comparative

report (2002) 1387 cf. Flecker, J, Hermann, C. & Schmid, A.: Betriebe ohne Betriebsrat in Österreich – wachsende Lücken und

alternative Vertretungsstrategien. In Artus, I., Böhm, S., Lücking, S. & Trinczek, R. (eds.): Betriebe ohne

Betriebsrat. Informelle Interessensvertretung in Unternehmen. Campus Verlag, Frankfurt am Main, (2006): 292f.


135

7.2.1.1 ASFINAG

The public company ASFINAG is responsible for the creation and maintenance as well as securing

of safe proceedings on all Austrian highways and interstates.1388 The company developed itself out

of a long history from the first need of streets during the 1920s, over the recreation phase after

World War II, to social tendencies and the task of the state to build streets for its citizens during

the 1970s. Until 1982 the task of constructing highways was accomplished within the assignments

of the Austrian Federal Ministries; however, in that year the government decided to restructure

this organization and establish ASFINAG as responsible legal entity.1389 Due to the fact that the

company is responsible for a task which was already accomplished by the state, and smaller public

enterprises before the establishment of ASFINAG, the enterprise can be considered as fulfilling a

solely public mission. The responsibility of creating highways and interstates as well as their

according maintenance relates to contributing to the greater-good and well-being within the

society. Despite the fact that the company, by now, interacts with other enterprises of its type on

an international, especially EU-wide, level, its tasks are primarily focused on Austria and the mo-

bility of Austrian citizens. Moreover, the long historical developments of the company indicate a

close relationship to the Austrian government. This circumstance is still prevalent today and man-

ifests, for instance, in the appointment of the Management Board. When the governmental con-

stellation of the People’s Party and Freedom Party in the early 2000s led to discrepancies about

the management within ASFINAG, the Management Board was simply expanded from two to

three persons and a manager who was close to the Social Democratic Party was integrated as well.

Indeed, the extension of the board members was officially justified by strategic management and

organization-related reasons; however, the political power plays within this 100% state-owned

enterprise were clearly visible. Currently, the governmental constellation of the Social Democratic

and People’s Party aligns with the representatives at the ASFINAG Management Board which are

either close to the one or the other party; however, indeed not officially members of them. The fact

that the state is officially liable for the financial situation and actions of the company, leads to

political power plays and governmental interventions on how to appropriately manage the finan-

cial conditions of the public enterprise; even though the company is not directly financed by the

state but by the income from tolls and external credits.


Unternehmen 1389 cf. BGBl. Nr. 591/1982


136

Overall, ASFINAG cannot be aligned with the concept of New Public Management; however, it

sometimes makes use of Public-Private Partnerships as indicated within the New Public Govern-

ance approach. In alliance with Jann (1998), it can be communicated that the company’s managers

have to deal not only with suppliers, customers and the media but also with political parties, the

National Council and different interest groups. Due to the fact that the company holds a monopoly

within Austria, the component of competition as indicated by Goldeng, Grünfeld and Benito

(2008) cannot be added in its analysis. Yet, connected to the research of Tan (2002) and Tan and

Peng (2003), it can be assumed that the long historical developments from the first need of streets,

over the phases of World War II and recreation as well as subsequent developments and even

liberalization tendencies, led to significant learning effects and consequently appropriate adjust-

ments over time which, indeed, aligns with the assumption of the researchers that companies with-

out competition phase high learning curves as well. When it comes to trade unions, there is no

clear connection of the company to a specific trade union; however, currently the debates about a

possible integration of ASFINAG into ÖIAG lead to the circumstance that the trade union GPA-

DJP, which is actually responsible for private people and journalism cooperates with the works

council of ASFINAG against an integration into ÖIAG.1390 The reasons behind that lie, indeed, in

discussions about partly privatizing the company after its integration; a circumstance the company

itself sees no benefits in. It can be assumed that the company’s future will continue to be charac-

terized by political interventions and often also power plays; especially when it comes to the cur-

rently discussed re-organization of ÖIAG and possible new integrations. Rooted in its historical

connections to the government and previous developments, it cannot be assumed that the organi-

zational logics of the company changed significantly.

7.2.1.2 Bundesimmobiliengesellschaft

The public limited liability company BIG is responsible for the administration of around 2,800 real

estates owned by the state.1391 As such, it accomplishes a variety of tasks such as the calculation

of rents, the inspection of buildings, maintenance, consulting and many more structured among

the three divisions schools, universities and special real estates.1392 Moreover, due to the fact that

the company’s emphasis is focused on Austria and real estates within this country, it cannot be

considered as public multinational or international enterprise. The enterprise is 100% public and

its representative is the Federal Minister of Science, Research and Economics.1393 Since 2013 this

1390 cf. Homepage APA-OTS: ASFINAG-Beschäftigte wehren sich gegen Eingliederung in ÖIAG (07.11.2014) 1391 cf. Homepage BIG: Über uns 1392 cf. Homepage BIG: Objektmanagement 1393 cf. BGBl. I Nr. 141/2000 § 1(2)


137

position is held by Reinhold Mitterlehner and consequently a member of the People’s Party. Also,

the two managing directors as well as three Supervisory Board members of BIG are connected to

the People’s Party; thereby indicating the dominance of this party within the management of the

company. This, indeed, also roots in the distribution of positions among the political parties.

