# 1928 Liechtenstein embezzlement scandal

The 1928 Liechtenstein embezzlement scandal was a scandal involving leading members of the Christian-Social People's Party, where it was revealed that they had embezzled funds from the National Bank of Liechtenstein for various speculative transactions. The scandal forced the government of Gustav Schädler to resign and early elections to be called.

## Background

Starting from 1926, leading members of the Christian-Social People's Party, Franz Thöny, Anton Walser, Niko Beck, and Rudolf Carbone embezzled funds from the National Bank of Liechtenstein for various speculative transactions. This included the expansion of the class lottery in Liechtenstein and Romania, which was operated by Walser and had the legal representation of President of the Landtag of Liechtenstein Wilhelm Beck, who was also chairman of the bank's board of directors. The program promised high income and employment for Liechtenstein, though proved controversial within both the Landtag of Liechtenstein and the general population.
During this time, Walser lived in Bucharest for almost a year and gained contacts with Romanian ministries. He founded several companies during his time there such as a bank and advertising company, which were intended to be used for the class lottery.

## Arrests and investigations

In June 1928, Walser, Niko Beck and Franz Thöny were arrested, with Rudolf Carbone being arrested in June 1929. In November 1929, Walser, who was primarily responsible, was sentenced to four years in prison, with the rest being sentenced to three. Once the scandal came to light, the opposition Progressive Citizens' Party demanded that the government of prime minister Gustav Schädler immediately resigned, the Landtag be disbanded, and that all individuals involved are investigated. The party threatened to hold a street demonstration to pressure the government if this did not happen.
Johann II and the Progressive Citizens' Party blamed the Christian-Social People's Party and the government of Gustav Schädler for the scandal, as the men arrested were members of the party and Walser himself was the party's president. Johann refused to receive Schädler in Vienna and instead invited Josef Ospelt, Emil Batliner, Fritz Walser, and Ludwig Marxer, where they recommended the immediate dissolution of the Landtag, dismissal of Schädler's government, and for new elections to be held.
As a result, in June 1928 Johann forced Schädler's government to resign and early elections were called. Prince Alfred of Liechtenstein was temporarily appointed as acting as prime minister. Schädler was not barred from re-election, but the 1928 Liechtenstein general election resulted in a win for the Progressive Citizens' Party and he was succeeded by Josef Hoop.
In 1931, an indictment was conducted against Schädler in the State Court of Justice for violating supervisory and official duties in the administration of the savings bank. However, he was acquitted, partly because the statute of limitations had expired and partly because the breach of duty was not due to gross negligence. In 1932, a similar indictment was laid against Wilhelm Beck for violating supervisory and official duties in the administration of the board of the directors of the National Bank of Liechtenstein. This resulted in him being ordered to pay damages in 1935; though he appealed this ruling, he did not live to see the outcome.
The Christian-Social People's Party accused government councillor Peter Büchel of being complicit in the scandal, but he immediately demanded an investigation and was acquitted of all allegations.

## Aftermath and legacy

Johann II assumed responsibility for the losses caused by the embezzlement, and donated one million Swiss francs. Local communities pledged their land for a week in order to support economic recovery. In addition, another two million francs was taken out as a loan from Switzerland in order to restructure the National Bank - the equivalent of two yearly budgets.
The Christian-Social People's Party believed that they had felt treated unfairly by Johann II by being refused an audience, as they believed that by only receiving people from the Progressive Citizens' Party that he was being fed biased and incomplete information on the scandal. The party remained alienated from him for the rest of his reign; this tension continued under his successor Franz I and the successor party Patriotic Union. The rift between the prince and the party would not be resolved until 1938 with Franz Joseph II ascending to the throne and the formation of a coalition government between the Progressive Citizens' Party and Patriotic Union.
The scandal greatly undermined the political power of the Christian-Social People's Party and later Patriotic Union in Liechtenstein politics, with it being used as proof of alleged incompetency of the party. The party would not form its own government again until 1970 under Alfred Hilbe.