COMMISSION STAFF WORKING DOCUMENT Opinion of the Republic of Austria concerning the preliminary report on the findings of the investigation related to the manipulation of statistics in Austria as referred to in Regulation (EU) No 1173/2011 of the European Parliament and of the Council on the effective enforcement of budgetary surveillance in the euro area (Commission Decision of 3 May 2016) Accompanying the document Report from the Commission on the investigation related to the manipulation of statistics in Austria as referred to in Regulation (EU) No 1173/2011 of the European Parliament and of the Council on the effective enforcement of budgetary surveillance in the euro area (Commission Decision of 3 May 2016)
Date: 2017-02-22
Institutions: European Commission, Eurostat
Subjects: Austria, EU control, EU statistics, Salzburg, budget deficit, budgetary control, euro area, national statistics, public debt, sanction (EU)

EN 

   EN 

   EUROPEAN COMMISSION  Brussels, 22.2.2017  SWD(2017) 105 final   COMMISSION STAFF WORKING DOCUMENT Opinion of the Republic of Austria concerning the preliminary report on the findings of the investigation related to the manipulation of statistics in Austria as referred to in Regulation (EU) No 1173/2011 of the European Parliament and of the Council on the effective enforcement of budgetary surveillance in the euro area (Commission Decision of 3 May 2016) Accompanying the document Report from the Commission on the investigation related to the manipulation of statistics in Austria as referred to in Regulation (EU) No 1173/2011 of the European Parliament and of the Council on the effective enforcement of budgetary surveillance in the euro area (Commission Decision of 3 May 2016) {COM(2017) 94 final}  
 
 
The preliminary findings of the investigation into the manipulation of statistics carried out in Austria 

in accordance with Regulation (EU) No 1173/2011

1

 have been passed on to the Republic of Austria 

in accordance with Article 6 of the Commission Delegated Decision 2012/678/EU

2

 on 20.12.2016 for 

a written opinion. The Commission asked the Republic of Austria to send the written opinion on the 

preliminary findings of the investigation by 19 January 2017. The Republic of Austria provided the 

following written opinion on 25 January 2017: 

1

  Regulation  (EU)  No  1173/2011  of  the  European  Parliament  and  of  the  Council  of  16  November  2011  on  the  effective 
enforcement of budgetary surveillance in the euro area, OJ 306, 23.11.2011, p 1 

2  Commission  Decision  2012/678/EU  of  29  June  2012  on  investigations  and  fines  related  to  the  manipulation  of  statistics  as 
referred to in Regulation (EU) No 1173/2011; OJL 306, 6.11.2012, p 21.  

2 

 
 
 
 
 
 
 
 
 
 
 
                                                            
 
OPINION  PURSUANT  TO  ARTICLE  8  OF  REGULATION  (EU)  NO  1173/2011  ON  THE 
PRELIMINARY  REPORT  ON  THE  FINDINGS  OF  THE  INVESTIGATION  RELATED  TO  THE 
MANIPULATION OF STATISTICS IN AUSTRIA AS REFERRED TO IN REGULATION (EU) NO 
1173/2011 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL ON THE EFFECTIVE 
ENFORCEMENT  OF  BUDGETARY  SURVEILLANCE  IN  THE  EURO  AREA  (COMMISSION 
DECISION OF 3 MAY 2016) 

Thank  you  for  sending  the  preliminary  report.  The  Republic  of  Austria  wishes  to  express  the 

following opinion on the preliminary report: 

It  should  first  of  all  be  noted  that  Eurostat  does  not  at  present  have  any  reservations  regarding 

Austria's  data  under  Regulation  (EC)  No  479/2009.  The  reason  for  this  investigation  is  the 

perpetration of criminal actions by individuals who are facing court action. 

The  Land  Salzburg  reacted  quickly  and  appropriately  to  the  problems  addressed  in  the  report  as 

soon as they were discovered. The Court of Audit has investigated the transactions in detail and the 

data  concerning  public  debt  for  2012  were  revised  on  the  basis  of  its  report.  Budget  policy 

assessment  of  public  debt  for  2012  in  the  proceeding  pending  since  2009  regarding  an  excessive 

deficit  for  Austria  would  not  have  been  different,  even  in  view  of  the  subsequent  revision  of  the 

data.  The  public  deficit  for  2012  was  actually  revised  slightly  downwards  (by  7  million  euros) 

following the audit. As at the end of 2013, public debt was restored by Land Salzburg to the level it 

would  have  been  at  if  the  relevant  transactions  had  not  taken  place.  This  also  meant  that  the 

operation of the economic and monetary union was not placed at risk. 

Regarding  the  facts  set  out  in  the  preliminary  report,  it  should  be  noted  that  legal  analysis  and 

judicial  follow-up  of  the  transactions  in  question  in  Austria  have  not  yet  been  completed.  Certain 

statements in the preliminary report should therefore be regarded as provisional. 

In particular, examination by the Austrian criminal courts is still pending, despite its importance for 

determining the extent to which the misrepresentation of data under Article 8 of Regulation (EU) No 

1173/2011 occurred by intent or as a result of gross negligence. The corresponding EU legislation 

cannot actually be interpreted to mean that the Member State in question is also obliged to exclude 

criminal behaviour.  

3 

 
 
 
 
 
 
 
 
 
It  should  also  be  noted  regarding  the  seriousness  of  the  infringement  of  Regulation  (EU)  No 

1173/2011 that the additional public debts were offset by corresponding financial assets acquired as 

a result of the debts. This means that the debt of Land Salzburg, which amounted to 3.528 billion 

euros as at the end of 2012 according to current data and ESA 2010 was reduced to 2.208 billion 

euros by the end of 2013 by liquidating financial assets. It has since fallen further. (See: 

http://www.statistik.at/web_de/statistiken/wirtschaft/oeffentliche_finanzen_und_steuern/maastricht

-indikatoren/oeffentlicher_schuldenstand/index.html)  

This  1.320  billion euro  reduction  in  the public  debt  of  Land Salzburg from  the  end of  2012  to the 

end of 2013 exceeds the 1.192 billion euro underreporting of debts found by Statistik Austria for the 

end  of  2012.  The  public  deficit  of  Land  Salzburg  for  2012  was  revised  downwards  by  7  million 

euros. This means that not only was the incompleteness of the DP data rectified, but also that the 

public debt of Land Salzburg was, within a year, returned to the level it would have been at if the 

transactions described in the preliminary report had not occurred. 

This opinion comprises: 

a)  a summary of the most important points on which there is disagreement with the statements 

in the preliminary report,  

b)  notes and proposed revisions of individual sections of the preliminary report (Annex I) and 

c)  opinions from the Salzburg State Office [Amt der Salzburger Landesregierung], the Court of 

Audit [Rechnungshof] (RH), the Austrian Federal Statistics Institute [Bundesanstalt Statistik 

Österreich]  (Statistik  Austria,  STAT), 

the  Austrian  Central  Bank  Oesterreichische 

Nationalbank  (OeNB)  and  the  Austrian  Federal  Financing  Agency  [Österreichische 

Bundesfinanzierungsagentur] (OeBFA) in the text (Annex II). 

4 

 
 
 
 
 
 
 
 
 
1.  Reply to the criticisms contained in the preliminary report 

The following points are discussed individually in reply to the criticisms contained in the preliminary 

report: 

  adequate and timely information supplied to Eurostat 

  no encouragement of transactions by OeBFA 

  extent  and  significance  of  data  revisions  with  regard  to  public  deficit  and  public  debt  for 

2012 

  no  infringement  of  reporting  or  auditing  obligations  by  OeNB/Eurostat  misinterpretation  of 

statements 

 

failure by the supervisory bodies to expose the faults defined as negligent behaviour 

  no failure on the part of RH to reveal data discrepancies 

  no gross negligence on the part of the Land Court of Audit or the Salzburg State Office 

1.1.  Adequate and timely information supplied to Eurostat 

Eurostat's  allegation,  in  the  report,  that  information  is  not  provided  on  time  is  rejected  by  the 

Austrian authorities.  

The  documentation  of  Statistik  Austria  shows  that  shortly  after  December  2012,  namely  on  31 

January 2013, there was an exchange of information with Eurostat concerning the entry of financial 

derivatives, which was triggered by the transactions in Salzburg. Both  authorities (Statistik Austria 

and  Eurostat)  therefore  held  approximately  the  same  information  following  the  exposure  of  the 

Salzburg financial scandal in December 2012. They subsequently exchanged information, as far as 

verifiable facts were concerned, up to the notification in April 2014.   

The  preliminary  report  explains  in  detail  that  the  revision  of  data  concerning  the  public  debts  of 

Land Salzburg took up a considerable amount of time and resources. As the report states, Statistik 

Austria uses the data recorded by the Court of Audit for the public debt of Land Salzburg for 2012. 

The  Court  of  Audit  published  its  report  on  9  October  2013.  Statistik  Austria  immediately  informed 

Eurostat of the problems, but also pointed out that the concept of debt used by the Court of Audit 

does not necessarily also have to match the definition under Regulation (EC) No 479/2009 and that 

this still needed to be verified. Statistik Austria verified the results of the Court of Audit in the light 

5 

 
 
 
 
 
 
 
of the relevant statistical requirements and reported the data at the next data notification meeting 

on  31  March  2014  under  Article  6  of  Regulation  (EC)  No  479/2009.  Paragraph  one  of  that  Article 

states that: "1. Member States shall inform the Commission, as soon as it becomes available, of any 

major revision in their actual and planned government deficit and debt figures already reported".  

The  preliminary  report  states  that  the  final  revision  of  data  in  2014  was  as  reported  by  Land 

Salzburg  as  early  as  27  March  2013  and  therefore  suggests  that  a  larger  debt  could  have  been 

submitted in the spring notification for 2013. It should not be forgotten, however, that according to 

Article  6(2)  of  Regulation  (EC)  No  479/2009  referred  to  above,  major  revisions  of  data  already 

reported need to be properly documented: ''2. Major revisions in the actual deficit and debt figures 

already reported shall be properly documented.“ Proper documentation by Statistik Austria was not 

possible at this time, since the report from the Court of Audit was not available and there was no 

proper documentation from other sources. According to paragraph 1 of Court of Audit report Bund 

2013/9 Land Salzburg – Finanzielle Lage [Federal 2013/9 Land Salzburg - Financial Position], there 

were problems with documentation in December 2012, as the relevant documents were not always 

available  following  confiscation  during  criminal  prosecution  by  the  Austrian  authorities.  Nor  were 

financial  statements  available  for  2012  for  Land  Salzburg  at  the  time  when  the  notification  was 

published,  in  autumn  2013.  According to the  STAT  list  of methodologies  for  the national  accounts 

(as at March 2016, e.g. pages 48, 175, 193), these financial statements are used as a basis for the 

national accounts. Eurostat never found fault with this. The practice of including certified figures in 

the  statistics,  moreover,  complies  with  and  results  from  Council  Directive  2011/85/EU  on 

requirements  for  budgetary  frameworks  of  the  Member  States,  under  Article  3  of  which  such 

national  systems  of  public  accounting  must  be  subject  to  internal  control  and  independent  audits. 

This means that if certified figures are available, they should be used. 

1.2.  No encouragement of transactions by OeBFA 

Page  37(3)  of  the  preliminary  report  states  that  in  the  absence  of  monitoring  mechanisms,  the 

framework  agreement  between  the  OeBFA  and  the  Laender  would  have  had  the  effect  of 

encouraging evasion of the clause prohibiting speculation in the case of Salzburg.  

The response to such a claim might be that agreements are in principle concluded to comply with 

this clause. Both the OeBFA and Land Salzburg were subject to independent external monitoring. It 

was not economically appropriate or legally necessary to also give the OeBFA a right of inspection.  

6 

 
 
 
 
 
Even if the use of the OeBFA funds had been monitored by OeBFA, this would have been irrelevant 

for  the  purposes  of  the  alleged  encouragement  of  data  manipulation,  since  under  Finanz-

Verfassungsgesetz  [Financial  Constitutional  Law]  1948  -  F-VG  1948)  Original  text:  BGBl.  [Federal 

Law  Gazette]  No  45/1948  as  amended  in  BGBl.  I  No194/1999  (DFB),  the  Laender  are  obliged  to 

deal  with  borrowing  themselves  and  finance  themselves  on  the  market  (§ 14. Land legislation 

governs the raising of loans by the Laender, local authority associations and municipalities.), nor is 

there  any  federal  liability  for  the  debts  of  the  Laender.  This  means  that  each  federal  Land  is 

responsible  for  its  own  debt,  and  so  the  points  raised  by  the  Commission  are  not  essential 

conditions for preventing data manipulation.  

There  was  therefore  own  borrowing  by  Land  Salzburg  amounting  to  about 1.7 billion  euros,  since 

the  revised  debt  as  at  the  end  of  2012  totalled  3.509  billion  euros,  whereas  the  debts  of  Land 

Salzburg to the OeBFA only amounted to 1.83 billion euros as at the end of 2012 according to the 

Court of Audit report of October 2013 (page 145). 

The framework agreement certainly had a positive effect on the representation of public debt during 

the period in question, since part at least of the (hidden) public debt of Land Salzburg was recorded 

correctly by the statistical authorities. 

1.3  Extent and significance of data revisions with regard to government deficit 

and government debt for 2012 

Page  40(1)  of  the  preliminary  report  contains  the  following  wording:  Thereby those entities 

facilitated the fact that (…) leading to the misrepresentation in 2012 and 2013 of Austria’s deficit 

and debt data regarding 2008-2012 to Eurostat, i.e. after the entry into force of Regulation (EU) 

1173/2011 (NB: it should be called ‘the Regulation’).  

However it happened that the reporting by Land Salzburg complied neither with federal nor with EU 

regulations, this did not cause public deficits and debts to be understated in initial national reporting 

for 2012 and 2013.  

The following data concerning public debt were reported to Eurostat: 

Table  1:  Government  debt  under  ESA  95  in  notifications  to  Eurostat  under  Regulation 

(EC) No 479/2009 in million euros 

7 

 
 
 
 
 
 
 
 
Notification of 
In 2012 
In 2013 

30.03.2012 
235.000* 
-  

28.09.2012 
230.192 
- 

29.03.2013 
227.431 
234.987 

30.09.2013 
227.173 
235.000 

09.04.2014 
228.422 
233.303 

*  In  the  course  of  clarification  with  Eurostat,  the  value  prior  to  publication  by  Eurostat  was  revised  to 
230.000, 
value.  
Remark: From the autumn 2014 notification onwards, the data were to be reported in accordance with ESA 
2010 and so were not compatible.  

above 

which 

final 

well 

was 

still 

the 

Table 1 shows that for the whole of 2012, Austria reported higher public debt for that year than was 

actually  necessary  after  correction  of  the  statistical  problems  through  the  2014  March-DP-

Notification.  Austria  also  reported  higher  public  debt  figures  for  2013  in  2013  than  were  finally 

actually  necessary.  The  misrepresentation  described  in  the  preliminary  report  therefore  applies 

solely to 2012 in 2013 for the purposes of the sanctions threatened in Article 8 of Regulation (EU) 

No 1173/2011.  

Furthermore,  Statistik  Austria  reduced  the  public  deficit  for  2012  by  7  million  euros  after  having 

verified the data of Land Salzburg.  

Table 2: Government deficit under ESA 95 in notifications to Eurostat under Regulation 

(EC) No 479/2009 in million euros 

Notification of 
In 2012 
In 2013 

9.228 
-  

9.625 
- 

29.03.2013 
7.684 
7.447 

30.09.2013 
7.818 
7.221 

09.04.2014 
7.866 
4.776 

It  should  also  be  noted  that  the  reports  based  on  Article  3  of  Regulation  (EC)  No  479/2009  are 

obligatory  for  four  reporting  years.  Any  amendments/revisions  of  data  in  relation  to  previous 

notifications must be made for the entire reporting period (2010 to 2012 were affected in the 2014 

March-DP-Notification).  

1.4  No infringement of reporting or auditing obligations by OeNB/Eurostat 

misinterpretation of statements 

On page 37(4), OeNB is accused of having failed to report to the Commission (Eurostat). In actual 

fact, OeNB has no obligation to report to Eurostat for ESA purposes either under EU or national law.   

Prior to publication in December 2012, OeNB had no knowledge of investments by Land Salzburg in 

financial derivatives, nor was it responsible for auditing the financial statements of the Laender. Nor 

can  reporting  securities  worth  300  million  euros  be  described  as  ‘exposure’,  since  the  securities 

8 

 
 
 
 
 
 
 
 
 
 
were  recorded  by  OeNB  on  a  routine  basis,  reported  to  STAT  and  included  in  the  calculation  of 

public debt by STAT.  

The  finding  by  Eurostat  that  a  number  of  statements  by  OeNB  to  representatives  during  the 

inspection  were  incorrect  is  itself  incorrect  and  is  based  on  misinterpretation  of  statements  (see 

Annex II - Opinion of OeNB). 

1.5 

Failure by the supervisory bodies to expose the faults defined as 

negligence 

On page 26, the failure by Land Salzburg to make the entries proposed by STAT and the fact that 

“such a misuse of the accounts was not unveiled by any of the monitoring entities demonstrates 

more generally a negligent behaviour” were generally described as “negligent behaviour”.  

This contradicts the results of the preliminary report (e.g. on p. 24), according to which the Court of 

Audit was obviously incorrectly or incompletely informed in its (horizontal) audit in 2012.  

On  page  37(2),  the  Court  of  Audit  is  accused  of  having  failed  to  investigate  data  discrepancies  in 

2012. This is not actually the case, since the events in 2012 resulted in the much more extensive 

audit by the Court of Audit. 