Contrary to the previously discussed ASFINAG, the public company BIG looks back on a rather

short history of 22 years; however, each year being influenced by governmental constellations and

consequently political interventions in its management. The logics behind its management are

focused on the generation of income through rents and sales as well as the maintenance of im-

portant public buildings and hence rather long-term focused instead of short-term profit-oriented.

The factor competition can therefore only be applied in the rent of living space; however, not in

the income from schools, universities or special real estates like courts due to the fact that the latter

are also public and need to pay to BIG and not a private counterpart. Within its business, private-

related aspects as indicated within the concept of New Public Management by Hood (1991) or

Schedler and Proeller (2009) are of importance for BIG as well; mainly due to the fact that aspects

of cost reduction, flexibility, rationalization and the focus on performance indicators play a signif-

icant role in the real estate industry. Moreover, the ideas of rent-seeking as formulated by

Tullok (1967) apply to this company as well due to its public efforts. The company’s connection

to its employees is rather clear not only because representatives of the works council are part of

the Supervisory Board but also because it is clearly connected to the trade union GÖD which is

responsible for employees within the public service. Overall, the company’s business represents a

rather stable and secure one in the future; certainly, characterized by governmental constellations

and political interventions. The speculations about integrating the ARE part of BIG into ÖIAG in

the course of the discussions about its restructuration, might change the rather stable predominant

organizational logics within the near future.

7.2.1.3 Österreichische Bundesbahnen Holding AG

The transportation company ÖBB Holding Group is a strategic holding corporation responsible

for a variety of subsidiaries within the area of railway and bus transportation.1394 Despite the fact

that its focus is mainly concentrated on the Austrian market, the company had to adapt to EU-wide

liberalization tendencies as well as internal competition. The establishment of the Austrian West-

bahn diminished its monopoly position in the area of railway transportation. Moreover, the fact

that the railway company Westbahn also entered the bus segment and offers cheap bus trips to

neighbouring countries, led to significant price pressure for the ÖBB Holding Group. In addition,

1394 cf. Homepage ÖBB Holding: Strategische Leitgesellschaft


138

the company had to adapt to international tendencies and increasingly cooperate with surrounding

countries and therefore EU-wide transportation companies; indeed, most of them also state-owned.

Due to the fact that it is 100% public, its connections to Austrian politicians are rather clear.

Legally, its representative is the Federal Minister of Traffic, Innovation and Technology; currently

Alois Stöger and therefore a member of the Social Democratic Party. In general the company is,

quite contrary to the previously discussed real estate manager BIG, characterized by Social

Democratic tendencies as the CEO as well as the majority of Supervisory Board members can be

connected to this party. In alliance with Weber’s (1976) conceptions, the entity can be considered

as bureaucracy in its purest form. A majority of civil servants within the corporation are paid

according to their age, rank and duration of employment; thereby also including a lot of permanent

staff which cannot be dismissed even though they might perform badly. As indicated by Public

Choice authors Niskanen (1974), Stretton and Orchard (1994) and Thom and Ritz (2006), the con-

nections within the company are focused on those between the civil servants and politicians and

in alliance with Downs (1974) the company’s organization can also be connected to internal

dynamics and increasing complexity. Over time, the ÖBB Holding Group went through a variety

of restructuration phases; often depending on the political parties influencing the management of

the company. This led to increasing internal hierarchies and, with augmenting size, to the need for

control mechanisms. However, Downs (1974) indicates that control needs effort which in turn

requires expenditures which, in the end, need control again. The spiral of bureaucracy and control

continues; thereby not only steadily increasing expenditures but also complexity. Its increasing

size through the continuing restructuration and creation of subsidiaries, lead to the alignment with

the research of Jann (1998) and his assumptions about having to deal with private-related parties

like customers and suppliers as well as public ones like politicians and committees. However, in

addition and contrary to ASFINAG, the competitive aspect as posed by Goldeng, Grünfeld and

Benito (2008) can also be included as the private company Westbahn diminished its monopoly

position in Austria. This also leads to the fact that, due to increasing internationalization and pri-

vate competition, the company has to apply aspects of New Public Management; thereby focusing

on cost reduction, flexibility as well as rationalizations. In alliance with the descriptions of

Hood (1991) and Schedler and Proeller (2009), the enterprise has to find the right balance between

providing a common good and maximizing profits. Indeed, connected to this, the topic of rent-

seeking plays a major role; especially when having a look at the representatives of the company

and, for instance, the scandals around Supervisory Board member Ludwig Scharinger. The repre-

sentation of the works council within the Supervisory Board as well as connections to the trade

union vida, show a clear defined relation to its employees. However, the fact that three out our of


139

four members of the works council can be connected to the Social Democratic Party shows, again,

a tendency towards this party within the company. Again, a connection to the currently in the

media discussed restructuration of ÖIAG can be established as speculations about demerging the

ÖBB rail network division and integrating it into ÖIAG emerged recently. However, as by now,

there are no concrete concepts on this and due to the fact that there are no official discussions about

possible privatizations either, it can be assumed that the organizational logics of the company do

not change within the near future.

