Markus Wolf AP
Markus Wolf. The guest house of the former spy chief was bought by Schlaff. Photo by AP
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Contact Gidi Weitz @ investigations@haaretz.co.il

In Austria, Martin Schlaff has long been identified with the Social Democratic Party. Former Austrian chancellor Alfred Gusenbauer has been considered his friend for many years, and Schlaff organized the party leader's victory celebrations after the election in 2006. Former chancellors Viktor Klima and Franz Vranitzky were also among his associates.

He also has a finger in other parties' pies: Highly placed individuals from the People's Party and the Future party, formerly headed by the late Joerg Haider, have mustered in the past to help his business ventures. Senior Austrian politicians have, after their retirement, found positions in Schlaff's business empire.

Schlaff is considered very daring in business, a man who takes great risks and has succeeded in refining to an art the alliance between wealth and government, and not just in his home country. Israeli attorney Ram Caspi describes him as "a sophisticated and tough businessman," adding that Schlaff combines "Austrian squareness and Jewish cunning."

Schlaff took his most significant business leap - the one that turned him into a billionaire - during the past decade by means of buying up mobile phone companies in Eastern Europe, sometimes from controversial sources, and later reselling them to huge corporations for big profits. In Israel, for some years, Schlaff was thought of as a casino tycoon since he has been involved in such ventures abroad, even though the gambling business is only a footnote in his career. Today he holds a small share in the Club Hotel Loutraki Casino in Greece and in another casino in Belgrade, both of them in partnership with the Israeli Club Hotel group.

In addition to the cell-phone businesses, Schlaff holds huge real estate assets, some in the United States. He is involved in the gas trade in Eastern Europe and is the main shareholder in RHI, one of the world's largest manufacturers of fireproof materials (metals, ceramics and so on ). A few months ago he established a bank in Liechtenstein called Sygma, and in recent years he has also invested in various computer and Internet ventures.

The first few hundred million accumulated by Martin Schlaff, which enabled him to become an independent tycoon, free of the shadows cast on him by his father and his father-in-law, were obtained mainly through connections with the East German government and its secret police force, the Stasi, before the fall of the communist regime in 1989. An Austrian who has known Schlaff for many years, and characterizes him as a calm and well-mannered person, relates that when he once asked Schlaff about his connections with the Stasi, the billionaire's expression went stone cold, before he responded: "Everything that is said about me never happened, it is dead, it is history and I don't want to talk about it."

Meeting with 'X'

In June 1982, at a time when most of Europe was preoccupied with the World Cup competition taking place in Spain, an official car was making its way from East Berlin to Schoenefeld Airport, then the principal airfield in East Germany. In it sat Schlaff and “X,” the director of an East Berlin import-export company. During the ride in the car, X later testified to East German authorities, Schlaff gave him an envelope with 5,000 deutsche marks in it. “I put the money in the glove compartment,” he related, “and I hid it in my garage at home.”

Shortly before that meeting, X had gone to Vienna, where he met with Schlaff at the Robert Placzek company offices. During the meeting Schlaff asked him and a colleague if they needed money for shopping. Both men replied in the affirmative and received 20,000 Austrian schillings in cash. One described to interrogators what he had bought with the help of the gift: “Two pairs of trousers, clothes for my children, T-shirts, one summer suit, and for the wife, Carrera sunglasses.”

In documents from East German archives that have come into Haaretz’s possession, among them Stasi records from the early 1980s, Schlaff is described as a junior executive at the Robert Placzek company, a man in his early 30s and a lover of hunting, especially of wild boar. In June 1982, he had a number of meetings with representatives of the East German regime. They were lodged, claimed the Germans, in the Hilton in Vienna and all their expenses were covered by the host.

In March 1986, Schlaff, together with one of his partners, attended a meeting with three East German businessmen in a hotel in Zagreb. In the book “Seduced by Secrets: Inside the Stasi’s Spy-tech World,” by historian Kristie Macrakis, there is a description of the project discussed at that Zagreb meeting: establishment of a production plant for computer hard disks in East Germany. At the time, the Western allies were united in an embargo on trade with the country. According to Macrakis, the three businessmen were in fact senior officials in the Stasi, who at the end of the meeting gave Schlaff the code name “Landgraf” and the registration number 3886-86.

The officers “were impressed with Schlaff,” she writes, “his extensive holdings, his various companies, and his access to the needed America technology.” According to Macrakis, Schlaff was supposed to “build a factory in a suburb of Vienna, but the components would be bought in duplicate − one set would stay in Vienna, the other would be smuggled to the East German factory,” under the radar of the Western authorities.

The idea was shelved the following year, because of various constraints, but in its stead a new idea was born: smuggling the secret components to East Germany by means of one of Schlaff’s companies in Singapore. According to Sarah Leibovitz-Dar and Arik Weiss, reporting in the Israeli daily Maariv, Schlaff brought elements in Israel into the operation as well.