It should also  be  noted  that  differences  between administrative  data  and data in  accordance  with 

ESA/EDP  are  not  confined  to  a  certain  Land  or  municipality  and  do  not  indicate  ‘manipulation’  or 

‘misreporting’. Regulation (EC) No 479/2009 permits the statistical authorities and Eurostat to revise 

administrative  data  without  negligence  being  assumed  as  a  result.  The  revisions  are  made  as 

explained on pages 25 to 27 of the preliminary report. Differences between administrative data and 

data in accordance with ESA/EDP had been routinely reported to Eurostat since 2010 as far as the 

public  deficit  of  individual  Laender  was  concerned.  Eurostat  had  therefore  also  been  aware  since 

September  2010  that  there  were  differences  between  administrative  data  and  data  in  accordance 

with ESA/EDP for Land Salzburg. 

Last  but  not  least,  according  to  Regulation  (EC)  No  479/2009,  liabilities  arising  from  financial 

derivatives are expressly not part of public debt. The misrepresentation of financial derivatives does 

not necessarily lead to the conclusion that the public debt also needs to be revised. 

9 

 
 
 
 
 
 
 
 
 
It should therefore be concluded that the supervisory bodies are not guilty of ‘negligence’.  

1.6   No gross negligence on the part of the Land Court of Audit (LRH) or the 

Office of the Salzburg State Office 

The  preliminary  report  does  not  take  due  account  of  the  fact  that  criminal  law  was  broken  and 

certain  findings  are  based  on  incomplete  information.  The  Internal  Audit  Department  was  not 

responsible for monitoring financial management and accounts for the entire Salzburg State Office. 

The ‘four-eye’ principle was actually applied in the Salzburg State Office, but it was not always acted 

upon,  sometimes  unlawfully.  The  fact  that  the  principle  existed  finally  led  to  the  exposure  of  the 

corruption.  There  was  an  advisory  board  to  monitor  financial  transactions,  but  it  was  unlawfully 

provided  with  incorrect  information.  There  were  external  audits,  but  these,  too,  were  unlawfully 

blocked.  Last  but  not  least,  Land  Salzburg  did  not  actually  derive  any  benefit  from  the  incorrect 

reporting of data, but a huge financial loss. The scale of the hidden transactions then caused delays 

in correcting the data. Annexes I and II contain an extensive opinion and detailed remarks by the 

Salzburg State Office on the preliminary report. 

Overall,  it  can  be  said  with  regard  to  the  report  that  some  assertions  were  made  without  being 

backed up with evidence or corresponding documents (... apparently greater liabilities ... allegedly 

not  informed  ...  it  appears  that  ...  these  misrepresentations  have  possibly  ...).  These  assertions 

should either be backed up with conclusive evidence or omitted from the report. 

2. 

Legislation passed as a result of the Salzburg financial scandal 

  As long ago as February 2013, political agreement was reached on a general prohibition on 

speculation  with  public  funds  which  entails  criminal  penalties  and  the  remaining 

implementation  steps  are  to  be  completed  by  the  end  of  2017.  Land  Salzburg  gave  its 

prohibition on speculation Land constitutional status as long ago as July 2013. 

  BGBL. II No 313/2015 greatly improved the regulation of estimates and financial statements 

of  the  Laender  and  municipalities,  following  the  recommendations  of  the  Court  of  Audit  in 

particular.  The  reform  included  an  integrated  accounting  system  comprising  financial 

statements, balance sheets and profit and loss accounts based on IPSAS and following the 

model  of  the  budgetary  law  reform  and  implementation  of  the  principle  of  accrual-based 

accounting. The rules comply with Article 3 of Council Directive 2011/85/EU of 8 November 

10 

 
 
 
 
 
2011 on requirements for budgetary frameworks of the Member States. The public accounts 

of sub-national authorities are regulated in a way that is consistent with federal accounts.  

  There  was  also  agreement  on  binding  upper  limits  on  liability  on  the  basis  of  harmonised 

data.  

  The  Austrian  rules  are  therefore  more  comprehensive  and  promote  budgetary  discipline 

more stringently than the rules of the European Union.  

  The  federal  procedure  for  lending  to  the  Laender  was  restructured  more  rigorously  and 

relaunched  after  the  speculation  by  Land  Salzburg  became  known,  as  a  result  of  these 

cases. Additional corresponding information is now, as a result, obtained from  the Laender 

(e.g. concerning the use of funds  by the Laender) and if  the provisions of agreements are 

infringed, it is possible to call in the loans granted to the Laender. 

3. 

Summary of the disagreements with the preliminary report 

  With regard to the misrepresentation of data, the preliminary report does not take account 

of  the  fact  that  the  legal  processing  of  apparently  criminal  actions  in  Austria  has  not  yet 

been completed.  

  The question of understatement of the public debt of Austria for 2008 and 2009 is irrelevant 

as far as any penalty is concerned, nor has it been specifically proven and in case of doubt it 

is  covered  by  EU  law  (ESA  revision  policy).  As  explained  above,  not  only  had  the 

misrepresentation  of  data  come  to  an  end  by  the  end  of  2013,  the  debt  of  Land  Salzburg 

had been brought down to a level it would have been at if the misrepresentation had never 

occurred. The public deficit for 2012 was revised downwards. 

 

It is incorrect to claim that Eurostat was not informed until 10 months after the appearance 

of a suspicion.  

 

It  is  incorrect  to  claim  that  inconsistencies  in  the  data  from  various  sources  could  logically 

lead  to  the  conclusion  that  data  have  been  misrepresented  or  even  that  such  data  or 

information  were  known  to  the  statistical  authorities.  It  is  correct  to  claim  that  since 

September 2010, Eurostat was aware of differences between administrative data and data in 

accordance with Regulation (EC) No 479/2009 for Land Salzburg. 

 

It is incorrect to claim that the Court of Audit failed to investigate discrepancies in the data. 

It  is,  however,  correct  that  it  immediately  launched  wide-ranging  audit  measures  and 

significantly contributed to showing the actual asset and debt management. 

11 

 
 
 
 
 
ANNEX I 

Remarks and proposed revisions of individual sections of the preliminary report 

ANNEX II 

Opinions from  

a) the Salzburg State Office (Amt der Landesregierung),  

b) the Court of Audit (Rechnungshof),  

c) the Austrian Federal Statistics Institute (Bundesanstalt Statistik Österreich),  

d) the Austrian Central Bank (Oesterreichische Nationalbank)  

E) the Austrian Federal Financing Agency (Österreichische Bundesfinanzierungsagentur) 

in full. 

12 

 
 
 
 
 
OPINION  OF  THE  REPUBLIC  OF  AUSTRIA  UNDER  ARTICLE  8  OF  REGULATION  (EU)  NO 
1173/2011 ON THE PRELIMINARY REPORT ON THE FINDINGS OF THE INVESTIGATION 
RELATED  TO  THE  MANIPULATION  OF  STATISTICS  IN  AUSTRIA  AS  REFERRED  TO  IN 
REGULATION  (EU)  NO  1173/2011  OF  THE  EUROPEAN  PARLIAMENT  AND  OF  THE 
COUNCIL  ON  THE  EFFECTIVE  ENFORCEMENT  OF  BUDGETARY  SURVEILLANCE  IN  THE 
EURO AREA (COMMISSION DECISION OF 3 MAY 2016) 

ANNEX I 

Remarks and proposed amendments  

to individual sections of the preliminary report 

The following remarks and amendments are taken from the following documents: 

-  Opinion of Salzburg State Office (SBG, 18. 1. 2017 (see Annex II) including additional 

information from 19. 1. 2017) 

-  Opinion of the Court of Audit (RH, 18. 1. 2017 (see Annex II) 

-  Opinion of the Austrian Federal Statistics Institute (STAT, 16. 1. 2017 (see Annex II) 

-  Opinion of the Austrian Central Bank (OeNB, 11. 1. 2017 (see Annex II) including additional 

information from 17. 1. 2017) 

-  Opinion of the Austrian Federal Financing Agency (OeBFA, 12. 1. 2017 (see Annex II) 

- 

Information from the Federal Ministry of Finance (BMF, 17. 1. 2017) 

Preliminary remark: In the case of translation questions, the remarks and amendments refer to the 

German version. 

SBG 1 

The Internal Audit 

SBG 1.1 

Text according to preliminary report (p 3): 

The report establishes that, from the year 2002, the executive and legislative powers in Land 

Salzburg respectively acted and legislated in a way that granted unlimited powers to the Financial 

Management Department of Land Salzburg, to enter and conclude high-risk financial transactions 

13 

 
 
 
 
 
 
 
 
 
 
 
with credit institutions, for unlimited time and unlimited amounts, while at the same time exempting 

that Department from being monitored by the Internal Audit Department of Land Salzburg. 

Proposed amendment: 

The report establishes that, from the year 2002, the executive and legislative powers in Land 

Salzburg respectively acted and legislated in a way that granted unlimited powers to the Financial 

Management Department of Land Salzburg, to enter and conclude high-risk financial transactions 

with credit institutions, for unlimited time and unlimited amounts. By decree, the Internal Audit Staff 

Unit of the Directorate of the Land Government Office (Landesamtsdirektion) has no responsibility 

for monitoring financial management and accounts, as this is already the responsibility of the 

federal and Land courts of auditors. 

SBG 1.2 

Text according to preliminary report (p 16): 

Furthermore, the State Government appoints, subject to the approval of the Federal Government, 

the Landesamtsdirektor, who is the head of the State Office of Land Salzburg. The State Office of 

Land Salzburg is the administrative support of Land Salzburg and is divided into several 

departments, inter alia the Internal Audit (Interne Revision) and the Abteilung 8: Finanz– und 

Vermögensverwaltung (hereinafter, the Financial Department). 

Proposed amendment: 

Furthermore, the State Government appoints, subject to the approval of the Federal Government, 

the Landesamtsdirektor, who is the head of the State Office of Land Salzburg. The State Office of 

Land Salzburg is the administrative support of Land Salzburg and is divided into several 

departments, inter alia the Directorate of the Land Government Office (Landesamtsdirektion) and 

the Abteilung 8: Finanz– und Vermögensverwaltung (hereinafter, the Financial Department). 

Internal Audit was a Staff Unit of the Landesamtsdirektion. 

SBG 1.3 

Text according to preliminary report (p 20): 

Moreover the Commission ascertains that the entire State Office of Land Salzburg, among which the 

Financial Department, was exempted from being monitored by the Internal Audit from 1999 

onwards. 

Proposed amendment: 

Moreover, the Commission finds that by decree the Internal Audit Staff Unit of the 

Landesamtsdirektion had no responsibility for monitoring financial management and accounts for 

14 

 
 
 
 
the entire State Office, as this is already the responsibility of the federal Court of Audit and the Land 

Court of Audit. 

SBG 1.4 

Text according to preliminary report (p 21): 

If the Internal Audit had not been barred from monitoring the Financial Department in 1999, it is 

likely that it would have been able to point out these failures of the internal control procedures. 

Proposed amendment: 

Omit this sentence (the Internal Audit was not barred from anything, but by decree was not 

responsible for auditing financial management and the accounts for the entire office). 

SBG 1.5 

Text according to preliminary report (p 35): 

During the same period of time, the Internal Audit and the Accounting Unit in the State Office of 

Land Salzburg were barred from analysing the transactions of the Budget Unit and from analysing 

the recording of those transactions in the financial statements. 

Proposed amendment: 

During the same period of time, the Accounting Unit in the State Office of Land Salzburg was barred 

from analysing the transactions of the Budget Unit and from analysing the recording of those 

transactions in the financial statements and the Internal Audit was not responsible for this. 

SBG 1.6  

Text according to preliminary report (p 36): 

The role of the State Government, and more specifically that of the Finanzreferenten, consisted 

partly in granting powers of attorney to three employees of the Financial Department to engage in 

high-risk investments from 2002 onwards and partly in exempting the activities of the Budget Unit 

from being audited by the Internal Audit and the Accounting Unit of Land Salzburg. 

Proposed amendment: 

The role of the State Government, and more specifically that of the Finanzreferenten, consisted 

partly in granting powers of attorney to three employees of the Financial Department to engage in 

high-risk investments from 2002 onwards and partly in exempting parts of the financial 

management activities of the Budget Unit from being audited by the Accounting Unit of Land 

15 

 
 
 
 
 
 
Salzburg. By decree, the Internal Audit was not responsible for auditing financial management for 

the entire office. 

At other points, too, (e.g. P 38), incorrect designations such as Direktion Interne Revision (Internal 

Audit Department) should be corrected, since as pointed out, this is only a staff unit within the 

Landesamtsdirektion. 

See also proposed rewording for SBG 9. 

SBG 2 

The four-eye principle and the accusation of gross negligence 

Text according to preliminary report (p 22): 

Hence, the Commission concludes that since, at least, 2002, Land Salzburg did not comply with the 

four-eye principle in the context of the financial management of Land Salzburg, in several occasions. 

This principle is paramount in ensuring sound financial management. The Commission considers 

that Land Salzburg's failure to comply with this principle constitutes serious negligence. 

Proposed amendment (addition): 

It should, however, be noted that there certainly is a four-eye principle laid down in the financial 

management guidelines. The Court of Audit makes the following statement in its report ‘Land 

Salzburg - Financial Position’ from 2013: “ Certain elements of an ICS, such as observance of a four-

eye principle or a division of functions between trading (front office) and processing (back office) in 

financial transactions were contained in the financial management guidelines for Land Salzburg, but 

were not always implemented in practice ...”. It should not be forgotten that it was in fact the four-

eye principle that finally led to exposure of the financial scandal. 

The Commission concludes that since 2002 at least, Land Salzburg did not comply with the four-eye 

principle in the context of the financial management of Land Salzburg, on several occasions. This 

principle is paramount in ensuring sound financial management, however. 

SBG 3 

Debt of the Land 

Text according to preliminary report (p 14): 

..., the effective amount of underreporting and/or misreporting of debt in that year by Land 

Salzburg was de facto 0.9% of GDP in that year. 

16 

 
 
 
 
 
 
 
Proposed amendment (addition): 

..., the effective amount of underreporting and/or misreporting of debt in that year by Land 

Salzburg was de facto 0.9% of GDP in that year. 

If the debts assignable to the institutions not covered by the budget but assigned to Salzburg at 

Land level are added, Land Salzburg would also be more indebted for each of the years 2010 to 

2012 in spite of the misreporting, which would bring about a corresponding reduction in the 

difference in relation to the value subsequently determined (2012) or estimated by Statistik Austria 

(2010 and 2011), which also includes entities already assignable to the Land but not included in the 

budget. 

SBG 4 

Accusation of concealing bank accounts 

Text according to preliminary report (p 23): 

Based on the statements of the State Office of Land Salzburg, the Commission concludes that the 

Financial Department of the State Office of Land Salzburg started to conceal bank accounts under 

the voranschlagsunwirksame from 2003 onwards.  

Proposed amendment: 

Based on the statements of the State Office of Land Salzburg, the Commission concludes that the 

former unit head of the budget unit, who must be considered to be criminally liable for this, started 

to conceal bank accounts under the voranschlagsunwirksame Gebarung (extra-budgetary accounts) 

from 2003 onwards. 

SBG 5 

Accusation of failing to observe unspecified ‘recommendations’ of the Court of Audit 

SBG 5.1  

Text according to preliminary report (p 28): 

Notwithstanding this, the Commission is not aware of efforts from any of the institutions in Salzburg 

(Landtag, LRH, State Government, and State Office) to closely follow-up on the recommendations of 

the RH and it has also concluded in this report that in fact the voranschlagsunwirksamen Gebarung 

were not effectively followed. 

Proposed amendment: 

Notwithstanding this, the Commission concluded that the extra-budgetary accounts 

(voranschlagsunwirksame Gebarung) were not effectively followed. 

17 

 
 
 
 
 
SBG 5.2  

Text according to preliminary report (p 35): 

This report shows that severe irregularities took place in the compilation, control and reporting of 

financial, as well as non-financial, transactions in Land Salzburg over a significant period of time. 

Public accounting rules were not complied with, control was lacking, the four-eye principle was not 

respected, financial and non-financial transactions were not appropriately reported,  

recommendations from the RH were ignored, documentation was falsified, signatures were forged 

and misleading information was sent to the national statistical authorities as well as to the RH, 

leading to the misreporting of the financial accounts, and hence to the misreporting of the debt data 

for Austria at least from 2008. 

Proposed amendment: 

This report shows that severe irregularities took place in the compilation, control and reporting of 

financial, as well as non-financial, transactions in Land Salzburg over a significant period of time. 

Public accounting rules were not complied with, control was lacking, the four-eye principle was not 

respected, financial and non-financial transactions were not appropriately reported, documentation 

was falsified, signatures were forged and misleading information was sent to the national statistical 

authorities as well as to the RH, leading to the misreporting of the financial accounts, and hence to 

the misreporting of the debt data for Austria at least from 2008. 

SBG 5.3  

Text according to preliminary report (p 36): 

Furthermore, the Landtag did not demonstrate any clear interest in the recommendations regarding 

high-risk financial transactions made in 2009 by the RH, nor did it encourage the LRH to undertake 

in-depth audits of the accounts of Land Salzburg. 

Proposed amendment: 

Furthermore, the Landtag did not encourage the LRH to undertake in-depth audits of the accounts 

of Land Salzburg with regard to the ‘high-volume and high-risk derivatives transactions’ mentioned 

by the RH. 

See also two proposed wordings SBG 9. 