7.2.1.4 Österreichische Bundesforste AG

The Austrian Federal Forestry Group ÖBf AG represents the biggest counsellor in the areas of

natural reserves, forestry, fishery and hunting areas and is consequently responsible for the mainte-

nance, management and protection of these public natural habitats.1395 Its tasks are completely

focused on Austria and the natural habitats within this country and even though the company is

actively operating within the wood industry, which means that it offers the sustainable harvest of

wood as well as its further commercialization and consulting activities, it cannot be characterized

as multinational player. Its roots trace back to the year 1925 and after several legal amendments

as well as restructuration efforts, the company became a separate legal entity; however, ever since

the company is 100% state-owned and therefore represented by the proper ministry which is em-

bodied by the Federal Ministry of Agriculture and Forestry; currently Andrä Ruprecht from the

People’s Party. In addition to this, and quite contrary to the previously discussed ÖBB Holding

Group, all four Supervisory Board members can be connected to the People’s Party; however,

different to other enterprises discussed, the Management Board members cannot be officially re-

lated to any political parties. The connections to its employees is rather clear. The works council

is represented within the Supervisory Board and its two members are foresters and therefore qual-

ified employees. The responsible trade union is PROGE and therefore the union responsible for

the production industry. Similar to the ÖBB Holding Group, the Austrian Federal Forestry Group

can be characterized as bureaucracy in the sense of Weber (1976); mainly but not exclusively due

to the fact that the company is structured in a clear hierarchical way and employees are paid

according to their age and duration instead of performance. Moreover, its connections to Austrian

politics aligns with Fisman (2011) as well as Goldman, Rocholl and So (2009; 2010) who indicate

that close connections to politicians can add significant value. The circumstance that the company

acts within the wood business and faces competition, leads to the application of New Public

Management tendencies like cost reduction and flexibility. Similar to the ARE part of BIG and the

1395 cf. Homepage Bundesforste AG: Unternehmensprofil


140

ÖBB rail network division, there are currently speculations about integrating the company into

ÖIAG in the course of its upcoming restructuration. However, rooted in the fact that the primary

business of the company is concerned with the greater well-being of everybody through the pro-

tection, maintenance and appropriate management of Austrian natural habitats, there are no

tendencies towards changing organizational logics or serious discussions about possible privatiza-

tions.

7.2.1.5 Österreichische Industrieholding AG

Responsible for the participations as well as privatization efforts of the state, the industrial holding

company ÖIAG acts close to the economy.1396 Its roots trace back to the period after World War II

and through several legal amendments and the attempt to protect Austrian industries, the company

was established for the efficient management of public stakes. Efficient management in this sense

also refers to partly privatizations of Austrian companies; hence thereby aiming at keeping at least

25% and one share to the voting share capital or contractual rights over third parties in order to

guarantee the continuing influence of ÖIAG.1397 Three important participations refer to the OMV

Group, the Telekom Austria Group and the Austrian Post Group; each of them already discussed

in more detail in section 6.2.

The focus of the enterprise can be considered as both national and international. On the one hand,

the corporation is primarily responsible for the appropriate management of Austrian public stakes;

however, on the other hand, these stakes might be part of multinational enterprises, like it is the

case with the OMV Group. Therefore, ÖIAG has to adapt to both national and international aspects

and its managers have to know what is best for Austria by including international progresses and

possible tendencies in the development of their stakes. The current CEO Rudolf Kemler was

appointed in 2012 by Maria Fekter who is a representative of the People’s Party; however, his

performance was criticized by both the People’s Party and the Social Democratic Party and there-

fore his contract will not be extended in October 2015. Currently, there are heavy discussions

about restructuring the company due to the evolvement of diminishing political influence since the

governmental constellation of the Freedom Party and the People’s Party in the early 2000s. They

decided that the responsible people within the management of the company can decide upon pre-

decessors themselves if someone leaves the company. In alliance with the concept of rent-seeking,

some say that this led to the allocation of people that are not qualified to lead a company like

ÖIAG; e.g. friends or business partners. However, others hold against these arguments by posing

1396 cf. Homepage ÖIAG: Unternehmen 1397 cf. BGBl. I Nr. 24/2000 § 9(2)


141

increasing political influence as harmful to the management as well. In any case, the current gov-

ernment is working on restructuration plans; thereby also including ideas such as extending the

Management Board from one to two managing directors or incorporating other public companies

into ÖIAG. The most recent proposal of a restructuration is to change the legal structure of the

company from a public limited company into a limited liability company as well as changing the

management from one managing director to a colloquium of political and neutral parties.1398 Con-

sequently it can be assumed that organizational logics are about to change within ÖIAG and future

discussions about the further privatization of public companies might arise. Relations to trade un-

ions are currently only focused on debates with trade unions and works council representing those

companies that are discussed to be incorporated; mainly because companies like ASFINAG, ARE

or the ÖBB rail network division are not willing to be incorporated.

7.2.1.6 Österreichische Post AG

The Austrian Post Group, as leading logistics and mail delivery service in Austria, is responsible

for the safe and universal supply of postal services to all citizens.1399 It can be characterized as the

corporation with the longest history among those depicted within this Thesis. Despite the fact that

the official establishment of postal and telecommunications services in Austria origins in 1887,

the roots of postal service trace back to the year 1490.

With increasing liberalization tendencies in the postal market in Austria during the 1990s and early

2000s, the company had to adapt to accumulative competition, interconnectedness and complexity.