Fall of the wall

The Berlin Wall fell in November of 1989 and Germany became a single state again in October the following year. After the unification of the German Democratic Republic ‏(East‏) and the Federal Republic of Germany ‏(West‏), the chancellor of united Germany, Helmut Kohl, announced a campaign to track down funds suspected of having been stolen from the coffers of the East German authorities. Schlaff, who until then had been a rather obscure Austrian businessman, became during the course of the 1990s the subject of reports in the press and investigations by the authorities.

In 1998 a special Bundestag committee of inquiry published a report on the disappearance of public funds and the privatization of assets in former East Germany. Among other things, the committee confirmed that East Germany had transferred tens of millions of marks to Schlaff through accounts in Vaduz, the capital of Liechtenstein, in return for goods “under Western embargo.”

In the period between the collapse of the wall and reunification, Stasi people set up a number of commercial companies, some of which were intended to keep the organization’s intelligence network alive, thus insuring the economic future of top Stasi officials. The same Bundestag report noted that “Schlaff’s empire of companies played a crucial role” in the undertaking. Thus, for example, Lomer, one of the companies controlled by Schlaff, which had received huge amounts of money for the hard-disk deals, transferred large, unsecured loans with no guarantees to a chain of travel agencies established by ex-Stasi people. Another Schlaff firm was a partner in an institute for traffic research, which was to serve as a cover for the Stasi’s operational missions.

The same Bundestag report told the story of a real-estate holding in Dresden, which in the past had served as the guesthouse of the head of the General Intelligence Administration ‏(the Stasi’s foreign intelligence division‏), Markus Wolf, who was Jewish. The money for the property’s purchase, the committee concluded from the testimony it had gathered, came from Schlaff’s pocket. The panel detailed, among other things, testimony from Schlaff’s chauffeur, who described how he withdrew 600,000 deutsche marks in cash from the account of one of the companies, which he then turned over to Schlaff, who was waiting in Dresden. The bundle of cash helped one of the Stasi’s collaborators to buy the property, the committee determined.

“In the participation of Schlaff’s companies, manipulations were made of valuable Stasi real estate,” the committee wrote in the report.

After the crumbling of East Germany, its national assets were sold off by the new government. Schlaff was the successful bidder for the lumber company HBB. The Bundestag report stated that in July 1991, after he assumed ownership of the company, with its real estate holdings, Schlaff met with Peter Deparade, one of the top people in the dissolution corporation, and agreed with him on significant changes he wanted to insert in the original contract of sale.

“Only in 1993,” stated the report, “in the context of an investigation against Schlaff conducted in Vienna, did it emerge that Deparade and his wife had been employed by the Robert Placzek company. Over the years, Deparade had managed on Schlaff’s behalf 33 companies that dealt in real estate.”

The committee further noted that, “after the dissolution of the Stasi, high-ranking people in the organization moved into management positions in Schlaff’s group of companies.”

One of those mentioned in the report was Herbert Kohler, who served until 1986 as the head of the information and technology department of the General Intelligence Administration, and subsequently as a Stasi commander in Dresden. In 1990, states the report, he was involved in the transfer of 170 million deutsche marks to the Schlaff group, for a shipment of hard disks. A few months later, Kohler was already serving in a senior position in one of Schlaff’s companies.

“The few cases surveyed here,” concluded the members of the panel, “show the collaboration between Stasi employees, on the one hand, and Schlaff’s group of companies, on the other, which had already worked together on deals to circumvent the embargo.”

The Bundestag report stated: “By means of bank deposits and cash transfers in East German currency and currencies that could be exchanged throughout the length and breadth of Europe, he [Schlaff] was able to launder black and gray money, and conceal the real source of these sums.” The committee defined Schlaff as an unofficial employee of the East German foreign intelligence service.

Schlaff speaks

Toward the end of the 1990s the German authorities filed a civil suit in Switzerland against Schlaff and his partner there, Konrad Ackermann, for having received what they alleged were tens of millions of marks from the East German state, ostensibly for about 24,000 hard disks. The suit claimed that the deal had been fictitious. In 2002 the Swiss court rejected the German authorities’ suit and levied court costs of 1.9 million Swiss francs on them.

Immediately after the court ruling, Schlaff gave an interview for the first time in his life to the Austrian magazine Profil. “I was not an agent of the Stasi and I had no special relationship with them,” he said. An investigation by the German authorities also ended without an indictment.

“In all his battles with the Germans he has emerged victorious,” says one of his associates with satisfaction. However, the suspicions concerning forbidden deals transacted with the East German regime − as well as the code name and the registration number he received from the Stasi − have served as constant artillery in the hands of his opponents.

In October 2007, Dr. Peter Pilz, one of the leaders of Austria’s Green Party, declared in the parliament, “Schlaff exploited his connections as a Stasi informer in order to advance his businesses afterward, with the collapse of Eastern Europe. These businesses would not have done well without the help of Austrian politicians.”