SBG 6 

Explanation of an apparent contradiction 

Text according to preliminary report (p 29): 

18 

 
 
 
 
 
According to the RH report published on 9 October 2013, the Director of the Finance Department 

informed the head of the Staff Department in May 2012 that the Head of the Budget Unit had acted 

against the State Office’s policy and service instructions. However, it should be noted that during 

the meeting on the 28 September 2016, this statement in the RH report was contradicted by the 

State Office claiming, on their side, that this event occurred in July 2012, rather than in May 2012.  

Proposed amendment: 

According to the RH report published on 9 October 2013, the Director of the Finance Department 

informed the head of the Staff Department in May 2012 that the Head of the Budget Unit had acted 

against the State Office’s policy and service instructions, and was punished (warning). The matter 

therefore seemed to be closed and there was not at first any further suspicion. Not until 2012, when 

the then Head of the Budget Unit had once again attempted to act against the State Office's policy 

and service instructions, did an “idea that something had gone wrong” manifest itself.kk. 

SBG 7 

Suspicion of incomplete coverage of financial transactions in monitoring 

Text according to preliminary report (p 30): 

….. 

  In October 2012, the Director of the Financial Department informed some employees of the 

Financial Department that the portfolio analysed by them was in fact just a part of the total 

portfolio, i.e. that a part of the portfolio had been concealed.  

  In the second half of October 2012, the Finanzreferent and the Director of the Financial 

Department jointly decided on the termination of foreign currency transactions and other 

transactions. The new employee hired on 1 September 2012 was mandated to undertaken 

such early cancellation of transactions and positions. Among others, financial derivative 

positions with the Deutsche Bank were cancelled, resulting in a loss of EUR 56 million for 

Land Salzburg. 

  On 23 October 2012, the Director of the Financial Department reported to the Financial 

Advisory Board the existence of additional financial transactions that had not hitherto been 

mentioned in the portfolio report addressed to that board.  

Proposed amendment: 

[Remark: omission of the second paragraph on page 30, because it concerns the same event as is 

mentioned in the fourth paragraph, with the following text:] 

….. 

19 

 
 
 
 

In the second half of October 2012, the Finanzreferent and the Director of the Financial 

Department jointly decided on the termination of foreign currency transactions and other 

transactions. The new employee hired on 1 September 2012 was mandated to undertake 

such early cancellation of transactions and positions. Among other things, financial derivative 

positions with the Deutsche Bank were cancelled, resulting in a loss of EUR 56 million for 

Land Salzburg. 

  On 23 October 2012, the Director of the Financial Department reported to the Financial 

Advisory Board the existence of financial transactions that had not hitherto been mentioned 

in the portfolio report addressed to that board.  

SBG 8 

Accusation of withholding information 

SBG 8.1  

Text according to preliminary report (p 31): 

It appears therefore that, from May to December 2012, during more than 6 months, the State 

Government of Land Salzburg, which at that stage was at least partly informed of the facts, 

concealed relevant information that it was obliged to provide at least to the RH, the statistical 

authorities and possibly to other bodies. Instead, from the second half of October about 300 

financial investments were terminated early by the administration and government of Land 

Salzburg, at the discretion of one member of the staff.  

It was only on 22 January 2013 that the State Office of Land Salzburg officially informed STAT on 

the issue of the existence of unrecorded liabilities.   

The Commission concludes that the concealment of relevant information by the officials of the 

financial management area and the government of Land Salzburg to the RH was also the cause for 

the incorrect and incomplete conclusions of RH 2012 follow-up report, which were ultimately 

published on 6 December 2012.  

Proposed amendment: 

After the Head of the Budget Unit had been punished for a first misdemeanour in May 2012, the 

existence of actual serious deficiencies was not discovered until the end of October 2012, when it 

was found that there were numerous financial transactions that had not been mentioned in the 

portfolio report. The consequences of this finding have not yet been analysed. Even in November 

2012, the then Head of the Budget Unit continued to deny having participated in risky transactions 

entered into for Land Salzburg. Not until 26 November 2012 did she admit having concealed a loss 

of approximately 340 million euros. This led to further intensive investigations, in the course of 

20 

 
 
 
which numerous forgeries of Financial Advisory Board (Finanzbeirat) minutes and signatures were 

revealed, resulting in dismissal without notice a few days later and the matter being brought to the 

attention of the public. That is why the RH, the statistics authorities and any other entities were not 

informed earlier. From the second half of October onwards, about 300 financial investments were 

closed prematurely, on the basis of the knowledge of a financial expert who had been hired. 

It was only on 22 January 2013 that the State Office of Land Salzburg officially informed STAT on 

the issue of the existence of unrecorded liabilities.  

RH not being informed until 6 December 2012 resulted in incorrect and incomplete conclusions in 

the follow-up report of RH 2012 published on the same date. 

SBG 8.2  

Text according to preliminary report (p 35): 

This report also shows that the facts could have been unveiled earlier, had relevant information 

been made fully available by the State Office of Land Salzburg to the monitoring, judicial and 

statistical authorities. 

Proposed amendment: 

This report also shows that the analysis of the consequences of the suspicion of the existence of 

serious deficiencies and the further intensive investigations made it impossible for the relevant 

information to be made fully available to the monitoring, judicial and statistical authorities at an 

earlier date. 

SBG 8.3  

Text according to preliminary report (p 36): 

Nevertheless, those entities did not inform the RH, which at the time was concluding its follow-up 

on an audit report to Land Salzburg, or the judicial or the statistical authorities about these events 

and findings. 

Proposed amendment: 

Nevertheless, those entities did not inform the RH, which at the time was concluding its follow-up 

on an audit report to Land Salzburg, or the judicial or the statistical authorities about these events 

and findings, because analysis of the consequences of the suspicion of the existence of serious 

deficiencies and the further intensive investigations made it impossible for the relevant information 

to be made fully available to these authorities at an earlier date. 

21 

 
 
 
 
 
 
SBG 9 

Attribution of behaviour, statements, etc to ‘Land Salzburg’, ‘Amt der Landesregierung’ 

(State Office), ‘Budgetreferat’ (Budget Unit), etc 

Remark: For the sake of completeness and to avoid any misunderstanding, when the Investigation 

Committee refers in this report to ‘Land Salzburg’, ‘Amt der Salzburger Landesregierung’, 

‘Budgetreferat’, etc, and it is (expressly or implicitly) stated that something has been replied, 

answered, explained, done, etc by ‘Land Salzburg’, ‘Amt der Salzburger Landesregierung’, 

‘Budgetreferat’, it should be noted that according to our understanding, various State officials 

have stated something (as witnesses), (unlawfully) done something, etc. As we understand the 

legal position, such statements, behaviour, etc cannot be automatically attributed to ‘Land 

Salzburg’, ‘Amt der Landesregierung’, ‘Budgetreferat’, etc. 

For example: 

SBG 9.1  

Text according to preliminary report (p 2): 

By serious negligence, public accounting rules were not followed, control was lacking, financial and 

non-financial transactions were not appropriately reported, and recommendations from the Austrian 

Court of Audit were ignored. In addition documentation was intentionally falsified and misleading 

information was intentionally sent to the national statistical authorities as well as to the National 

Court of Audit (RH). 

Proposed amendment: 

By serious negligence, public accounting rules were not followed by the then Head of the Budget 

Unit, control was lacking and financial and non-financial transactions were not appropriately 

reported by the then Head of the Budget Unit. In addition documentation was intentionally falsified 

and misleading information was intentionally sent to the federal statistical authorities as well as to 

the National Court of Audit (RH) by her. 

and: 

SBG 9.2  

Text according to preliminary report (p 26): 

Furthermore, the fact the State Office of Land Salzburg did not take over the suggestion provided 

by STAT since, at least, 2010, on the correct recording practices and ... 

22 

 
 
 
 
 
 
Proposed amendment: 

Furthermore, the fact that the then Head of the Budget Unit did not take over the suggestion 

provided by STAT since, at least, 2010, on the correct recording practices and ... 

and: 

SBG 9.3  

Text according to preliminary report (p 26): 

Even if STAT included these amounts in the Austrian Maastricht Debt in accordance with their 

consolidations practices, the absence of these amounts in the balance sheet of the State Office of 

Land Salzburg amounts to a case of false statement from the State Office of Land Salzburg to the 

Austrian statistical and monitoring entities. 

Proposed amendment: 

Even if STAT included these amounts in the Austrian Maastricht Debt in accordance with their 

consolidations practices, the absence of these amounts in the balance sheet of the State Office of 

Land Salzburg amounts to a case of false statement from the then Head of the Budget Unit to the 

Austrian statistical and monitoring entities. 

and: 

SBG 9.4  

Text according to preliminary report (p 38): 

The State Office of Land Salzburg, which has under its responsibility, among others, the Internal 

Audit Department, the Accounting Unit and the Financial Department (notably the Budget Unit), 

should be considered as the main responsible for the fact that financial and non-financial accounts 

were misreported since, at least, 2008.  

On one side, the Internal Audit of the State Office of Land Salzburg failed to check the internal 

control procedures and the risk management of the Financial Department. On the other side, the 

Accounting Unit failed to control the bookkeeping records, both for the budgetary accounts and for 

the non-budgetary accounts.  

The findings of the report demonstrate that the Financial Department, and notably the Budget Unit: 

… 

Proposed amendment: 

The then Head of the Budget Unit carried out unlawful actions that resulted in accounts for financial 

and non-financial transactions being misreported since at least 2008. 

23 

 
 
 
 
 
On one hand, the Internal Audit of the State Office of Land Salzburg did not check the internal 

control procedures and the risk management of the Financial Department. On the other hand, the 

Accounting Unit did not control the bookkeeping records, both for the budgetary accounts and for 

the non-budgetary accounts. 

The findings of the report demonstrate that the then Head of the Budget Unit: … 

Then: Deletion of the first sub-point (Ignoring recommendations of the RH), since it is not evident 

what exactly they might be) 

and: 

SBG 9.5  

Text according to preliminary report (p 40): 

Thereby those entities facilitated the fact that in the Budget Unit of the State Office of Land 

Salzburg could, intentionally, misrepresent and conceal financial transactions, leading to the 

misrepresentation in 2012 and 2013 of Austria’s deficit and debt data regarding 2008-2012 to 

Eurostat, i.e. after the entry into force of Regulation (EU) 1173/2011. 

Proposed amendment: 

Thereby those entities facilitated the fact that the then Head of the Budget Unit of the State Office 

of Land Salzburg could, intentionally, misrepresent and conceal financial transactions, leading to the 

misrepresentation in 2012 and 2013 of Austria’s deficit and debt data regarding 2008-2012 to 

Eurostat, i.e. after the entry into force of Regulation (EU) 1173/2011. 

and: 

in general, especially in the final notes: 

SBG 9.6  

Text according to preliminary report: 

“The State Office of Land Salzburg declared: ...” 

“Furthermore, ... the State Office of Land Salzburg replied ...” 

“When asked ... the State Office of Land Salzburg replied ...” etc 

Proposed amendment: 

“The witness declared: ...” 

“Furthermore, ... the witness replied ...” 

“When asked ... the witness replied ...” etc 

24 

 
 
 
 
 
 
SBG 10 

Verschuldensvorwurf gegen Landesrechnungshof und Amt der Sbg Landesregierung: 

SBG 10.1  

Text according to preliminary report (p 2): 

On the basis of all the facts and reasoning described in this report, it can be concluded that the LRH 

and State Office and State Government of Land Salzburg, i.e. entities within the general 

government sector of the Republic of Austria, were seriously negligent in not ensuring appropriate 

compilation controls and reporting procedures. 

Proposed amendment: 

On the basis of all the facts and reasoning described in this report, it can be concluded that the LRH 

and State Office and State Government of Land Salzburg, i.e. entities within the general 

government sector of the Republic of Austria, did not ensure appropriate compilation controls and 

reporting procedures. It should also be noted, however, that the financial scandal was exposed not 

by an external entity but within the State Office itself and that until it was exposed, no-one had 

noticed anything serious, especially as information was withheld or misinformation was supplied (cf 

forgery of minutes) by the then Head of the Budget Unit. 

SBG 10.2  

Text according to preliminary report (p 40): 

On the basis of all the facts and reasoning described in this report, it can be concluded that the LRH 

and State Office and State Government of Land Salzburg, i.e. entities within the general 

government sector of the Republic of Austria, were seriously negligent in not ensuring appropriate 

compilation controls and reporting procedures. … 

Proposed amendment: 

On the basis of all the facts and reasoning described in this report, it can be concluded that the LRH 

and State Office of Land Salzburg, i.e. entities within the general government sector of the Republic 

of Austria, did not ensure appropriate compilation controls and reporting procedures. It should also 

be noted, however, that the financial scandal was exposed not by an external entity but within the 

State Office itself and that until it was exposed, no-one had noticed anything serious, especially as 

information was withheld or misinformation was supplied (cf forgery of minutes) by the then Head 

of the Budget Unit. … 

25 

 
 
 
 
 
 
RH 1 

Text according to preliminary report (point 2.3.4, p 27): 

“Furthermore, on 10 October 2012, after receiving a table from STAT that showed the debt of Land 

Salzburg from 2011 onwards, as compiled by STAT (see Table 1, row 3), the RH requested further 

information on the EUR 1,050 million of debt of the 'funds', asking more specifically what funds 

STAT was referring to. STAT has explained to the RH that the EUR 1,050 million of debt referred to 

the loans from OeBFA on-lent to the Landeswohnbaufonds. Whereas, as explained above, these 

loans should be recorded in the balance sheet of Land Salzburg as the debt of Land Salzburg, the 

Commission has not received information on further correspondence exchanged between the two 

entities on this issue, i.e. the Commission is not aware that the RH, in face of this misuse of the 

accounts of Land Salzburg, further raised the issue either with STAT or the State Office of Land 

Salzburg. 

Remark of RH concerning point 2.3.4, p 27: 

The EC report places the enquiry by RH of 12 October 2012

3

 to Statistik Austria in the wrong 

context. The enquiry was solely for clarification of the report by Statistik Austria concerning the 

annual budget results under Article 11 of the 2011 Austrian Stability Pact

4

. These data are the basis 

for fulfilment of the function of assessor assigned to RH in the Stability Pact. 

It is incorrect to claim that “the RH, in face of this misuse of the accounts of Land 

Salzburg" failed to mention this to Statistik Austria and the  

Salzburg State Office. The enquiry by RH was not  

in connection with an audit. RH was not then aware of the deficiencies in the internal monitoring 

system and accounts of the Land described in its later report on the financial position of Land 

Salzburg, certainly not to their full extent. There was therefore not at that time any reason to 

assume that the accounts or the figures from Statistik Austria were incorrect. 

This paragraph of the preliminary report should be deleted without being replaced. 

RH 2 

Text according to preliminary report (point 2.3.5, pp 27 and 28): 

“When enquired by the RH on the differences between the debt reported by Land Salzburg 

(Finanzschulden) and the table produced by STAT depicting the debt of each of the Länder, STAT 

3

 RH is only aware of one e-mail of 12 October 2012 with the relevant content, not as stated in the EC report 
of 10 October 2012. 
4

 The 2011 Stability Pact governed national budgetary co-ordination, medium-term budgetary orientation and 
the division of deficit ratios and penalty burdens up to 2014. The new 2012 Austrian Stability Pact was 
concluded in 2012 and is to apply for an indefinite period. 

26 

 
 
 
                                                            
explained, to the RH that , among others the difference included EUR 300 million regarding 

securities "that we found nowhere in the Rechnungsabschluss". During the second half of 2012, the 

RH discussed the finding of its 2011 follow-up report of the financial management of Land Salzburg 

with the State Office of Land Salzburg. Ultimately this led to the publishing of a RH’s report on 6 

December 2012. However the extremely important issue concerning the misreporting of EUR 300 

million of Maastricht relevant liabilities was not included in the RH report.” 

Remark of RH concerning point 2.3.5, pp 27 and 28: 

The e-mail from RH of 29 August 2012 explaining a difference of 

300 million euros between the Land's accounts and the data from Statistik Austria has been placed 

in completely the wrong context by the EC. The enquiry by e-mail 

from RH did not concern, as incorrectly stated, the follow-up check on the financing instruments of 

the Land, but the audit of ‘Consolidation measures of the Laender of Upper Austria, Salzburg and 

Styria’. This audit finally culminated in the more extensive ‘Land Salzburg - Financial Position’ audit. 

The explanation of the difference of 300 million euros raised by RH could therefore not be included 

in the report on the follow-up audit of the financing instruments of the Land published on 6 

December 2012. 

This paragraph of the preliminary report should be deleted without being replaced. 

RH 3 

Text according to preliminary report (point 3, p 35, paras 6 and 7): 

“Similarly, between 2002 and 2012, neither the LRH nor the RH conducted any effective in-depth 

audit of the financial accounts of Land Salzburg. In particular, they did not audit the 

voranschlagsunwirksame Gebarung which, as showed in Table 2, in section 2.3.3., reached more 

than EUR 26 billion of inflows and outflows in 2011 and included de facto all the unreported 

transactions and stocks, while in principle they should have included only extra-budgetary flows and 

not Maastricht-relevant liabilities. The main actors involved in the events described in this report are 

the State Office, the State Government, the Landtag and the LRH of Land Salzburg, the RH, OeBFA, 

OeNB and STAT. “ 

Remark of RH concerning point 3, p 35, paras 6 and 7: 

RH carried out the following audits at Salzburg State Office during the period in question: 

Financing instruments of the subnational authorities 

(Salzburg 2009/3) 

Audit 

On-site audit 2008; Date of publication: 15 July 2009. 

27 

 
 
 
The horizontal audit covered the federal level, the Laender of Salzburg, Burgenland, 

Carinthia and Tyrol and the cities of Villach, Dornbirn and Wels. 