In alliance with Hood (1991) and Schedler and Proeller (2009), the enterprise consequently

focused on the balance between offering a public service and achieving cost reductions. However,

the difficulty in this was, and still is, the fact that the corporation is structured in the sense of

Weber’s (1976) bureaucracy concept which indicates a strict hierarchical structure, incentives

according to age and rank as well as the circumstance that a majority of employees is permanent.

The act of reducing employees by sending them into early retirement led to heavy disparagement

by the Austrian Federal Court. The institution criticized this tactic as a displacement of costs:

instead of the company paying wages, the state had to pay early retirements. Moreover, after the

initial approval of the attempt to displace them within the public sector by sending postal officers

to the police, this method ceased to continue as well. Instead, the company increasingly focused

1398 cf. Homepage Kurier: ÖBIB – Regierung greift durch (13.01.2015); Homepage Wirtschaftsblatt: Neue ÖIAG

verwaltet OMV, Post und Telekom mit den „garantiert besten Köpfen“ (13.01.2015); Homepage OÖ Nachrichten:

Der kleinste gemeinsame Nenner bei der ÖIAG (13.01.2015); Homepage Die Presse: ÖIAG-Privatisierungen:

Zwischen Protesten und Korruptionsvorwürfen (13.01.2015) 1399 cf. BGBl. I Nr. 123/2009 § 1(1)


142

on the improvement of customer services through the establishment of online information plat-

forms, the implementation of the Post.Partner concept and the integration of banking facilities.

This aligns with the idea of New Public Management and attempts to increase flexibility while at

the same time rationalize. Over time, the shares of the Austrian Post Group, initially all held by

the state, were sold and despite the fact that the majority of 52.8% is still under public control and

managed by ÖIAG, the company has to align with the needs and demands of its shareholders and

therefore apply performance indicators and long-term strategies. Balancing public as well as pri-

vate needs as indicated by Jann (1998) is one of the major concerns of the enterprise; as well as

the appropriate tackling of international and national competition. The entity’s connection to its

employees is clearly defined by the circumstance that the works council is represented within the

Supervisory Board and the people are connected to the trade union GPF which is responsible for

all workers related to post and telecommunications services. It can be assumed that the govern-

mental attempt to restructure ÖIAG will also have consequences for the Austrian Post Group;

mainly but not exclusively because the industrial holding company represents its majority share-

holder. With the restructuration of ÖIAG, and consequently the possible change of political con-

stellations within this company, influences on the Austrian Post Group might change as well.

7.2.1.7 Österreichischer Rundfunk ORF

Austria’s biggest media company ORF fulfils the public order of terrestrial broadcasting, thereby

having the mission of distributing neutral information about politics, social and economic issues

via TV channels, radio channels and online platforms.1400 The purpose of the entity implies its

public order and the fact that it interacts on a national but not international level. However, it faces

severe competition from private channels; especially from the neighbouring country Germany.

Politics play a major role within ORF; a circumstance especially visible within the Foundation

Board which consists of 35 members and acts in the sense of a Supervisory Board. The fact that

each political party represented within the National Council is allowed to appoint one member for

the Foundation Board as well as the fact that, in addition, the nine provinces appoint one member

each as well, is unique among the discussed enterprises within this Thesis. Currently there are

representatives of six different political parties within the Foundation Board. Moreover, the

circumstance that Austrian citizens have to pay GIS1401 fees, leads to a monopoly position for the

company. These conditions align with the assumptions of Belletini, Ceroni and Prarolo (2014)

who think that regulations and bureaucracy are used strategically for the purpose of establishing a

1400 cf. BGBl. Nr. 379/1984 § 1; § 2; Homepage ORF: Offenlegung 1401 GIS stands for Gebühren Info Service


143

political network of members who prevent outsiders from entering. In case of ORF, the relation-

ship to the government and political parties is strong; however, contrary to other public companies,

ORF has no Supervisory Board which is connected to the works council. Different to other enter-

prises, the central works council is represented by the fact that it appoints five out of 35 members

of the Foundation Board. In addition to this, the connection to the trade union GPA-DJP, which is

responsible for private people and journalists, is rather clear. When being compared to other

enterprises within this Thesis, it can be communicated that the broadcasting company ORF is not

only highly influenced by politics but also clear in its organizational logics and structure. There

are no discussions about possible privatizations, its incorporation into ÖIAG or other restructu-

ration efforts which leads to the assumption that the company will not change its organizational

logics or design soon.

7.2.1.8 OMV AG

The OMV Group is the biggest publicly listed industrial enterprise in Austria and with its four

business units and over 27,000 employees it interacts mainly in the area of extracting and com-

mercializing oil and gas on a global level.1402 Since its establishment in 1956 the company repre-

sents one of the most successful industrial Austrian enterprises. By keeping 31.5% of shares after

the company went public, the Austrian state attempted to secure and continue its influence. How-

ever, due to the fact that the enterprise is among the top global players in its business by now, it

has to adapt to different cultures, habits of doing business as well as liberalization processes.

The political influence is given by the circumstance that Kemler, as the managing director of the

completely state-owned ÖIAG, is also the head of the Supervisory Board at the OMV Group; yet,

major guidance comes from the Abu Dhabi based company IPIC. Most recently the enterprise

caught media attention due to the Kemler approved early dismissal of two Management Board

members; a circumstance which will probably cost millions of euros in compensation payments.

However, contrary to other public companies discussed within this Thesis, the OMV Group is not

a typical public company but rather an exception due to its global presence and international con-

stellation of the Management and Supervisory Board. Therefore, the political influence is not as

strong as in 100% state-owned companies like for example ASFINAG, BIG, ÖBf AG or the ÖBB

Holding Group formerly depicted. Certainly, the reasons behind less political influence also lie in

the circumstance that the above mentioned companies provide goods or services that, in general,

serve the greater good or well-being of the public; however, the OMV Group sells a competitive

good and is foremost not in charge of serving the public with a common good. Consequently, the

1402 cf. Homepage OMV AG: Über uns


144

management is, even more in this than in other discussed enterprises, focused on rationalizations,

cost savings and quick adaptations through learning. Contrary to the 100% state-owned enter-

prises, the OMV Group can be managed by making use of benchmarks. In alliance with Grout and

Stevens (2003) as well as Goldeng, Grünfeld and Benito (2008), the enterprise is able to compare

its strategy, tactics and performance to its main competitors; thereby increasing competition again

and simultaneously enhancing its learning effects. Moreover, the oil and gas industry is constantly

monitored and the enterprise is therefore under persistent pressure to react and adapt to develop-

ments within the market. Five out of 15 members of the Supervisory Board are appointed by the

works council which indicates a clear relation to its employees. However, due to the fact that the

enterprise owns a variety of subsidiaries in diverse business areas, there is no clear connection of

the workers to one specific trade union. Overall, the company faces several internal changes within

the upcoming year. In addition to the early dismissals of Roiss and Floren by mid-2015, the change

of the managing director position of ÖIAG in October 2015 will affect the position within the

Supervisory Board of the OMV Group. Moreover, influences might change and political interven-

tions might occur due to the attempted structural changes of ÖIAG. All this leads to the assumption

that, contrary to other discussed enterprises, organizational logics within the company might trans-

form within the following year.

7.2.1.9 Schienen-Infrastruktur-Dienstleistungsgesellschaft mbH

The limited liability company SCHIG mbH is 100% state-owned and since 2005, as part of the

ÖBB Holding Group reformation, it can be regarded as independent consulting and service pro-

vider in the area of rail transport.1403 Despite its efforts in a PPP-project with Regensburg, the

company acts on a national base which means that it cannot be regarded as international or multi-

national player within its field.

For the purpose of supporting the Federal Ministry of Transport, Innovation and Technology, the

company is in charge of controlling the infrastructure; thereby acting according to its major criteria

of thriftiness, efficiency and usefulness.1404 The cooperation with the ministry is close; also due to

the fact that the Federal Minister of Transport Innovation and Technology, currently the Social

Democrat Alois Stöger, is the official representative of the company. Moreover, out of nine

Supervisory Board members, four are also employed at the ministry. The others are either con-

nected to the Federal Ministry of Finance, and therefore currently the People’s Party or officially

independent. This indicates a political mix of people close to the Social Democratic Party as well

1403 cf. Homepage SCHIG mbh: Aufgaben und rechtliche Grundlagen 1404 cf. Homepage SCHIG mbH: Infrastrukturkontrolle


145

as the People’s Party within the management of the enterprise. The circumstance that the company

depicts itself as independent consulting and service provider, as well as the fact that it fosters the

management according to the criteria of thriftiness, efficiency and usefulness, aligns with the re-

search of Hood (1991) and Schedler and Proeller (2009) who indicate that the concept of New

Public Management is characterized by the focus on cost reductions, discipline and the profes-

sional management of performance indicators. Moreover, the participation in two major PPP-

projects, one of it even being the first cross-border project of its kind in this area, matches with the

indication of PPP by Bastin (2003), Klijin (2005) and Lenk and Röber (2011) who see them as

time-restricted contractual agreements between a public and a private actor for the purpose of

fulfilling a project; often in the area of infrastructure like in this case. Furthermore, the declared

independence of SCHIG mbH points to the research of Macdonald (2011) who indicates that some

public companies are built in the sense of acting like private ones; however, always in arm-length

control of the government. The company’s relationship to its employees is defined in a rather clear

way. Three out of nine members of the Supervisory Board are appointed by the works council

which specifies a representation of one third. Besides, the worker’s connections to a trade union

are, since the reformation of the ÖBB Holding Group and SCHIG mbH’s transformation from a

financing company to a service provider, rather unclear. Overall, the company is, similar to for

example ASFINAG or BIG, 100% state-owned and therefore highly influenced by political inter-

ventions and governmental decisions. However, contrary to other enterprises there are no discus-

sion about integrating SCHIG mbH into ÖIAG or other privatization rumours. Consequently, it

can be assumed that the organizational logics within the company will not change significantly

within the near future.

7.2.1.10 Telekom Austria AG

The Telekom Austria Group is the biggest telecommunications company in Austria. It is positioned

internationally in seven additional countries and with around 5.7 million customers in mobile

telephony and 2.3 million customers in fixed network telephony, the company’s provider A1

represents the leading communication supplier in Austria.1405 As already depicted within the

section of the Austrian Post Group, the postal and telecommunications services tended to be man-

aged together; however, in 1996 they were separated and with the liberalization of the telecom-

munications market in Austria in 1998, Telekom turned into a separate business.