Objectives and subject matter 

Even at this stage, RH indicated a recorded 

value at risk of 178.20 million euros (End 2007). This value at risk amounted to 41% of financial 

debt, corresponding to just under 10% of the income of the budget (Landesvoranschlag) of Land 

Salzburg. Land Salzburg (Land Salzburg) therefore showed by far the highest value at risk of all the 

verified entities (including eight times the comparable value at risk at federal level). 

Comment 

In view of this particularly high value at risk and potential loss, RH chose Land Salzburg for a follow-

up audit. 

Follow-up-audit of financing instruments 

(Salzburg 2012/9) 

Audit 

On-site audit 2011; Submission of audit results for an opinion 

End May 2012: Date of publication: 6 December 2012 

Objectives and subject matter 

Salzburg expressed an opinion on them in August 2012 without informing RH that the financial 

manager responsible had admitted to having concealed book losses for many years. As became 

clear from the subsequent ‘Land Salzburg - Financial Position’ audit, minutes used extensively by RH 

in the follow-up audit had been forged or were entirely missing, which meant that its 

recommendations were based on items that had been manipulated. 

Consolidation measures of the Laender of Upper Austria, Salzburg and Styria 

(Salzburg 2014/3) 

Audit 

The audit commenced in July 2012 and was interrupted owing to performance of the ‘Land Salzburg 

- Financial Position’ audit from November 2012 to March 2013. The Consolidation Measures audit in 

the three Laender was subsequently continued from April to June 2013 and published in June 2014. 

In summer 2012, there was no-one for RH to contact in Salzburg. The audit team was informed that 

the financial manager had been on sick leave for a long time. 

28 

 
 
 
 
 
 
Objectives and subject matter 

The audit was based on a cross-section of all the Laender. The objective was to determine the 

financial position and reveal any need for consolidation on the basis of medium-term financial 

planning. 

Comment 

During the investigations for the audit, Statistik Austria was requested to explain a difference of 300 

million euros that was initially detected (see above). This  

sum was, however, only one aspect of the matters that came to the attention of the audit team in 

the accounts of the Land. The audit team encountered more and more unexplained accounting 

differences, including in connection with extra-budgetary accounts 

(voranschlagsunwirksame Gebarung). RH therefore interrupted the audit at the beginning of 

December 2012 in order to audit Land Salzburg in much greater depth (‘Financial 

Position - Land Salzburg’). 

Land Salzburg – Financial Position 

(Salzburg 2013/7) 

Audit 

On-site audit from December 2012 to March 2013; Submission of audit results 

Beginning of April 2013; Date of publication: 9 October 2013 

Objectives and subject matter 

The audit included assessment of financial transactions and the associated impact on the financial 

position of the Land, the Internal Monitoring System in relation to the statement of financial 

transactions, commercial relationships with credit institutions 

and the Republic of Austria, in particular with regard to derivative transactions, booking of financial 

transactions, risks arising from liabilities assumed and financial  

relationships with affiliates and the representation of risks in medium-term planning and accounts of 

the Land, especially with regard to the economic reality, transparency  

and completeness of accounts. 

Comment 

This means that in this audit, RH not only continued to investigate the difference of 300 million 

euros addressed in the Consolidation Measures audit in August 2013, but  

also took much more extensive audit measures. The report includes the total debt of the Land and 

detailed breakdowns of stocks and flows in extra-budgetary accounts [voranschlagsunwirksamen 

Gebarung]. 

29 

 
 
 
In its risk-oriented audit approach, RH accordingly repeatedly audited the financial management of 

Land Salzburg during the period in question. If the EC is now including RH among “the main actors 

involved in the events described in this report”, this runs counter to the facts and can in no way be 

concluded from the findings of the report. In view of the extensive audit activities of RH, which 

made a substantial contribution to clarifying the financial position of the Land, this statement is 

incorrect and is most emphatically rejected. 

This paragraph of the preliminary report should be deleted without being replaced. 

RH 4 

Text according to preliminary report (point 3, p 37): 

“During the year 2012, the RH failed to effectively follow up on the discrepancies it had found in the 

accounts of Land Salzburg as pointed out by STAT, namely concerning the mismatch of the lending 

from OeBFA to Land Salzburg and the EUR 300 million in securities that were not reported in the 

balance sheets of Land Salzburg.” 

Remark of RH concerning point 3, p 37: 

The statement in the EC report, that RH had failed to investigate “the mismatch of the lending from 

OeBFA to Land Salzburg and the EUR 300 million in securities that were not reported in the balance 

sheets of Land Salzburg” runs counter to the facts. RH was not questioned or asked to supply 

documentation with regard to this matter. This would have resulted in objective determination of 

the facts of this case. The attempt to obtain an explanation for a sum of 300 million euros from 

Statistik Austria through the enquiry by email on 29 August 2012 was only one of the matters that 

came to the attention of the audit team in the Salzburg accounts during the audit of ‘Consolidation 

measures of the Laender of Upper Austria, Salzburg and Styria’. Because the audit team was 

encountering more and more unexplainable accounting differences and there were no competent 

contact persons on site

5

, RH interrupted this audit at the beginning of December 2012 in order to 

conduct a much more extensive audit of Land Salzburg (see also the comments by RH concerning 

point 3 , p 35, paras 6 and 7): 

The report on the ‘Land Salzburg - Financial Position’ audit included a statement  

of borrowings, assets and liabilities in the extra-budgetary accounts (voranschlagsunwirksamen 

Gebarung) and securities transactions. The audit results were handed to the Head of Government 

(Landeshauptfrau) of Land Salzburg by the Chief Auditor in person. 

The audit activities by RH actually went far beyond the  

5

 RH was informed that the Financial Manager was absent because of sickness. 

30 

 
 
 
 
                                                            
300 million euros referred to by the EC and led to a general statement of all securities transactions 

and borrowings. RH therefore did in no way fail to expose discrepancies, but made a significant 

contribution to clarifying and revealing the actual asset and debt management in the Land through 

its audit activities. 

This paragraph of the preliminary report should be deleted without being replaced. 

31 

 
 
 
 
STAT 1 

Text according to preliminary report (p 2): The report contains a detailed description of the 

main reasons for the 1.2 billion euro revision in the government debt of Austria in 2014, relating to 

the years 2010-2012, ... 

Proposed amendment: The report contains a detailed description of the main reasons for the 1.2 

billion euro, 0.9 billion euro and 0.5 billion euro revisions in the government debt of Austria in 2014, 

relating to the years 2012, 2011 and 2010 respectively, ... 

STAT 2 

Text according to preliminary report (p 3): The misrepresentation of the government debt of 

Austria was, as of 2012, of EUR 1.2 billion. 

Proposed amendment: The misrepresentation of the government debt of Austria as at the end of 

2012 was EUR 1.2 billion. 

STAT 3  

Text according to preliminary report (p 3): Even if in the April 2014 EDP notification Maastricht 

Debt was revised for years 2010-2012, it appears that the misreporting of debt, as well as possibly 

deficit, may have started at least from 2008 onwards, and that the level of Maastricht debt 

presented by the Austrian statistical authorities for the years 2008 and 2009 is still underestimated. 

Remark: The Member States are obliged under the EDP Regulation to report data for the years n-

4. Only data for the years 2010 to 2014 were therefore notifiable in the report of April 2014. 

Reporting changes in data for previous years is only obligatory under other EU regulations

6

. 

Proposal 1 for amended wording: … and that the level of quarterly public debt presented by 

the Austrian statistical authorities for the years 2008 and 2009 is still underestimated. 

Proposal 2: Assertions that cannot be supported by the submission of documents (“... it appears 

that ...”) and that relate to reporting years that are not relevant to the matter under investigation 

(such as the 2008 reporting year) should be eliminated from the report.   

STAT 4 

Text according to preliminary report (p 3): Finally, the report concludes that whereas the 

Commission (Eurostat) was only informed of this case on the 10 October 2013, the Austrian 

statistical authorities were aware of the possibility of misrepresentation of the accounts of Land 

6

 Council Regulation (EC) No 1222/2004 of 28 June 2004 concerning the compilation and transmission of data 
on the quarterly government debt and Regulation (EU) No 549/2013 of the European Parliament and of the 
Council of 21 May 2013 on the European system of national and regional accounts in the European Union. 

32 

 
 
 
 
 
                                                            
Salzburg since, at least, the 6th of December 2012. 

Remark: The “representation in the books” of a Land or municipality must be carried out in 

accordance with the Regulation on Budget and Closed Accounts of State and Local Governments 

(Voranschlags- und Rechnungsabschlussverordnung) (VRV) of the Federal Minister for Finance. 

STAT checks the suitability of the data sent by the Laender for the calculation of ESA and/or EDP 

data, not whether they are VRV-compliant in a particular case. The possibility of misrepresentation 

in the books of Land Salzburg might therefore not be known to STAT. On the other hand, problems 

with data were reported to the Commission (Eurostat) as early as the end of January 2013 and 

again at the time of the EDP notification in April 2013. 

STAT 5 

Text according to preliminary report (p 3): Also, the report concludes that both Statistics 

Austria and the Austrian Central Bank were aware of sizeable inconsistencies in the data reported by 

Land Salzburg, before the so called 'financial scandal' became public at the end of 2012. 

Remark: Although the data sent under the Public Statistics Regulation (GebStat-VO)

7

 are the most 

important, they are not the sole basis for the calculation of ESA or EDP data. There is therefore a 

sometimes a significant difference between ‘Debts according to VRV’ and ‘EDP-Maastricht debt in all 

the Laender’. As far as STAT is aware, as at 30. 9. 2013, this difference amounted to 1.3 billion 

euros for Land Salzburg and 8.9 billion euros for all the Laender. Differences between VRV and 

ESA/EDP data are therefore not confined to a single Land. 

Proposal for amended wording: The report also contains the conclusion that Statistik Austria 

had already been aware of the need to supplement the data reported by Land Salzburg for 

the calculation of ESA and/or EDP data, before the so-called financial scandal became public 

knowledge at the end of 2012. 

STAT 6 

Text according to preliminary report (p 3): ... serious deficiencies in the organisation of the 

data flows between public entities and the statistical authorities. 

Remark: STAT cannot understand this view of the Commission. The “data flows between public 

entities and STAT” are clearly regulated in the Public Finance Statistics Regulation. 

7

 Public Finance Statistics Regulation (Gebarungsstatistik-Verordnung); BGBl. II No 361/2002, BGBl. II Nr. 
465/2004 and BGBl. II No 345/2014 (from 1 January 2014) 

33 

 
 
 
 
 
                                                            
STAT 7 

Text according to preliminary report (p 3): ... the central verification of accounting data by 

Member States at all levels of general government, and robust and effective supervisory and control 

systems at national level. 

Remark: Data transferred by the Laender under GebStat-VO should be VRV-compliant in principle. 

The task of STAT is to check the suitability of the data for the calculation of ESA and/or EDP data, 

not whether they are VRV-compliant in a particular case.  

STAT 8 

Text according to preliminary report (p 8): On 10 March 2014, STAT provided the Commission 

(Eurostat) with the results of its internal analysis of the statistical implications of the RH findings 

and announced that, after the incorporation of the new Land Salzburg data, the general 

government debt of the years 2010, 2011 and 2012 would be revised upwards (+0.3pp of GDP in 

2010, +0.3pp in 2011, +0.4pp in 2012). 

Proposed amendment: On 10 March 2014, STAT provided the Commission (Eurostat) ... (+0.2 

pp of GDP in 2010, +0.3 pp in 2011, +0.4 pp in 2012). 

STAT 9 

Text according to preliminary report (p 8): After an examination of the facts by the 

Commission (Eurostat), it became clear that the case of unreported debt in the Land Salzburg was 

serious. The elements that led to this conclusion include, amongst other, the fact that the Court of 

Auditors had published findings indicating the existence of several and severe irregularities in the 

financial management of Land Salzburg, that as a result of these irregularities there was an 

incorrect reporting of debt figures for non-negligible amounts, on which the national statistical 

authorities were allegedly not informed during many years and finally, that the regional government 

in Land Salzburg, in exercising its legal powers, seemed to have facilitated the incorrect reporting of 

transactions. 

Consequently the Commission (Eurostat) assessed that a more thorough analysis of the facts 

occurred in Land Salzburg was needed. 

Remark: This entire paragraph refers to the assessment by the Commission (Eurostat) before the 

more detailed analysis. STAT therefore proposes that this should be pointed out immediately in the 

first sentence, e.g. “After an examination of the facts, the Commission (Eurostat) judged that 

...” 

34 

 
 
 
 
 
STAT 10 

Text according to preliminary report (p 9, footnote 7): OeBFA provides data and metadata to 

the statistical authorities to be used for the calculation of the interest accrual adjustment, data on 

federal government receipts and on the federal government debt. 

Proposed amendment: OeBFA provides data and metadata to the statistical authorities to be 

used for the calculation of the interest accrual adjustment, data on federal receipts and on the 

federal debt. 

STAT 11 

Text according to preliminary report (p 11): The first row of the table reflects the financial 

debts (Finanzschulden) of Land Salzburg as reported in the balance sheets compiled by the State 

Office of Land Salzburg for the years 2002-2012. According to information from STAT, these 

'Finanzschulden' should include both loans and government bonds, and are in this sense the 

relevant liabilities to be taken into account for the compilation of Maastricht Debt. 

Remark: On 11 October 2013, i.e. two days prior to publication of the report by the Court of Audit 

on the financial position of Land Salzburg, STAT informed Eurostat that the terms Finanzschulden 

(financial debts) and Gesamtschulden (total debts) are not identical with the term Maastricht-

Schuldenstand (Maastricht debt)

8

. This would make it clear that the sum of 3.507 billion euros 

specified in the report by the Court of Audit could not be used to calculate the Maastricht debt 

without detailed research. 

STAT 12 

Text according to preliminary report (p 12): For example, the estimation by STAT took into 

account a considerable part of the Voranschlagsunwirksame Erläge, i.e. cash transited through the 

accounts of Land Salzburg that is owed to a third entity,  

Remark: It has been noted that the extra-budgetary accounts (voranschlagsunwirksame 

Gebarung) (transfers) were not reported to Statistik Austria by any of the Laender. The additional 

sources of data were the balances of the Wohnbaufonds (residential construction fund) and other 

balances sheets of outsourced entities (Landesfonds (Land fund) and Landeskammern (Land 

chambers) and information from OeBFA and OeNB, which was used for validation and cross-checks. 

8

 This information was provided in connection with the Requests for clarification following the EDP 
notifications: “Financial debts amounting to 1.370 billion euros were recorded in the accounting system of the 
Land as at 31 December 2012. On the other hand, the total debts had a nominal value of 3.507 billion euros 
as at 31 December 2012.” Neither ‘Finanzschulden’ nor ‘Gesamtschulden’ can be taken 1:1 as Maastricht 
debt.” 

35 

 
 
 
 
                                                            
STAT 13 

Text according to preliminary report (p 13): Furthermore, and after receiving information from 

the OeNB, STAT concluded that Land Salzburg had financed itself, in 2010, through the issuing of 

government securities amounting to EUR 300 million. Even if such an amount was nowhere visible 

in the balance sheets of Land Salzburg, STAT took the decision to follow the direct data source of 

the OeNB and to include these amounts in the debt of Land Salzburg. 

Remark: This is an example of the general approach of STAT to calculating ESA and EDP data, 

according to which the data sent in accordance with the Public Finance Statistics Regulation form 

the most important but not the only basis for data

9

. It is also noted that the information 

regarding the existence of a loan was checked using the ISIN number (securities number) in the 

portal of the Viennese Stock Exchange (Wiener Börse). Because the loan appeared on the Viennese 

Stock Exchange and the Thumbstone showing that it had been placed on the stock exchange was 

found on the Internet, the information from OeNB securities statistics had been confirmed by an 

independent third institution (Viennese Stock Exchange) and was used to calculate the debt. 

STAT 14 

Text according to preliminary report (p 13): Even if STAT has the possibility to change the 

figures from the data sources when compiling national accounts, it does not have the power to 

oblige entities to amend the data reported 

Remark: Data transferred by the Laender under GebStat-VO should be VRV-compliant in principle. 

The task of STAT is to check the suitability of the data for the calculation of ESA and/or EDP data, 

not whether they are VRV-compliant in a particular case. 

STAT 15 

Text according to preliminary report (p 14): It can be observed that data for the years prior to 

2010 were not revised by the statistical authorities. In a letter sent by STAT to Eurostat on 28 

March 2014 it was stated: "As one outcome of our bilateral meeting with officials from Land 

Salzburg it can be taken for sure that no additional resources will be dedicated to further clarify 

earlier years. That means that our estimates will remain unchanged". Notwithstanding this 

9

 The half-yearly verification of the data sent by Laender and municipalities and the inclusion of other data 
sources has resulted in the adaptation of the standard allocation tables and/or the addition to them of Land-
specific or municipality-specific allocations. STAT also uses other data sources to calculate ESA or EDP data, in 
particular financial management data sent from entities not included in the budget or statistics from other 
institutions (for calculation of the public debt, in particular the securities and banking statistics of the Austrian 
National Bank).   

36 

 
 
 
 
 
                                                            
statement by STAT ... 

Remarks:   

a) In the period from October 2013 to March 2014, STAT only received information for a 

revision of the data for 2012 from the Salzburg State Office. The ESA data for 2010 and 2011 

were revised on the basis of various estimates. Because only data concerning the years 2010 to 

2014 needed to be sent to the Commission (Eurostat) in connection with the EDP notification prior 

to 1 April 2014, no further data was processed for the years prior to 2010. 

b) The statement quoted from the letter of 28 March 2014 only concerned the years 2010 and 

2011

10

. 

STAT 16 

Text according to preliminary report (p 14): Finally, row (6a) reflects the difference between 

the calculation of Land Salzburg's debt taking into account all data sources available in March 2014 

(row (4)) and the debt effectively reported by Land Salzburg (row (1a)) for those years, under the 

Finanzschulden. This means that even if the reported impact of the revisions to the Austrian 

Maastricht debt amounted to only 0.4% of GDP in 2012, the effective amount of underreporting 

and/or misreporting of debt in that year by Land Salzburg was de facto 0.9% of GDP in that year. 

Remark: The investigation in question concerns the Austrian EDP report, not ‘factual’ results of 

financial management in Land Salzburg. The finding that the incorrect reporting of figures 

concerning the debts of Land Salzburg actually amounted to 0.9% each year should therefore be 

omitted. 

STAT 17 

Text according to preliminary report (p 25): Firstly, it is the understanding of the Commission 

that the interest payable should have been revised by STAT at least also for years 2010 and 2011, 

along with the revisions undertaken to the debt (see Table 1). 

Remark: In the period from October 2013 to March 2014, STAT only received information for a 

10

 iii. Availability of information for years 2010-2011 

Eurostat/Question: You state in the report that: 'The officials of Land Salzburg are not in a position to 
provide quantitative information for earlier years due to constraints in resources and lack of information 
available'. 
Is it intended by the Land Salzburg to dedicate additional resources to the issue in the future or to take any 
efforts to obtain the information which is at present lacking? Or will the estimation of the data by Statistics 
Austria continue? 
STAT/Answer: As one outcome of our bilateral meetings with officials from Land Salzburg it can be taken 
for sure that no additional resources will be dedicated to further clarify earlier years. That means, that our 
estimates will remain unchanged. 

37 

 
 
 
 
                                                            
revision of the data for 2012 from the Salzburg State Office. This meant that only the year 2012 

could be audited. Neither an audit (Prüfung) nor monitoring (Kontrolle) could be carried out for 

2010 and 2011. STAT revised the data concerning public debt for 2010 and 2011 on the basis of 

various estimates (in particular retropolation of the data for 2012). Because the interest expenses 

relating to the deficit turned out to be lower after the audit of the data for 2012 than before it and 

in the absence of additional information for 2010 and 2011, there was no “Estimation of interest 

expenses on the basis of an estimate of public debt”. 

STAT 18 

Text according to preliminary report (p 25): Furthermore, it is the understanding of the 

Commission that, following the fact that it was ascertained that debt is underestimated for years 

prior to 2010, consequently interest payable is also underestimated, and therefore the Austrian 

government deficit for those years. 

Remark: Interest flows based on swap agreements and forward rate agreements were also 

included in the calculation of the public deficit

11

. The interest flows are difference between 

expenditure and income and can therefore raise or lower the public deficit. In the audit of the data 

for 2012, it was found that some redemptions (not relevant to the deficit) also contained 

settlements on the basis of swap agreements, which needed to be recorded as deficit-reducing 

income. According to Table 2 (on page 24 of the preliminary report, penultimate line), this audit 

resulted in a reduction of 7 million euros in the public deficit for 2012. It is therefore not possible 

to automatically draw a conclusion regarding the impact on the Austrian government deficit.  

The assertion that the debts for 2010 were demonstrably underestimated must be proven by the 

Commission (Eurostat) or deleted if this is not possible. 

STAT 19 

Text according to preliminary report (p 25): In a meeting held on 8 September 2010 between 

STAT and the Budget Unit of the State Office of Land Salzburg, STAT explained that all the funds 

lent by OeBFA should be reported under the Finanzschulden (as they are, de facto, debt of Land 

Salzburg in relation to OeBFA).  

Remark: The term ‘Finanzschulden’ (financial debts) is not identifical with the term ‘Maastricht-

Schuldenstand’ (Maastricht debt). Attention was drawn to the representation in the ESA at the 

11

 Regulation (EC) No 2558/2001 of the European Parliament and of the Council of 3 December 2001  
amending Council Regulation (EC) No 2223/96 as regards the reclassification of settlements under swaps 
arrangements and under forward rate agreements, supplement to Annex 5 to ESA 1995: Definition of 
government deficit for the purpose of the EDP (excessive deficit procedure). 

38 

 
 
 
   
                                                            
meeting on 8 September 2010

12

. 

Proposal for amended wording: ... All the funds lent by OeBFA in the ESA and EDP statistics 

should be reported as loans by the federal government and borrowings by the Land. 

STAT 20 

Text according to preliminary report (p 26, footnote 33): “This follows from the email 

exchange of 27 September 2010 ...” 

To be corrected (see footnote 13 on page 13): “This follows from the email exchange of 27 

September 2012 ...” 

STAT 21 

Text according to preliminary report (p 26): Furthermore, it should be stated that 

consolidation practices do not only involve using the most reliable data when realizing that a 

considerable discrepancy exists, as was done by STAT during these years. The best consolidation 

practices should also concern informing the relevant authorities of the existence of such 

discrepancies, given that misreporting in one item may imply misreporting in other items.  

Remark: As already pointed out more than once, the persons responsible for supplying data were 

continuously informed of consolidation processes and transfers to ESA. Discrepancies do not in any 

way imply misreporting. A general suspicion is therefore impermissible. A correction therefore needs 

to be made in the text of the report. 

STAT 22 

Text according to preliminary report (p 29): Finally, it is important to mention that, for the 

years under analysis, no flows or stocks of financial derivatives were reported in national accounts 

for the whole S.1312 sector (state government sector ). The Commission is aware that sizeable 

cross-currency swaps existed at least between Land Salzburg and OeBFA. 

Remark: The Commission was aware since the end of January 2013 at the latest that 

financial derivatives had been concluded in Land Salzburg that were not included in the Austrian 

ESA statistics. That is obtained from an internal record of a telephone conversation with the then 

12

 The Financial Accounts in ESA 95, Consolidated/Unconsolidated: “Consolidated means that payment flows 
and stocks are reduced by the amounts that occur within the government sector. Unconsolidated means that 
the amounts of flows/stocks within the government sector continue to be included in the results. Typical 
flows/stocks that must be consolidated are loans to the Laender from the Austrian Federal Financing Agency 
(OeBFA). During consolidation, these loans are treated as lendings by the federal authorities and borrowings 
of the Land and as such, are not included in the results.” 

39 

 
 
 
 
 
                                                            
Eurostat Desk Officer (MW) on 31 January 2013.

13

. Furthermore, STAT informed the Commission 

(Eurostat) in connection with the usual enquiries regarding the EDP notification (“Request for 

clarification” in April 2013 of the initial researches regarding the topic of financial derivatives and 

that information from Salzburg would not be available before the end of September 2013 “due to 

the well-known reasons”

14

. In this information, it was also pointed out that STAT and OeNB had 

proposed including a separate representation of financial derivatives in the VRV

15

 to the Federal 

Ministry of Finance. It should therefore be added to the report that the Commission (Eurostat) had 

been informed about these circumstances since the end of January 2013. 

Proposed amendment: “…in the national accounts for the entire sector S.1312 (Laender 

subsector )…” 

STAT 23 

Text according to preliminary report (p 31): It was only on 22 January 2013 that the State 

Office of Land Salzburg officially informed STAT on the issue of the existence of unrecorded 

liabilities. 

Remarks:  

a) The comments from STAT do not make it clear what additional information was made available 

by the Salzburg State Office on 22 January 2013 that had not already been known since the press 

conference on 6 December 2012. As long ago as 6 December 2012, the Salzburger Nachrichten 

contained the following words: The Deputy Head of the Land Financial Department is alleged to 

have speculated with public money and hidden the losses in the budget.” (see also footnote 48 on 

page 31 of the preliminary report). 

13

 “Just had a fairly long discussion with MW (has read in the media about Salzburg, Linz and Lower Austria) 
and is surprised that there is nothing under F.34 in the EDPT3C and 3D. I told her that we were checking the 
data supplied to us in this regard with Salzburg and Lower Austria.” 
14

 Quotation from the ‘concluding remarks’ by Eurostat of 16 April 2013:  

Question by Eurostat: We understand that this issue has been explicitly addressed in your exchanges with 
the data providers and it has been confirmed that such transactions have not taken place in Austria in the EDP 
reference period. Otherwise, please explain to us whether, and if yes, on which grounds, it can be concluded 
that the transactions would not have any major impacts on the state government debt measurement. 
Answer by STAT: To get more information on financial derivatives, already in 2009 STAT and OeNB made 
proposals to the MoF for additional break down in the state and local government budgets but didn’t succeed 
these proposals being implemented in the National Regulation (VRV). Again this issue was presented by STAT 
to the responsible committee for developing the VRV in March 2013. In March 2013 we also contacted the 
states of Lower Austria, Burgenland and Salzburg and requested flow- and stock-data on financial derivatives 
but there was no answer so far (in fact, in Salzburg closed accounts as such for the year 2012 will 
not be available before September 2013 due to the well-known reasons). 
15

 Regulation on Budget and Closed Accounts of State and Local Governments (Voranschlags- und 

Rechnungsabschlussverordnung) (VRV) of the Federal Minister for Finance in agreement with the Court of 
Audit. 

40 

 
 
 
                                                            
b) The comments by STAT concerning the contacts with the Salzburg State Office on 22 January 

2013 show: 

ba) Telecon with Mr (CM) at about 8.30 on 22 January 2013: He introduced himself as the new 

contact person for data transfers to STAT and wished to know whether there was a backlog of 

notifications to STAT. 

bb) Detailed information to Mr (CM) concerning requirements with regard to content and technical 

details of notifications. 

STAT was not informed on 22 January 2013 of the existence of unrecorded liabilities. A correction 

therefore needs to be made in the text of the report. 

STAT 24  

Text according to preliminary report (p 32): On 22 January 2013, the State Office of Land 

Salzburg and STAT exchanged some emails. In one of these emails, STAT states: "For our part, we 

are very interested in the interim reports on the finances of Land Salzburg in order to get a picture 

of the changes/revisions that have come to us, or to what misreporting and manipulations we have 

been exposed." 

Remark: The actual wording of the e-mail is as follows: “For our part, we would be very 

interested in the interim reports on the finances of Land Salzburg in order to get a picture of the 

changes/revisions that have come to us, or to what misreporting and manipulations we have been 

exposed.” This implies that on 22 January 2013, STAT was not in possession of any information that 

went further than what had been known since the press conference on 6 December 2012.  

A correction therefore needs to be made in the text of the report. 

Proposed amendment: In one of these emails, STAT states: “For our part, we would be very 

interested in the interim reports  

STAT 25 

Text according to preliminary report (p 32): On 5 March 2013, there was a bilateral meeting 

between STAT and the State Office of Land Salzburg in Vienna; 

Remark: This meeting on 5 March 2013 in Vienna was attended by two representatives of the 

Salzburg State Office

16

 and a number of representatives of STAT. The participants from Salzburg 

were announced by Mr (CM). 

Proposed amendment: On 5 March 2013, there was a bilateral meeting between STAT and the 

State Office of Land Salzburg in Vienna; 

16

 Mr (RO) and Mr (PS) 

41 

 
 
 
 
                                                            
STAT 26 

Text according to preliminary report (p 32): On 27 March 2013, the State Office of Land 

Salzburg informed STAT that, following a report by an external independent private auditor, it had 

been ascertained that the consolidated liabilities of Land Salzburg amounted to EUR 3,507 million, 

although no breakdown of this amount could be provided. The Commission is not aware of any 

specific follow-up having taken place in order to ascertain the nature of such liabilities; 

Remarks:  

a) Since on 27 March 2013 there was no breakdown of the sum of 3.507 billion euros, which related 

to only one reporting year, namely 2012, it could therefore not be excluded that liabilities from 

financial derivatives were also included in this sum. As early as 19 March 2013, STAT asked Land 

Salzburg for detailed information about financial derivatives. This was disclosed to the Commission 

(Eurostat) on 16 April 2013

17

. 

A correction therefore needs to be made in the text of the report. 

b) The claim that “The Commission is not aware of any specific follow-up having taken place in 

order to ascertain the nature of such liabilities;” is incomprehensible. On 19 March and 7 May 2013, 

there were discussions between Land Salzburg and Statistik Austria, preceded and followed by 

numerous contacts by e-mail. The discussions were held solely in order to make the representatives 

of Land Salzburg more aware of the data requirements and contents of the notifications. STAT does 

not produce statistics on the basis of a number in a Pdf document that not even the sender can 

explain exactly. 

STAT 27 

Text according to preliminary report (p 32): On 7 May 2013 a meeting took place between 

STAT and the State Office of Land Salzburg. In this meeting, STAT recognized that there might be 

problems with the recording of derivatives and debt in Land Salzburgtt. ( the quotation according to 

footnote tt is actually (see p 49 of the preliminary report): "We read the press on 6 December 2012. 

In this context, we had a first meeting with representatives of the Land Salzburg in May 2013. From 

this we recognized that there might have been issues with the reporting of derivatives and EDP debt 

(reporting of loans).” 

Proposed amendment: In this meeting, STAT realised that there might be problems with the 

recording of derivatives and debt in Land Salzburg. 

17

 In March 2013 we also contacted the states of Lower Austria, Burgenland and Salzburg and requested flow- 
and stock-data on financial derivatives but there was no answer so far (in fact, in Salzburg closed accounts as 
such for the year 2012 will not be available before September 2013 due to the well-known reasons). 

42 

 
 
 
 
                                                            
STAT 28 

Text according to preliminary report (p 33): In July 2013, still in the absence of annual data, 

STAT compiled the accounts of Land Salzburg on the basis of the quarterly data providedvv; ( the 

quotation according to footnote vv is actually (see p 49 of the preliminary report): During the 

meeting with STAT on 26 September 2016, the RH representative, who in July 2013 was an 

employee of STAT, stated: “As final annual data on the closed accounts of the Land Salzburg for the 

year 2012 were not available for the calculation of ESA National Accounts, STAT used quarterly data 

to compile the National Accounts (…)." 

Remarks: 

a) STAT does not prepare any accounts for Land Salzburg, but ESA and EDP statistics. 

b) The following passage is to be found on page 6 of the minutes of the meeting of the Commission 

with STAT on 26. 9. 2016: Before October 2013, Land Salzburg had not officially informed STAT and 

we did not receive updated data (corrections) from them. They provided only the quarterly debt 

data according to the existing reporting obligations without any further comments. 

The wording must therefore be corrected. 

Proposed amendment: In September 2013, still in the absence of annual data, STAT prepared 

the ESA and EDP statistics taking account of the quarterly data submitted by the Land Salzburg. 

STAT 29 

Text according to preliminary report (p 33): On 10 October 2013, the issue is brought to the 

attention of Eurostat for the first time, i.e. ten months after the issue had been brought to the 

attention of STAT; 

Remark: The press conference in Salzburg on 6 December 2012 not only elicited a strong response 

from all German-language media inside and outside Austria, but was also reported internationally 

within and even outside of Europe. It is difficult to believe that the Commission (Eurostat) was 

unaware of it. The Commission (Eurostat) was obviously “made aware of these matters” by 

reporting in the media, as can be concluded by an enquiry on 31 January 2013 from the Eurostat 

Desk Officer (MW), who at that time was responsible for this area. It was aware since the end of 

January 2013 at the latest that financial derivatives had been concluded in Land Salzburg that were 

not included in the Austrian ESA statistics.   

The wording must therefore be corrected. 

43 

 
 
 
 
Proposed amendment: On 11 October, STAT sent initial comments on the RH report ‘Land 

Salzburg - Financial Position’ to Eurostat

18

. 

STAT 30 

Text according to preliminary report (p 33): On 31 March 2014, STAT reported the April 2014 

EDP Notification to Eurostat. The level of Land Salzburg's contribution to Maastricht debt, for 2011, 

was revised upwards by EUR 3,507 million, i.e., exactly the amount which had been signalled by the 

State Office of Land Salzburg to STAT on the 27 March 2013; 

Remark: As can be seen from Table 1 of the preliminary report (p 15), the EDP notification of 31 

March 2014 included a contribution from Land Salzburg including Wohnbaufonds amounting to 

18

 Comments on the Report of the Austrian Court of Audit (CoA) on Land Salzburg – Financial situation 

(published on 9 October 2013)   
a) General:  
STAT has neither been involved in nor informed on the auditing process of the Austrian Federal CoA about the 
financial situation in Land Salzburg. The report itself has been downloaded by STAT from the CoA-website on 
9 October 2013. According to the usual “auditing procedures” the draft report has probably been transmitted 
to Land Salzburg already in June 2013 for comments. 
b) Remarks on some details of the report:   
- “300 bank accounts with a turnover in 2012 of 9.5 billion euros”: The total inflows and outflows on all these 
bank accounts sum up to this amount, which refers to the transactions during the year (“im Jahr”). This must 
not be mixed with stocks of assets or liabilities. 
“Financial debts amounting to 1.370 billion euros were recorded in the accounting system of the Land as at 31 
December 2012. On the other hand, the total debts had a nominal value of 3.507 billion euros as at 31 
December 2012.” Neither ‘Finanzschulden’ nor ‘Gesamtschulden’ can be taken 1:1 as Maastricht debt.” 
Statistics Austria has published on 30 September 2013 the Maastricht debt of S.1312 by state (for the years 
2009 to 2012). The result for Land Salzburg is € 2.315 bn. 
- The difference between “Buchhaltungssystem” and Maastricht debt originates from the inclusion of 
extrabudgetary units (for instance the “Wohnbaufonds”), information provided by the Austrian Treasury and 
comparison with data of the security by securitiy database of OeNB. - On the other hand the difference 
between the result of CoA (“Gesamtschulden”) and STAT data of about € 1.2 bn (0.4 as percentage of GDP) 
cannot be interpreted as “to be added 1.1 to the debt data notified on 30 September 2013 (for instance it 
could be the case that “Gesamtschulden” comprises financial derivatives as liabilities). STAT will urge the 
officials of Land Salzburg to provide detailed data necessary for a comprehensive evaluation as soon as 
possible. 
- The chapter “Risikobetrachtung einzelner Geschäftskategorien” which deals with “swaps” gives no indication 
that there have been off-market swaps.  

c) There are no diverging results on the existence of financial derivatives in the individual state 
government units when comparing the information which has been provided independently to STAT and 
OeNB.    

d) The current compilation procedure for financial accounts implies the use of many indirect data 
sources. For example for deposits of the Sector S.1312 money and banking statistics is used or for securities 
other than shares (F.331 and F.332) the security by security data base of the OeNB is used. Therefore, all 
deposits of S.1312 with Austrian banks are recorded in financial accounts. Furthermore, security holdings of 
the Land Salzburg in custody of Austrian Banks are recorded in financial accounts. To ensure full coverage of 
securities other than shares, the OeNB reminded the Land Salzburg on the reporting obligation of security 
holdings in custody with foreign banks as laid down in the Foreign Exchange Act 2004 (this has been done 
along with the letter on the reporting obligation of financial derivatives). 