Two years later, the company was transferred into the ownership of ÖIAG and after the initial

public offering of its shares at the stock exchange, the industrial holding company ÖIAG kept

1405 cf. Homepage Telekom Austria Group: Über uns; Homepage A1: Unternehmensprofil


146

44.4% of its shares. This, and the fact that the ÖIAG managing director Kemler is also the head of

the Supervisory Board of the Telekom Austria Group assume political influence. This influence

seemed to diminish in 2014 when ÖIAG signed a Syndicate Agreement with the Mexican billion-

aire Carlos Slim and approved that he is allowed to buy the majority shares of the Telekom Austria

Group and consequently hold control over the enterprise in the future. By now, Slim’s telecom-

munications company América Móvil holds the majority of 59.7% of shares while ÖIAG holds

only 28.4%. However, the entity’s CEO, CFO and CTO are still Austrians and even though they

are not officially connected to any political party but rather worked their way up the hierarchy,

this circumstance determines significant influence. Conforming to the research of Jann (1998),

these managers have to align with customers, suppliers and subordinates as well as they have to

adapt to different interest groups and committees. This leads to the assumption that the company

primarily faces challenges within the liberalized market and not so much within its relationship to

politicians. In alliance with Cuervo and Villalonga (2000), Grout and Stevens (2003) as well as

Goldeng, Grünfeld and Benito (2008), the company faces aspects of competition and has to react

accordingly by decentralizing its structure, controlling its costs and monitoring the market as well

as benchmarking. Similar to the previously discussed SCHIG mbH, the works council is repre-

sented by one third; which means that out of 15 members, it appoints five into the Supervisory

Board. In Austria, the workers can be connected to the trade union GPF which is responsible for

the postal and telecommunications service industry. However, its international presence leads to

the circumstance that the connections to foreign trade unions is rather unclear. In the near future,

the planned restructuration of ÖIAG as well as new positioning of its managing director might

lead to changes within the Telekom Austria Group. Currently, the CFO of América Móvil holds

the position of vice-chairman of the Supervisory Board; the exit of Kemler by October 2015 could

lead to changes within this as well. Yet, the company’s international presence and the fact that the

political influence might continuously diminish due to the majority shareholder Carlos Slim, leads

to the assumption that future organizational logics and management tactics do not depend on Aus-

trian politicians or governmental interventions but rather on criteria related to privately managed

companies.

7.2.1.11 Verbund AG

The last analysed company can be considered as one of the leading electricity companies in

Europe.1406 Verbund is focused on the generation of electricity through hydro power; a business

which is of great importance for Austria where a variety of rivers and the Danube flow through.

1406 cf. Homepage Verbund AG: Über uns


147

The company’s history traces back to the restructuration phase after World War II and the trans-

mission of major industrial companies into public ownership. In 1988 the company went public;

51% of shares stayed in the ownership of the state while over 32% were transferred to regional

energy suppliers and 20% were released for free float.1407 The majority shares of 51% are repre-

sented by the Federal Minister of Economy, Family and Youth Reinhold Mitterlehner who is a

member of the People’s Party. While the company’s CEO Anzengruber can be connected to the

People’s Party as well, the vice-chairman of the Management Board as well as the CFO can be

related to the Social Democratic Party. Despite the fact that over half of the shares are state-owned,

the circumstance that additionally over 30% are in the ownership of regional energy companies

leads to strong political connections and the possibility of governmental interventions. This aligns

with Jann’s (1998) research on having to deal with political parties and the National Council when

wanting to manage a foremost public enterprise. Moreover, the historical roots of the company

indicate a strong connection to the state ever since. As depicted by Fisman (2001) and Goldman,

Rocholl and So (2009; 2010), this connection can add significant value to the enterprise. Moreover,

it can be assumed that the thereby connected risk of uncertainty about future policies due to a

possible changing political landscape can be minimized by the circumstance that both predominant

political parties are equally represented within Verbund. This can be seen contrary to, for example,

BIG which is primarily dominated by the People’s Party or the ÖBB Holding Group which is

foremost dominated by the Social Democratic Party. The relationship to the workers seems to be

clear as the works council is represented within the Supervisory Board and, contrasting to the two

previously discussed enterprises, the works council is represented by slightly more than one third

as five out of 14 members are appointed by it. Besides, the workers can relate to the trade union

GPA-DJP. Within the near future, the company will be confronted with discussions about its in-

corporation into ÖIAG in the course of its restructuration attempts. Similar to ASFINAG and ARE,

the company already stated against a possible inclusion or privatization efforts. However, if the

company is included into ÖIAG, this will change its organizational logics significantly. By now,

there are no tendencies towards an internal change of political interventions or logics.