44 

 
 
 
                                                            
 
  
 
 
3.172 billion euros for 2011, while the EDP notification of 30 September 2013 included a sum of 

2.293 billion euros. The revision therefore amounted to 879 million euros. 

The wording must therefore be corrected. 

Proposed amendment:  

Variant A: On 31 March 2014, STAT reported the April 2014 EDP Notification to Eurostat. The level 

of Land Salzburg's contribution to Maastricht debt for 2011 was revised upwards by 879 million 

euros. 

If 2012 was meant, variant B should be included: 

Variant B: On 31 March 2014, STAT reported the April 2014 EDP Notification to Eurostat. The level 

of Land Salzburg's contribution to Maastricht debt for 2012 was revised upwards by 1.191 billion 

euros. 

STAT 31 

Text according to preliminary report (p 33): STAT informed the Commission (Eurostat) about 

the misreporting in Land Salzburg only on the 10 October 2013. Nevertheless, it has been 

ascertained that STAT was gradually informed about these facts from 6 December 2012 onwards. 

Notably, it was clear to STAT, at least since the 22 January 2013, that "misreporting and 

manipulations" had occurred in Land Salzburg. 

Remarks: 

a) On 29 January 2013, STAT informed all the federal Laender of the extent to which they had not 

yet met the requirements for the public finance statistics in connection with notifications to STAT 

and requested them to improve the quality of the notifications as quickly and fully as possible. The 

Federal Ministry of Finance was also informed of this situation on 29 January and requested “to help 

us with the improvement of the quality of the budget data sent to us”. The Federal Ministry of 

Finance immediately replied that “an improvement in the quality of data at sub-national level is also 

very important to us”. 

b) Falschberichterstattung (Misreporting), at least in the area of Finanzderivate (financial 

derivatives) was obvious to Eurostat by 31 January 2013 at the latest. On the basis of this 

communication on 31 January 2013, STAT requested Land Salzburg to provide information about 

financial derivatives on 19 March 2013; the results of this investigation were reported to Eurostat on 

16 April 2013. At the same time, Eurostat was also informed that final data for 2012 could not be 

expected from Land Salzburg before the end of 2013 “due to the well-known reasons”.  

c) On 9 October 2013 the RH published its report "Land Salzburg - Financial Position". Following a 

telephone conversation between STAT and the then Eurostat Desk Officer (MW) on 10 October 

45 

 
 
 
2013 concerning this report, STAT sent Eurostat its initial comments concerning this report on 11 

October. 

STAT 32 

Text according to preliminary report (p 34): Moreover, on the basis of information provided by 

the State Office of Land Salzburg concerning the results of an independent external audit, it should 

have been clear to STAT, at least since 27 March 2013, that the level of debt of Land Salzburg was 

in fact considerably larger than what had previously been estimated by STAT. Given that STAT 

would, four days later, report data to Eurostat in the context of the April 2013 EDP Notification, it is 

the opinion of the Commission that an immediate and urgent practical follow-up should have been 

undertaken by STAT after receiving this information from Land Salzburg. This appears not to have 

been the case. Furthermore, even if in such a short delay it would not be possible to give the issue 

a comprehensive follow-up, it is the opinion of the Commission that, under the principle of due 

diligence, STAT should have informed Eurostat immediately after 27 March 2013. 

Remark: Liabilities from financial derivatives are not part of public debt. It is the function of STAT 

to calculate public debt as defined in the EDP Regulation and report it in the EDP notifications for 

the years n-4 to n (namely the years 2009 to 2013 in the EDP notification of 31 March 2013). For 

the ‘Result of the independent external audit’ of 27 March 2013, which related to the end of 2012, it 

was not known to what extent liabilities from financial derivatives might be included, nor was there 

information concerning other years. A ‘clear revision’ of only one year without a secure basis of data 

for the EDP notifications is not normally accepted by Eurostat. 

STAT 33 

Text according to preliminary report (p 35): These irregular practices were made public in 

2012, following a press conference held on 6 December 2012 by the Finanzreferent, the Director of 

the Financial Department and the Head of the LRH of Land Salzburg. Furthermore, this report also 

demonstrates that the Commission (Eurostat) could and should have been informed by STAT 

several months earlier about these facts. 

Remark: The existence of irregular practices must have already been known to the Commission 

(Eurostat) owing to the widespread reporting in the media following the press conference on 6 

December 2012. There was communication between STAT and Eurostat concerning the availability 

of data concerning financial derivatives in Land Salzburg on 31 January and 16 April 2013. The 

wording must therefore be corrected. 

46 

 
 
 
 
 
STAT 34 

Text according to preliminary report (p 37): Even if STAT correctly implemented in the 

context of the EDP notifications the necessary changes to the data provided by the State Office of 

Land Salzburg, it is the opinion of the Commission that other relevant Austrian entities, notably the 

BMF and the RH, should have been informed. 

Remark: There are no Austrian legal standards that oblige STAT to take such action. It should 

rather be assumed that these institutions were fully informed about these events, if only by the 

wide reporting in the media. 

STAT 35 

Text according to preliminary report (p 38): Secondly, even if STAT was fully informed, at 

least since 22 January 2013, that misreporting and manipulation had occurred in the accounts of 

Land Salzburg, it failed to immediately inform the Commission (Eurostat) of these facts. 

Remarks:  

a) On 22 January 2013, STAT had no knowledge of the extent of the revisions to be expected. 

STAT therefore immediately asked Land Salzburg for information

19

 and agreed on a meeting for the 

extensive exchange of information in early March 2013. 

b) It can be assumed that on 22 January 2013, Eurostat had the same information about irregular 

practices in Land Salzburg as STAT itself owing to the media reporting following the press 

conference on 6 December 2012. 

The wording of the report should therefore be amended accordingly. 

STAT 36 

Text according to preliminary report (p 40): Finally, the report concludes that whereas the 

Commission (Eurostat) was only informed of this case on the 10 October 2013, the Austrian 

statistical authorities were aware of the possibility of misrepresentation of the accounts of Land 

Salzburg since, at least, the 6th of December 2012. 

Remark: Misreporting (Falschberichterstattung) - at least in the area of financial derivatives 

(Finanzderivate) became obvious to the Commission (Eurostat) on 31 January 2013 at the latest 

(see in particular remarks B.26 and B.28 above). The existence of a data problem associated with 

Land Salzburg also became obvious to the Commission (Eurostat) through the EDP notification in 

April 2013. The wording of the report should therefore be amended accordingly. 

19

 Email of 22 January 2013: "For our part, we would be very interested in the interim reports on the finances 

of Land Salzburg in order to get a picture of the changes/revisions that have come to us, or to what 
misreporting and manipulations we have been exposed." 

47 

 
 
 
 
                                                            
STAT 37 

Text according to preliminary report (p 40): Also, the report concludes that both Statistics 

Austria and the Austrian Central Bank were aware of sizeable inconsistencies in the data reported by 

Land Salzburg, before the so-called 'financial scandal' became public at the end of 2012. 

Remark: Since this sentence is an exact repetition of the sentence on page 3 of the preliminary 

report, remark STAT 5 above also applies to it:  

Remark: Although the data sent under the Public Statistics Regulation (GebStat-VO)

20

 are the most 

important, they are not the sole basis for the calculation of ESA or EDP data. There is therefore a 

sometimes a significant difference between ‘Debts according to VRV’ and ‘EDP-Maastricht debt in all 

the Laender’. As far as STAT is aware, as at 30. 9. 2013, this difference amounted to 1.3 billion 

euros for Land Salzburg and 8.9 billion euros for all the Laender. Differences between VRV and 

ESA/EDP data are therefore not confined to a single Land. 

Proposal for amended wording: The report also contains the conclusion that Statistik Austria 

had already been aware of the need to supplement the data reported by Land Salzburg for 

the calculation of ESA and/or EDP data, before the so-called financial scandal became public 

knowledge at the end of 2012. 

STAT 38 

Text according to preliminary report (p 40): As a result, the data sent by Austria to Eurostat in 

the context of the EDP 2013 Notifications exercises ... 

Proposed amendment (translation error): As a result, the data sent by Austria to Eurostat in 

the context of the EDP Notifications exercises in 2013 ... 

STAT 39 

Text according to preliminary report (p 40): Based on the findings in this report regarding the 

behaviour of the authorities of the Member State in the period from 13 December 2011 until the 

launch of the investigation on 5 May 2016, the Commission may decide to adopt a recommendation 

to the Council to impose a fine on the Republic of Austria, as foreseen in Regulation (EU) No 

1173/2011. 

Proposed amendment: …3. May 2016 ... 

20

 Public Finance Statistics Regulation (Gebarungsstatistik-Verordnung); BGBl. II No 361/2002, BGBl. II Nr. 

465/2004 and BGBl. II No 345/2014 (from 1 January 2014) 

48 

 
 
 
 
 
 
                                                            
STAT 40 

Text according to preliminary report (p 49, end note vv): During the meeting with STAT on 

26 September 2016, the RH representative, who in July 2013 was an employee of STAT, stated: “As 

final annual data on the closed accounts of the Land Salzburg for the year 2012 were not available 

for the calculation of ESA National Accounts, STAT used quarterly data to compile the National 

Accounts (…)." 

To be corrected, translation error: the expression für die Europäische Finanzaufsichtsbehörde 

(for the European Financial Supervisory Authority) in the German version can be deleted, since it is 

already covered by VGR (national accounts). 

49 

 
 
 
OeNB 1 

Accusation: “The OeNB, although recognising that it was aware of the investments by Land 

Salzburg in financial derivatives, failed to report these to the Commission (Eurostat), in the 

transmission of the Austrian financial accounts.” (page 37 of the report): 

Under EU and Austrian law, OeNB does not have any obligation to report to the Commission 

(Eurostat) arising from the ESA transmission programme (Regulation (EU) No 549/2013). The 

accusation of having failed to report transactions is therefore meaningless. OeNB has not infringed 

any obligation. 

Furthermore, the statement by OeNB at the meeting with Eurostat on 26 September 2016 that it 

was aware of financial derivatives (Meeting Report, rely to Question 8) only concerned the fact that 

we were made aware of possible derivative transactions of Land Salzburg by the corresponding 

press reports in December 2012. OeNB was not in possession of any data concerning this at that 

time (or previously). 

OeNB 2 

Accusation: “Furthermore, its consolidation practices regarding the financial accounts were 

ineffective.” (page 37 of the report): 

The consolidation practices corresponded to the agreement concluded between OeNB and Statistik 

Austria. Furthermore, it is not the task of a statistical authority to check the accuracy of accounts of 

subnational authorities (this is the function of auditors or courts of audit), still less so if such an 

authority only has the status of service provider, as in the case of OeNB. During the meeting on 26 

September 2016, it was also repeatedly emphasised that it had not been and was not the task of 

OeNB to audit accounts (cf Meeting Report, 5 f). 

OeNB 3 

Accusation: “Moreover, the Commission concludes that some declarations of the OeNB officials 

during the meeting between the OeNB and the Commission on 26 September 2016 were not 

correct. OeNB stated that it had found nothing unusual in the accounts of Land Salzburg for the 

period between 2002 and 2012, but the Commission has proof that, in fact, the EUR 300 million in 

securities not reported in the accounts of Land Salzburg had been unveiled by OeNB in 2010. [...] 

both Statistics Austria and the Austrian Central Bank were aware of sizeable inconsistencies in the 

data reported by Land Salzburg, before the so called 'financial scandal' became public at the end of 

2012.” (p 40 of the report): 

50 

 
 
 
 
First of all, the representatives of OeNB did not say at this meeting that OeNB had not found 

anything unusual in the accounts of Land Salzburg, especially as auditing or monitoring such 

accounts was not the task of OeNB. The further conclusions of Eurostat that some of the 

statements of the OENB representatives were incorrect are apparently based on the statement 

concerning financial derivatives already mentioned in point one (Meeting Report, reply to Question 

8). This statement by OeNB was misinterpreted and can only be understood in the context 

mentioned in point one. Only in the course of the routine quarterly exchange of data for the entire 

government sector did OeNB send securities issuance data that it had collected and formally 

checked against the master data (including the 300 million euros in 2010 already referred to) to 

StatistikAustria, which included them in the Maastricht debt. This was therefore not an exposure, as 

supposed in the report. Nor was any plausibility check in relation to the accounts to be carried out 

by OeNB, as shown above, since OeNB was not responsible for this.  

OeNB 4 

Page 9, footnote 6 of the report: 

“The OeNB is currently responsible for the compilation of financial accounts for all institutional 

sectors, with the exception of the government sector. In the past, however, OeNB was also 

compiling the financial accounts of the general government. In 2009, it was agreed between STAT 

and OeNB that the former should overtake the compilation of the Financial Accounts for the general 

government (S.13) after a transition period, with the view to use to a maximum possible extent 

direct data sources also for financial accounts compilation. Financial accounts for the general 

government, compiled by STAT, were transmitted to Eurostat for the first time in September 2014.” 

Replace by: 

“The OeNB is currently responsible for the preparation of financial accounts for all institutional 

sectors, with the exception of the government sector. In the past, however, OeNB also prepared 

the financial accounts of the government sector for STAT. In 2009, it was agreed between STAT 

and OeNB that the former should take over the preparation of the Financial Accounts for the 

general government (p 13) after a transition period, with a view to using to the maximum possible 

extent direct data sources also for financial accounts preparation. Financial accounts for the 

general government, compiled by STAT, were transmitted to Eurostat for the first time in 

September 2014. 

51 

 
 
 
 
 
 
OeNB 5 

Page 26 of the report: 

“Likewise, OeNB, has informed the Commission that the compilation practices of OeNB, in the 

compilation of the financial accounts, involved comparing the raw data on lending received from 

OeBFA with the consolidated information as provided by STAT. Good practices for consolidation 

should involve the comparison of two independent sets of raw data, rather than the comparison of 

one set of raw data with an output resulting from those same data. In case of the latter, it is 

improbable that there will be inconsistencies as one dataset is derived from the other.” 

Replace by: 

Likewise, OeNB has informed the Commission that the compilation practices (laid down in the 

working agreement with STAT) of OeNB, acting as a service provider for STAT, in the 

compilation of the financial accounts, involved comparing the raw data on lending received from 

OeBFA with the consolidated information as provided by STAT. Good practices for consolidation 

should involve the comparison of two independent sets of raw data, rather than the comparison of 

one set of raw data with an output resulting from those same data. In the latter case, it is 

improbable that there will be inconsistencies as one dataset is derived from the other. 

OeNB 6 

Page 27 of the report: 

“In 2011, STAT was informed by OeNB that the State Office of Land Salzburg had borrowed money 

through the sale of bonds amounting to EUR 300 million in 2010. As discussed internally by STAT, 

these securities were not visible in the accounts of the State Office of Land Salzburg reported to 

STAT. Even if such an amount was not reported in the balance sheets of Land Salzburg (in any 

liability item), STAT took the decision to follow the direct data source of the OeNB and hence to 

include these in the debt of Land Salzburg.” 

Remark: 

The securities issuance data collected by OeNB were sent to STAT in 2011 during the routine 

quarterly exchange of data. They also included issues by Land Salzburg in 2010 totalling 300 million 

euros. As discussed within STAT, these securities did not appear in the accounts of the Salzburg 

State Office reported to STAT. Even if such an amount was not reported in the balance sheets of 

Land Salzburg (in any liability item), STAT took the decision to follow the direct data source of the 

OeNB and hence to include these in the debt of Land Salzburg. 

52 

 
 
 
 
 
OeNB 7 

Page 27, footnote 36 of the report: 

Such information included in the security-by-security database of OeNB was coming from the 

counterpart (i.e. the lender) and not from the accounts of the State Office of Land Salzburg. 

Replace by: 

Such information included in the security-by-security database of OeNB did not originate from the 

accounts of the State Office of Land Salzburg.  

OeNB 8 

Page 28 of the report: 

“Finally, whereas the above issue was unveiled by comparing the direct data sources of OeNB with 

the data provided by STAT, the OeNB has explained to the Commission that for the relevant years, 

i.e. the period between 2002 to 2012, it did not find anything unusual in the accounts of Land 

Salzburg, except regarding derivatives.” 

Remark: This paragraph, including the footnote, should be deleted and not replaced, 

because incorrect conclusions are being drawn out of context. 