Based on the previous discussion of relevant concepts for the management of public enterprises

and inherent logics and tactics as well as the subsequent applicative analysis of selected major

Austrian enterprises, the developments of organizational logics within those enterprises do not

point towards significant changes. Those companies which are 100% state-owned and therefore

1407 cf. Homepage Verbund AG: Informationen zur Verbund Aktie


148

represented by a federal ministry, and consequently a member of a specific political party, are

indeed more influenced by governmental interventions as well as changing policies and political

power plays. The predominant parties seem to distribute their representatives among the different

major public enterprises; a circumstance previously depicted. For instance, while the companies

BIG and ÖBf AG seem to be highly influenced by the People’s Party, the ÖBB Holding Group is

strongly connected to the Social Democratic Party. Yet, companies like ORF or SCHIG mbH seem

to be characterized by a political mix; the first having members of all parties represented within

the National Council in its Foundation Board and the latter being branded by the two predominant

People’s Party and the Social Democratic Party. The corporations which are related to international

aspects and external shareholders, and therefore not 100% state-owned, are characterized by lib-

eralization tendencies as well as cost and competitive pressure which leads them to adapt to the

market, its competitors and rationalization tactics and even though some of the solely public en-

terprises face the pressure of liberalization as well, they aim at applying a mixture of politics and

market related aspects within their management. In alliance with the theoretical assumptions of

Weber’s (1976) bureaucracy model, a variety of major public enterprises within Austria still faces

strict hierarchical structures and bureaucratic influences which consequently lead to increasing

costs through payment by age and rank instead of performance, as well as slower adaptation to

changing markets. By combining private-related with public issues and hiring appropriate man-

agement personnel who implements new tactics and different organizational logics, public enter-

prises aim at improving their performance compared to private ones. However, political interven-

tions and restrictive actions in terms of destructive rent-seeking in the sense of Tullok (1967), can

lead to significant costs for the economy and subsequent dissatisfaction. Therefore, the public

companies nowadays, no matter if they are 100% public or a public-private mixture, need to be

aware of movements within the political landscape as well as the market surrounding them.

8. Conclusion Etienne Koo

149

8. Conclusion

Within this Thesis, the overall aim was to contribute to the research of CIRIEC on the state and its

role within major national and international, partly of fully public, enterprises as well as their or-

ganizational logics and important developments. Due to the fact that the main focus was on the

provision of according information, the Thesis was dedicated to the application of a qualitative

documentary analysis through secondary desk research.

In the first section the focus was on a holistic conspectus on concepts of public enterprise manage-

ment. Based on the circumstance that the Republic of Austria is relatively young, and since its

establishment characterized by political interventions and a close relationship to the government,

this part also includes a brief retrospection on significant developments in Austria since the end of

World War I until recently. Moreover, the past political background and economic as well as his-

torical developments of a country can give insights into its possible future. Due to the fact that the

majority of chosen enterprise examples relate to either fully state-owned or at least partly state-

owned companies, the first part subsequently also dealt with the concepts of new Public Manage-

ment and New Public Governance. The importance of the first lies in the fact that it positions itself

between the ideological antagonism of the social welfare state and the liberalistic state and there-

fore attempts to manage public enterprises by incorporating disciplines and indicators that might

help in adapting to the increasingly complex environment. The latter, however, rounds off this

concept by posing the idea of cooperation between governmental and non-governmental institu-

tions for the appropriate management of a public company. It therefore also includes the idea of

Public-Private Partnerships which was not only described within this first part but also applied by

two of the discussed enterprises. For the purpose of completeness, additionally, the concept of

Public Choice and its ideas of the rational value-maximizing individual were explained further.

According to researchers on this topic, this approach often explains the political behaviour and

bureaucracies within public enterprises. Connected to this, the topic of rent-seeking and possible

negative relations like bribery or corruption were depicted briefly.

The second part was concerned with the underlying background of the whole Thesis and therefore

its main part. It related to the thorough analysis of the chosen examples of major Austrian enter-

prises. In alliance with CIRIEC, the selected fully or partly public companies dealt with businesses

that are of importance for every citizen and therefore also contribute to the greater well-being of a


150

society. These industries refer to electricity, infrastructure, transportation, broadcasting, telecom-

munications as well as public natural habitats and real estates. Indeed, some of them have a stricter

public tenet than others; nevertheless, all of them refer to goods that are needed by the public and

generate costs or benefits for the society as a whole.

Ultimately, the Thesis aimed at the provision of detailed information on organizational logics,

management tactics, political connections and structures within major Austrian enterprises. The

final discussion shows that those companies which are 100% state-owned, are usually more related

to political power plays and governmental interventions than others. Politicians are employed in

management positions and the predominant parties tend to distribute these positions among them.

However, within those companies not completely public but with shares in free float or specific

external shareholders, like it is the case with the Telekom Austria Group or the OMV Group, the

political influence is still high. Moreover, increasing liberalization tendencies within the European

Union as well as on a global level, lead to the need for public enterprises to adapt to dynamic

surroundings as well; even though they might possess a quasi-monopolistic position. Therefore

the concepts of New Public Management, New Public Governance and Public Choice, despite the

fact that they were developed decades ago, are still of importance in today’s research and subse-

quent implementation in public companies worldwide.