OeNB 9 

Page 29 of the report: 

“The fact that no stocks and transactions were reported regarding the Austrian state government 

sector for the period between 2002 and 2012 cannot be easily reconciled by the European 

Commission with the statement of OeNB, at the time the compiler of the Austrian financial accounts, 

that the only issue found unusual in the accounts of Land Salzburg was related to financial 

derivatives.” 

Remark: This sentence should be deleted and not replaced. 

OeNB 10 

Pages 35 and 36 of the report: 

The main actors involved in the events described in this report are the State Office, the State 

Government, the Landtag and the LRH of Land Salzburg, the RH, OeBFA, OeNB and STAT. All the 

entities interviewed have been helpful and fully cooperative with the Commission investigation 

team, providing the Commission all requested information which was necessary for the 

investigation.” 

53 

 
 
 
 
 
 
Remark: OeNB was not a main actor. This was also pointed out at the meeting with Eurostat. 

OeNB 11 

Page 37 of the report: 

“The OeNB, although recognising that it was aware of the investments by Land Salzburg in financial 

derivatives, failed to report these to the Commission (Eurostat), in the transmission of the Austrian 

financial accounts. Furthermore, its consolidation practices regarding the financial accounts were 

ineffective. Moreover, the Commission concludes that some declarations of the OeNB officials during 

the meeting between the OeNB and the Commission on 26 September 2016 were not correct. OeNB 

stated that it had found nothing unusual in the accounts of Land Salzburg for the period between 

2002 and 2012, but the Commission has proof that, in fact, the EUR 300 million in securities not 

reported in the accounts of Land Salzburg had been unveiled by OeNB in 2010.” 

Remarks: 

a) The second sentence should be replaced by: 

The consolidation practices laid down in the working agreement with STAT, which are described in 

the report, are ineffective. 

b) The rest of the sentence should be deleted and not replaced, since the further 

conclusions of Eurostat that some statements of OeNB were incorrect are based on 

misinterpretations. 

54 

 
 
 
 
 
OeBFA 1 

In general, it should be noted that the federal authorities, represented by OeBFA is the contracting 

party and therefore lender, not OeBFA (e.g. p 13: “debts of Land Salzburg to OeBFA” should be: “to 

the federal authorities”, p 25: “Lending from OeBFA to Land Salzburg” should be: “Lending by the 

federal authorities”; “the funds lent by OeBFA” should be: “the funds lent by the federal 

authorities”; Page 26: “ use of the lending from OeBFA” should be: “use of the lending from the 

federal authorities”; Page 27: “the loans from OeBFA on-lent to the Landeswohnbaufonds” should 

be: “the loans from the federal authorities on-lent to the Landeswohnbaufonds”; Page 29: “Cross-

currency swaps between Land Salzburg and OeBFA” should be: “Cross-currency swaps between 

Land Salzburg and the federal authorities”; Page 37: “Beneficiaries of lending from OeBFA” and 

“framework agreement of OeBFA with the Länder” should read ‘Federal authorities’ instead of 

‘OeBFA’). Correction throughout the report is requested. Alternatively, the fact that OeBFA is acting 

in the name and for account of the federal authorities as laid down in Article 2(1) of the Federal 

Finance Act (Bundesfinanzierungsgesetz) could be stated in footnote 7. 

OeBFA 2 

Page 9, endnote 7: 2nd sentence clarification: This authority has been delegated to OeBFA 

under the Federal Finance Act. OeBFA is acting under this authority on behalf and in the name of 

the federal authorities”. 

OeBFA 3 

P 13, third paragraph: The wording Die Differenz (166 Mio. EUR) zur von STAT 2011 

veranschlagten Schuldenhöhe (2,293 Mrd. EUR) erklärt sich in erster Linie aus den Unstimmigkeiten 

beim von der OeBFA an das Land Salzburg getätigten Weiterverleih zwischen den Meldungen der 

beiden Institutionen.(The difference (EUR 166 million) to the amount of debt estimated by STAT in 

2011 (2,293 million euro) is mainly explained by the inconsistencies in the lending from OeBFA to 

Land Salzburg as reported by the two institutions.) expresses the situation more clearly in German.  

OeBFA 4 

P 25, section 2.3.4, first paragraph: The OeBFA has the delegated authority, amongst others, 

to take on loans on the capital market and to on-lend these funds to the Länder. “The amount of 

the loans was determined by the BMF.” The federal procedure for lending to the Laender was 

restructured more rigorously and relaunched after the speculation by Land Salzburg became known, 

as a result of these cases.  

55 

 
 
 
 
 
OeBFA 5 

P 25, section 2.3.4, first paragraph: “The upper limit of the loans to be conceded by OeBFA is 

the administrative deficit of the Länder.” This observation is incorrect. Cf point 3 of the record of the 

survey of 26 September 2016. It should be as follows: “The upper limit of the funds that the federal 

authorities can make available to the Laender through OeBFA is determined by the public deficit of 

the Laender, as laid down in the Austrian Stability Pact, plus repayments.” 

OeBFA 6 

P 25, section 2.3.4, second paragraph: “Nevertheless, since there is neither a legal obligation 

for the Länder to provide OeBFA with any information on the effective use of the money, nor for 

OeBFA to keep track of the use of these funds this obligation not to reinvest the funds appears to 

have had a cosmetic, i.e. a pro forma, character.” 

The wording “this obligation not to reinvest the funds appears to have had a cosmetic, i.e. a pro 

forma, character.” should be deleted, since it is incorrect and misleading. The agreements are in 

principle drawn up to observe this. OeBFA does not consider the obligation to have a “pro forma 

character”. It is for the respective supervisory organs (e.g. Landtag (Land assembly) or LRH (Land 

Court of Audit) to verify observance of the agreements. OeBFA has no possibility of inspection. 

P 26, final paragraph: “The role of the LRH in the recording and use of the lending from OeBFA 

remains unclear to the Commission. On one side OeBFA has stated that the cross-checking of the 

information regarding these funds is the responsibility of the LRH, but on the other side the LRH has 

stated that this cross-checking is the responsibility of OeBFA.” 

One of the responsibilities of the LRH is to monitor the recording and use of loans.  

OeBFA 8 

P 37, third paragraph: “The framework agreement of OeBFA with the Länder laid down that the 

beneficiaries of lending from OeBFA should must not engage in speculative behaviour by means of 

the loans provided, but did does not contain any control mechanisms to ensure the compliance with 

that clause, apart from direct reporting by the Land. As such, the framework agreement proved, in 

the case of Land Salzburg, to be an invitation to circumvent the said clause.  

The last sentence should certainly be deleted, since it is subjective without any basis in fact. The 

agreements are in principle drawn up to observe this. A party to an agreement can never guarantee 

56 

 
 
 
 
 
 
 
observance of an agreement by the other party, but can only encourage this (e.g. by means of 

notice or contractual penalties) or verify non-observance (e.g. by obtaining corresponding 

information). When the speculation of Land Salzburg had become known at the end of 2012, the 

national processes associated with lending by the federal authorities to the Laender were 

immediately revised and made stricter. Additional corresponding information is now, as a result, 

obtained from the Laender (e.g. concerning the use of funds by the Laender) and if the provisions 

of agreements are infringed, it is possible to call in the loans granted to the Laender.   

P 47, footnote gg “When asked during the Commission investigation what actions are undertaken 

and what information is exchanged with the LRH if the information regarding lending from OeBFA is 

not identical to information reported by the Laender, OeBFA replied: "This information sent to the 

LRH is part of the works on the closing of accounts done by the LRH. In this sense, the cross-

checking is the role of the LRH, and not the role of OeBFA, which means we do not cross-check 

these data. In addition, we have never received any feedback from the LRH stating that there were 

discrepancies in the data." 

The sentence "This information sent to the LRH is part of the works on the closing of accounts done 

by the LRH. is incorrect Cf also the record of the survey of 26 September 2016. It should instead 

read as follows, on the basis of point 14 of the record of the survey: “Since Land Accounts 

Statement 2013 (Landesrechnungsabschluss 2013), LRH (Salzburg) has used the instrument of 

‘Bankbriefe’ (letter where the LRH asks OeBFA about the amounts of on-lending provided to Land 

Salzburg). OeBFA then provides LRH with this information. In this sense, the cross-checking is the 

role of the LRH, and not the role of OeBFA, which means we do not cross-check these data. In 

addition, we have never received any feedback from the LRH stating that there were discrepancies 

in the data." 

OeBFA 10 

P 47, footnote hh: “When asked during the Commission investigation what kind of information the 

LRH received from OeBFA and how this information was used, the representative of LRH explained 

that: "OeBFA was receiving the financial statements from Land Salzburg so they should have cross-

checked." (…)” 

OeBFA rejects this assertion by LRH. The internal records of OeBFA show that no accounts were 

received. Instead, it was not until February 2014 (i.e. after the events had become known) that the 

57 

 
 
 
 
 
Land Court of Audit for the first time requested a list of the loans granted to Land Salzburg in order 

to be able to match this information against the information for preparing the accounts in the Land. 

58 

 
 
 
 
BMF 1 

The last sentence of page 7 is incorrect in the German version: As a consequence, the Commission 

(Eurostat), in its Excessive Deficit Procedure (hereinafter EDP) news release of 21 October 2013 ...);  

The Excessive Deficit Procedure for Austria commenced on 30 November 2009 (and ended in 2014). 

Probably the following is meant: “in connection with the publication of the ED data published in 21 

October 2013 concerning public deficits and debts”. 

59 

 
 
 
 
COMMENTS  BY  AUSTRIA  PURSUANT  TO  ARTICLE 8  OF  REGULATION  (EU)  NO  1173/2011  ON 
THE PRELIMINARY REPORT BY EUROSTAT OF 20 DECEMBER 2016 ON THE FINDINGS OF THE 
INVESTIGATION RELATED TO THE MANIPULATION OF STATISTICS IN AUSTRIA AS REFERRED 
TO  IN  REGULATION  (EU)  NO  1173/2011  OF  THE  EUROPEAN  PARLIAMENT  AND  OF  THE 
COUNCIL ON THE EFFECTIVE ENFORCEMENT OF BUDGETARY SURVEILLANCE IN THE EURO 
AREA (COMMISSION DECISION OF 3 MAY 2016) 

ANNEX II 

Opinions 

a)  from the Salzburg State Office (Amt der Landesregierung) 

b)  the Court of Auditors 

c)  the Austrian Federal Statistics Institute [Bundesanstalt Statistik Österreich] 

d)  the Austrian Central Bank 

e)  the Austrian Federal Financing Agency [Österreichische Bundesfinanzierungsagentur] 

in the text

60 

 
 
Federal Ministry of Finance 
Department III/1 General 
Economic Policy  
Attn. Ministerial Advisor 
Dr [AK]  
Johannesgasse 5  
1010 Vienna 
-----@bmf.gv.at  

-2017 

Reference (please quote in correspondence) 
208-ALL/82.084/ 
Subject: 
Decision C-2016-2633; Provisional results; 
Opinion of Land Salzburg 
finanzen@salzburg.gv.at 

Dear Sir, 

LAND 

SALZBURG 

Finanz- und 
Vermögensverwaltung 
(Financial and Asset 
Management 
Department) 

Date 
18.01.2017 

Kaigasse 2a 

P.O.  Box  527,  5010  Salzburg 

Fax +43 662 8042 2906 

D

Dr [HP]  

Tel. +43 662 8042 0 

Land Salzburg hereby submits the following opinion on the provisional findings of the investigation 
by the Commission (Eurostat). 

A. General remarks: 

1.  In the light of the findings from a scandal which has been brought to light, outsiders are 

regularly given the distinct impression that there has been a fairly massive failure of the control 
bodies or mechanisms whose task is to prevent such a scandal. For a fair assessment, however, 
it seems essential to examine the situation ex ante rather than the situation ex post, i.e. the 
state of knowledge after the scandal broke. Two points in particular need to be examined: 

• 

 No institution is able to exercise complete supervision of the activities of its staff. 
Maintaining its operations sometimes requires certain compromises in organisational and 
operational structure which do not necessarily work in favour of close supervision. All staff 
must therefore be trusted to some extent to perform their activities legally and correctly. 
This will also regularly be the case because unlawful and wrongful conduct by staff raises 
the risk of disciplinary, civil (damages) and criminal (fine or detention) consequences. 

www.salzburg.gv.at 

Amt  der  Salzburger  Landesregierung  Department 8  –  Finanz-  und  Vermögensverwaltung  (Financial  and  Asset  Management 
Department) 
P.O.  Box  527,  5010  Salzburg 

|  Austria  Tel.  +43  662  8042  0  post@salzburg.gv.at 

|  DVR  0078182

61 

 
 
 
 
         
•   The checks carried out, which as noted above can only be partial (e.g. sampling), can 
only achieve their desired effect if the control bodies involved have sufficiently strong 
suspicions which they can investigate in order to uncover more serious inadequacies or 
irregularities. 

In this context, for example, repeated misconduct has come to light by employees in various 
enterprises (Enron, Societé Générale, Lehman Brothers, etc.) who, one might say, have not 
acted with the care of a responsible businessperson. Austria too has in the recent past been 
affected by the threat of a massive bank failure (Hypo Alpe-Adria-Bank). From the supervisory 
board of such enterprises, which is supposed to supervise the management board's activities, 
via the statutory auditor to the State supervisory authorities (such as the Financial Market 
Authority for the banking sector), there is a dense network of control mechanisms in place, 
raising the question of how such scandals are even possible. Nevertheless, modern criminal 
law systems, in spite of all the control mechanisms in place, still make provision for particular 
criminal offences for balance sheet manipulation or false accounting, indicating that even the 
best control systems cannot prevent unlawful acts (causing damage to third parties). 

The Salzburg financial scandal involved the concealment of unlawful behaviour, as shown by 
the fact that final judgment has been passed on the former head of the Budget Unit on 
numerous counts of signature forgery and misreporting of disaster losses. But the 
concealment of a large number of completed financial transactions from the ongoing 
monitoring, still to be dealt with in further criminal proceedings, which resulted in the 
Financial Advisory Board (Finanzbeirat), as the supervisory body appointed in accordance with 
the Directive, working on the basis of completely false risk figures in the portfolio for Land 
Salzburg, or the involvement of a large number of payment flows in so-called ‘continuous 
financial management’ without complying with the no-netting principle when offsetting in the 
Land budget, also fall into this category. 

2.  The State Office of Land Salzburg [Amt der Salzburger Landesregierung] has in the meantime 
restructured the Financial Department, and especially the Budget Unit, the Accounting Unit 
[Landesbuchhaltung] has been placed under the Directorate of the Land Government Office 
[Landesamtsdirektion] and there have been new appointments to senior positions. This has 
established the framework for consistent preparation of the financial case, e.g. a new 
budgetary law, new offsetting system, new organisation, etc. There have also been extensive 
negotiations with Land Salzburg to minimise the damage, and corresponding settlements 
have been reached. 

B. On the individual ‘provisional findings’: 

1.   With regard to the comments on pp. 3 and 20, it should be noted that the Internal Audit 

section is only a small independent unit of the Landesamtsdirektion and by no means a 
separate department, as indicated in point 2.2 on p. 16. The relevant Decree 1.25, which, 
according to our information regarding the relevant passage, applied before 1999, laid down 
that: ‘Checks on financial management and accounting, administrative checks and intra-
service administrative and technical supervision are not the tasks of the Internal Audit 
section.’ The exception for checks on financial management and accounting was based on the 
fact that, under the constitution, both the Federal and Land Courts of Audit (Rechnungshof) 
are responsible for financial management checks in the Land, and the Internal Audit section is 
therefore restricted to ‘internal services’. This was in no way a ‘special regulation’ for the 

65 

 
 
Financial Department to prevent checks on its activity, but a general determination of 
responsibilities. For this reason it also seems plausible that, according to endnote l, the 
Internal Audit section has received no mandate to review the entire financial management 
since 1999, as this is not one of its tasks as laid down in the Decree. However, as regards the 
responsibilities of the Internal Audit section (verification of the efficiency, effectiveness and 
economy of the administration while respecting legality; involvement in drawing up 
organisational rules and in organisational projects), the Financial Department, like every other 
department of the State Office, has been subject to audit by and cooperation with it. Since 
2014, the Internal Audit section in Salzburg has also been entitled to carry out financial 
management audits or financial audits. 

2.  We do not understand why a prolonged failure by Land Salzburg to notice criminal behaviour 

by natural persons is termed ‘gross negligence’ on page 22 (point 2.3.1). 

As  the  Commission's  assessment  determines  whether  and  to  what  extent  it  will  propose  to 
the  Council  the  imposition  of  a  penalty,  all  factors  exonerating  Land  Salzburg  must  also  be 
taken into account in determining the Land's liability in the proceedings in question. 

We reject the Commission's unreserved accusation by analogy that the Land has permitted 
gross negligence in its organisational structure, at least to the extent portrayed. This is 
particularly so because the case was uncovered not by external (audit) bodies but because of 
the structure in the Financial Department of the State Office itself at that time and, as a 
result, the review of the financial scandal and, in particular, the correct recording of the debt 
was carried out promptly in a spirit of cooperation together with the federal authorities. 

3. 

In setting out the debt in accordance with Table 1 on p. 15 of the ‘provisional findings’, we 
note that lines 1 and 1a clearly contain only the debt for Land Salzburg according to the 
Land’s clearance of accounts. The debts of extra-budgetary units are not included; it does not 
therefore relate to debts in accordance with ESA 2010. It should be noted that the 
determination of Maastricht debt for Land Salzburg (authority and extra-budgetary units) is 
exclusively the responsibility of Statistics Austria. Nor is the Land obliged to report the debts 
of extra-budgetary units, as these must forward the corresponding data to Statistics Austria 
themselves. If the debts to be attributed to the extra-budgetary units, which are added at 
Land level, were added, there would also be higher debt for each of the years 2010 to 2012 
despite the misreporting, thus reducing the difference to the ex-post value (2012) or the 
value estimated by Statistics Austria (2010 and 2011), which includes the extra-budgetary 
units to be added to the Land. 