Concluding, and based on all aspects refurbished within this Thesis, the research question on

whether there is an increasing importance of the state in national and international Austrian-

originated companies, cannot be answered with assurance; however, tendencies point towards no;

thereby considering that Austria can be regarded as a special case. The previously depicted history

of Austria and its developments after World War I and II shows that the state has always played a

major role in the Austrian society and economy; especially after World War II when a majority of

important industries for Austria were made public in order to guarantee their continuation and re-

establish the well-being among the citizens. As already indicated before, the then developed forms

of structures and internal hierarchical systems are still prevalent today in a variety of Austrian

public companies. These historical developments and research on recent trends and changes within

major enterprises shows, that the influence of the Austrian state, and therefore also Austrian

politicians, has always been strong in public companies. This is especially true for those

corporations which are 100% state-owned and therefore legally represented by a certain ministry

which is, indeed, occupied by a political party. Yet, in Austria this is also true for companies which

are not 100% state-owned; a circumstance which can be explained by means of the public ÖIAG.


151

Even though the company sold a variety of shares it still aims at keeping the control over the

enterprises. In case of the Austrian Post Group it kept more than half of the shares and even though

the management wanted the IPIC to enter the OMV Group, it looked after having more shares, and

therefore more control, than the Abu Dhabi oil enterprise. Even in case of the Telekom Austria

Group, where the majority is now owned by the Mexican billionaire Carlos Slim, the company

aimed at keeping formal control over the business by signing a Syndicate Agreement that, even

though it grants the major ownership to América Móvil, also includes the fact that the managing

director of ÖIAG holds the management chair of the Supervisory Board and is granted veto rights.

This means that an Austrian decides upon major steps like the appointment of the management

which is, by now, still Austrian-based within the Telekom Austria Group.

Closing, it seems that the influence of the state is not increasing in those enterprises 100% state-

owned due to the fact that they are already highly influenced by state interventions. In addition,

despite the above posed circumstance that the state attempts to keep control over enterprises not

100% state-owned as well, there is no indication that the influence of the state increased over the

past years, or will increase within the near future, in those enterprises. This assumption is based

on the following reasons.

The year 2014 was characterized by a variety of developments within major Austrian companies.

While ÖIAG decided to sign a Syndicate Agreement with the Mexican billionaire Carlos Slim to

acquire the majority of the Telekom Austria Group, the OMV Group attained media attention

through internal discrepancies and the subsequent decision by Kremler to approve the early dis-

missal of the CEO and another Management Board member. Moreover, in 2014, most of the

analysed companies faced slight economic and financial difficulties or only minor improvements

to the previous year after they were actually able to recover from the consequences of the financial

crisis and subsequent phase of recession. All these factors contribute to the future developments

in 2015 and throughout the year, the situation might change again for some of the discussed enter-

prises. First, the early dismissal of two Management Board members of the OMV Group led to

heavy discussions and the fact that Kemler’s contract will not be extended in October 2015.

Second, current debates about the restructuration of the legal structure as well as management

colloquium of ÖIAG led to media attention and criticism on political power plays and the distri-

bution of positions. Third, while some rumours relate to the incorporation of additional companies

like ASFINAG or ARE into ÖIAG, others talk about the possible complete sale of managed rest

shares. Moreover, as soon as some managers leave and the restructuration of ÖIAG is fixed, those

companies holding a significant portion of shares, like it is the case with IPIC and América Móvil,


152

might intervene and distribute their own managers among the most important positions. This is

especially probable in the case of Carlos Slim who, now that he owns the majority of the Telekom

Austria Group, will want to have significant decision rights as well. All this indicates that changes

are about to occur within certain Austrian enterprises which might affect the organizational logics

as well as management tactics within the near future. Therefore, additional research should be

conducted on what happens to these companies and how changes affect them.

A further question would be whether political parties actually should be managing public enter-

prises or if they should appoint experienced neutral third parties that possess the appropriate

knowledge and skills. On the one hand, it is logical that political representatives want to manage

public enterprises as each party considers its ways of thinking and solving issues as the best for

the society. On the other hand, the distribution of political representatives among different posi-

tions within public enterprises can lead to inadequate appointments, significant inefficiencies and

negative effects of rent-seeking. Moreover, if the political landscape changes due to elections,

positions will be changed and new people will be appointed. This leads to negative developments

because the positive effects of recently implemented measures might not have aroused and their

interruption and course change leads to significant costs. This aligns with the research of Zand and

Sorensen (1975) based on the ideas of Lewin (1947) who sees the implementation of actions in

phases of unfreezing, moving and refreezing.1408 After unfreezing the effects, significant costs

occur which would turn into positive effects as soon as they reach the state of refreezing; however,

often projects are interrupted and changed in the moving phase which leads to an even further

decline of performance. This aligns with what happens when positions in companies are trans-

formed due to changes in the political landscape.

Notwithstanding the previous analysis, it has to be considered that this Thesis includes only eleven

out of a variety of fully or partly public enterprises in Austria. Despite the fact that these eleven

count as the most important ones, the CIRIEC-conform research on them denotes only a portion

of developments within those companies. Moreover, as already indicated before, major restructu-

ration efforts, as well as changes within the upcoming year, will lead to adaptations and further

changes in the discussed enterprise examples that, for the purpose of completeness, would need to

be tackled next.

1408 cf. Lewin, K.: Frontiers in group dynamics: concept, method and reality in social science; social equilibria and

social change. Human Relations, Vol. 1 (1947): 5f.; Zand, D. E. & Sorensen, R. E.: Theory of Change and the

Effective Use of Management Science. Administrative Science Quarterly, Vol. 20, Issue 4 (1975): 534f.

References Etienne Koo

153

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