4.  Point 2.2.2 on p. 20 maintains that the Commission ascertained that the entire State Office of 

Land Salzburg, to which the Financial Department belonged, was exempted from monitoring 
by the Internal Audit section from 1999 onwards. As already noted in point 1 above, this is 
incorrect. The State Office, including the entire Financial Department (and thus also the 
Budget Unit), was naturally subject to audit by the Internal Audit section. Only the financial 
management audit sector itself was exempt from checks by the Internal Audit section. As 
already noted, the reason given for this by the Landesamtsdirektion was also that financial 
management was audited by both the Federal and Land Courts of Audit. 

5.  The comments under point 2.3.1 (pp. 21 and 22) list a number of infringements of the ‘four 

eyes’ principle. For a balanced representation, however, which is important in determining 
whether and, if so, to what extent there was negligence on the part of Land Salzburg, it 

66 

 
 
 
should be noted that there was naturally a ‘four eyes’ principle laid down, so that an impartial 
reader is not given the incorrect impression that there was none in practice. The 
Rechnungshof adds – despite all the criticism – in paragraph 13.1 (4) of its 2013 report 
entitled ‘Land Salzburg — Financial situation’: ‘Some elements of an ICS, e.g. compliance with 
a ‘four eyes’ principle or a separation of functions between trade (front office) and the 
settlement (back office) of financial transactions, were set out in the financial management 
guidelines for Land Salzburg, but were not consistently implemented in practice ...’. It should 
be borne in mind that it was precisely the ‘four eyes’ principle that – albeit with a time lag – 
led to the discovery of the financial scandal, because it was only this principle that enabled an 
official in the Budget Unit to report to the head of Department a suspected infringement of 
directives and/or instructions, which then gave rise to further actions. The impression which 
can arise if the Commission merely lists a number of cases in which the ‘four eyes’ principle 
has not been respected without indicating the enforcing of that principle in the directives in 
force at the time, namely that there was more or less no ‘four eyes’ principle, is therefore 
incorrect. 

6.  Point 2.3.3 on p. 23 states that, based on the testimony of staff, the Commission concluded 

that the Financial Department of the State Office began in 2003 to conceal bank accounts 
under the Voranschlagsunwirksame Gebarung (extra-budgetary accounts). This is incorrect, 
because it gives the impression that a department acting officially on behalf of the Land 
committed an unlawful act. In fact, the head of the Budget Unit, who is facing criminal 
charges in this regard, committed unlawful acts without the knowledge of the head of 
department at that time. 

7. 

In point 2.3.6 on p. 28 (Financial derivatives), the Commission states: ‘Notwithstanding this, 
the Commission is not aware of efforts from any of the institutions in Salzburg (Landtag, LRH, 
State Government, and State Office) to closely follow-up on the recommendations of the RH 
and it has also concluded in this report that in fact the Voranschlagsunwirksamen Gebarung 
were not effectively followed.’ However, the Commission does not mention in this context the 
specific recommendations of the Rechnungshof, compliance with which was not monitored. 

8.  On p. 29 it is stated that, according to the RH report published on 9 October 2013, the 

Director of the Finance Department informed the head of the Staff Department in May 2012 
that the Head of the Budget Unit had acted against the State Office’s policy and service 
instructions. From a statement in the preliminary report cited in endnote kk, the commission 
of inquiry finds a contradiction to the effect that this event occurred in July 2012, rather than 
in May 2012. This can be explained as follows: The then head of the Budget Unit had 
concluded an unauthorised financial transaction for the first time in May 2012, following 
which action was taken ending in the disciplinary measure of a ‘warning’. The matter 
appeared to be closed, and there was no further suspicion that anything else might be 
wrong. Only in July 2012, when the then head of the Budget Unit again attempted to infringe 
directives and instructions, did the idea arise ‘that something had gone wrong’ (cf. statement 
in endnote kk). There is therefore no contradiction. 

9.  On p. 30, the second and fourth paragraphs should be combined, as they relate to the same 
event: The statement concerning the second paragraph, quoted in endnote oo, relates 
precisely to the Financial Advisory Board meeting on 23 October 2012, referred to in the 
fourth paragraph: At that time the head of the Financial Department had apologised to the 
two external experts on the Financial Advisory Board and explained with deep regret that the 
new financial expert operating in the Financial Department had found that, unfortunately, the 

67 

 
 
 
portfolio which the Financial Advisory Board had monitored represented only part of the 
overall portfolio of Land Salzburg. 

10.  Point 2.4 on p. 31 states that the Commission concludes from the events in 2012 set out 
above that ‘the concealment of relevant information by the officials of the financial 
management area and the government of Land Salzburg to the RH was also the cause for the 
incorrect and incomplete conclusions of RH 2012 follow-up report, which were ultimately 
published on 6 December 2012’. It should be noted that the existence of actual shortcomings 
only came to light on 23 October 2012, when it was discovered that there were financial 
transactions which up to that date had not been mentioned in the portfolio report sent to the 
advisory board. The consequences of this finding had still to be analysed. The preliminary 
report quite correctly states on p. 30 that even in November 2012, ‘the Head of the Budget 
Unit denied to have been involved in risky transactions on behalf of Land Salzburg’.  It is 
extremely difficult for an employer of staff suspected of having acted unlawfully to disclose 
any information incriminating them, as the employer must then reckon on being held 
responsible (defamation, damage to reputation). Not until 26 November 2012 did the head of 
the Budget Unit admit to having concealed a loss of ca. EUR 340 million in financial 
investments. This led to further intensive investigations, which revealed a number of 
counterfeit Financial Advisory Board minutes and signatures from staff. The end result was 
that, a few days later, once the required legal steps had been prepared, dismissal without 
notice was announced (7 December 2012) and the matter was made public (press conference 
on 6 December 2012). It should be noted that this immediate dismissal was also deemed 
justified by the Labour Court, until the matter was put before the Supreme Court. 

There was absolutely no intention that the Rechnungshof would, on the very morning of the 
day on which that press conference was held, and with no knowledge thereof, publish its 
conclusions in the follow-up report. On the contrary, as explicitly stated in point 32 on p. 15 of 
the minutes of the meeting held on 28 September 2016 in Salzburg, the then Director of the 
Landesrechnungshof had informed the president of the Rechnungshof, Dr [JM], on 6 
December 2012, but did not try to telephone him until after the press conference. 

In relation to the particular accusations of blame in the preliminary report against the State 
Office, it should be borne in mind that a number of highly qualified ‘supervisory bodies’, as set 
out in that report, had noticed no serious issues until the financial scandal came to light, 
particularly as information was withheld from them or incorrect information given (cf. forged 
minutes). 

With regard to ‘the concealment of relevant information’, in relation to the subject of the 
investigation (misrepresentation of statistics concerning an incorrect debt and deficit situation) 
it should also be borne in mind that the removal of financial management from the 
competence of the head of the Budget Unit and her consequent dismissal meant a massive 
loss of knowledge and experience, and has caused enormous difficulties for the Budget Unit in 
terms of maintaining normal everyday operations. Things worsened considerably after the 
scandal became public because, in addition to the urgent day-to-day agendas, a large number 
of advisers, auditors (including those from the Rechnungshof), law enforcement agencies, etc. 
had to be supervised and supported on an ongoing basis by the Financial Department. This 
helps to explain why, in spite of all efforts, it unfortunately took a long time to correct the 
inaccurate data on the debt, due not least to the fact that there was no-one who could filter 
out which of the Land’s liabilities should now be reported under ‘Maastricht debt’ and which 
should not. Also, the entire file management and financial management processes under the 

68 

 
 
 
 
previous head of the Budget Unit made it impossible to subsequently wind up previous 
accounting years. 

For the sake of good order, and to avoid misunderstandings, it can be pointed out that, if the 
commission of inquiry's preliminary report mentions a ‘meeting with the State Office of Land 
Salzburg’ and it is mentioned that the State Office gave an answer or explanation, etc. (cf. in 
particular various quotations in the endnotes), then, as we understand it, various Land 
officials, who first had to be explicitly released by their employer, Land Salzburg, from their 
obligation of professional secrecy, have given statements as witnesses concerning their 
knowledge or perceptions, as is usually the case, for example, with witness statements in 
national court proceedings. They were not, however, statements by the State Office. This can 
in no way apply to persons who, owing to their positions at that time, were not working for 
the State Office, such as the then Director of the Landesrechnungshof. This is a body of the 
Salzburg Landtag and therefore of the legislature; the State Office is an auxiliary 
(bureaucratic) apparatus of the Land administration and of the Landeshauptmann (Governor) 
in indirect federal administration and is part of the executive (enforcement). 

We would ask you to take the above into account. 

For Land Salzburg: 
For the Land Government:

Dr [SH] 
Director of the State Office 

69 

 
 
 
 
 
 
Comments by the Rechnungshof for the joint opinion to the Permanent 

Representation of Austria to the European Union 

1.  Commission report, point 2.3.4, p. 27 

‘Furthermore, on 10 October 2012, after receiving a table from STAT that showed the debt of Land 
Salzburg from 2011 onwards, as compiled by STAT (see Table 1, row 3), the RH requested further 
information on the EUR 1,050 million of debt of the 'funds', asking more specifically what funds STAT 
was  referring  to.  STAT  has  explained  to  the  RH  that  the  EUR 1.050  million  of  debt  referred  to  the 
loans from OeBFA on-lent to the Landeswohnbaufonds. Whereas, as explained above, these loans 
should  be  recorded  in  the  balance  sheet  of  Land  Salzburg  as  the  debt  of  Land  Salzburg,  the 
Commission  has  not  received  information  on  further  correspondence  exchanged  between  the  two 
entities  on  this  issue,  i.e.  the  Commission  is  not  aware  that  the  RH,  in  face  of  this  misuse  of  the 
accounts  of  Land  Salzburg,  further  raised  the  issue  either  with  STAT  or  the  State  Office  of  Land 
Salzburg.’ 

Comment by the RH on point 2.3.4, p. 27: 

The  Commission  report  places  the  request  from  the  RH  of  12 October  2012
  to  Statistics 
Austria in an incorrect context. The request was only intended to clarify the report from Statistics 
Austria  concerning  the  annual  budget  results  in  accordance  with  Article  11  of  the  Austrian 
Stability  Pact  2011.
  These  data  are  the  basis  for  the  referee  task  assigned  to  the  RH  in  the 
Stability Pact. 

22

21

The wording whereby ‘the RH, in face of this misuse of the accounts of Land Salzburg’ did not 
bring this up with Statistics Austria and the State Office is not appropriate. The request by the 
RH was not related to an audit. At this point, the RH was not yet aware of the shortcomings in 
the internal control system and the accounting system set out in its later report on the financial 
situation in Land Salzburg, and certainly not of their full extent. There was therefore no reason at 
that time to assume that the accounts or the figures from Statistics Austria would not be correct. 

2.  Commission report, point 2.3.5, pp. 27 and 28: 

‘When  enquired  by  the  RH  on  the  differences  between  the  debt  reported  by  Land  Salzburg 
(Finanzschulden) and the table produced by STAT depicting the debt of each of the Länder, STAT 
explained, to the RH that, among others the difference included EUR 300 million regarding securities 
"that we found nowhere in the Rechnungsabschluss". 

During  the  second  half  of  2012,  the  RH  discussed  the  finding  of  its  2011  follow-up  report  of  the 
financial management of Land Salzburg with the State Office of Land Salzburg. Ultimately this led to 
the  publishing  of  a  RH’s  report  on  6  December  2012.  However  the  extremely  important  issue 
concerning the misreporting of EUR 300 million of Maastricht relevant liabilities was not included in 
the RH report.’ 

21

 The RH is aware only an of e-mail of 12 October 2012 with the content referred to, not 10 October 2012 as set out 

in the Commission report. 
22

 The Stability Pact 2011 governed national budget coordination, medium-term budget guidelines and the allocation of 

deficit ratios and penalties until 2014. In 2012, a new Austrian Stability Pact 2012 was concluded, which is open-
ended. 

70 

 
 
 
                                                            
Comment by the RH on point 2.3.5, pp. 27 and 28: 

The e-mail of 29 August 2012 from RH explaining a discrepancy of EUR 300 million between the 
Land accounts and the data from Statistics Austria is taken completely out of context. The e-mail 
request from RH did not, as is wrongly stated, relate to the follow-up audit of the Land's financial 
instruments but to the audit of ‘consolidation measures for the Länder of Upper Austria, Salzburg 
and  Steiermark’.  This  latter  audit  led  finally  to  a  further  audit,  ‘Land  Salzburg  –  Financial 
situation’.  The  explanation  of  the  discrepancy  of  EUR 300 million  queried  by  the  RH  could  not 
therefore be contained in the report published on 6 December 2012 on the follow-up audit of the 
Land's financial instruments. 

3.  Commission report, point 3, p. 35, paragraphs 6 and 7: 

the 

financial  accounts  of  Land  Salzburg. 

‘Similarly,  between  2002  and  2012,  neither  the  LRH  nor  the  RH  conducted  any  effective  in-depth 
the 
audit  of 
voranschlagsunwirksame  Gebarung  which,  as  showed  in  Table  2,  in  section  2.3.3.,  reached  more 
than  EUR  26  billion  of  inflows  and  outflows  in  2011  and  included  de  facto  all  the  unreported 
transactions and stocks, while in principle they should have included only extra-budgetary flows and 
not Maastricht-relevant liabilities. The main actors involved in the events described in this report are 
the State Office, the State Government, the Landtag and the LRH of Land Salzburg, the RH, OeBFA, 
OeNB and STAT.’ 

they  did  not  audit 

In  particular, 

Comment by the RH on point 3, p. 35, paragraphs 6 and 7: 

During  the  period  in  question,  the  RH  carried  out  the  following  audits  at  the  State  Office  in 
Salzburg: 

Audit 

Objectives and subject matter 

Comment 

Financial instruments for local authorities 
(Salzburg 2009/3) 
On-the-spot audit 2008; publication on 
15 July 2009 
The horizontal audit included the federal 
government, the Länder of Salzburg, 
Burgenland, Carinthia and Tyrol and the 
towns of Villach, Dornbirn and Wels. 

With regard to Salzburg, the RH already 
noted at this stage an identified value at risk 
of EUR 178.20 million (at the end of 2007). 
This value at risk amounted to 41 % of the 
financial debt or was almost 10 % of budget 
revenue for Land Salzburg. It therefore had 
by far the highest risk value of all bodies 
audited (e.g. eight times higher than the 
comparable risk level for the federal 
government). 

Follow-up audit of financial instruments 
(Salzburg 2012/9) 
On-the-spot audit, end of 2011; transmission 
of audit results for opinion, end May 2012; 
publication on 6 December 2012 

Salzburg gave its opinion in August 2012 
without informing the RH that the competent 
financial manager had already admitted 
concealing accounting losses for many 
years. 

Because of this particularly high risk and loss 
potential, the RH selected Land Salzburg for 
a follow-up audit. 

As the subsequent audit ‘Land Salzburg – 
Financial situation’ showed, minutes on 
which the RH relied in the follow-up audit 
were falsified or missing completely, so that 
its recommendations were based on 
manipulated data. 

71 

 
 
 
 
 
 
The audit took a horizontal sample through 
all Länder. The aim was to ascertain the 
financial situation and, based on medium-
term financial planning, identify any 
consolidation requirements. 

Consolidation measures for the Länder of Upper Austria, Salzburg and Steiermark 
(Salzburg 2014/3) 
The audit began in July 2012, and was 
interrupted between November 2012 and 
March 2013 because of the ‘Land Salzburg – 
Financial situation’ audit. 
The audit of consolidation measures in the 
three Länder continued in the period from 
April to June 2013 and was published in 
June 2014. 
In the summer of 2012, no-one was available 
to provide information to the RH in Salzburg. 
The audit team was informed that the 
financial manager was on long-term sick 
leave. 

During the surveys for this audit, Statistics 
Austria was asked to explain the initial finding 
of a discrepancy of EUR 300 million (see 
above). However, this amount was only a 
part of the anomalies identified by the audit 
team in the Land accounts. The team 
repeatedly came across unexplained 
accounting discrepancies, for instance in 
connection with voranschlagsunwirksame 
Gebarung. The RH therefore interrupted the 
audit in early December 2012 in order to 
carry out a separate audit of Land Salzburg 
in greater depth (‘Land Salzburg – Financial 
situation’). 

Land Salzburg – Financial situation 
(Salzburg 2013/7) 
On-the-spot audit, December 2012 to March 
2013; transmission of audit results, early 
April 2013; publication: 9 October 2013 

The audit covered the assessment of 
financial transactions and the associated 
impact on the Land’s financial situation, the 
internal control system in relation to the 
conclusion of financial transactions, business 
relations with credit institutions and the 
Republic of Austria, with particular regard to 
derivative transactions, accounting for 
financial transactions, the risks of assumed 
liabilities and financial links with holdings, 
and illustrating the risks in the Land’s 
medium-term planning and accounting, with 
particular regard to economic reality, 
transparency and completeness. 

With this audit, therefore, the RH not only 
looked further into the discrepancy of 
EUR 300 million noted in August 2012 during 
the audit of consolidation measures but 
applied much more comprehensive 
procedures. 
Among other things, the report contains the 
Land’s total debt and detailed breakdowns of 
stocks and flows in voranschlagsunwirksame 
Gebarung. 

In  accordance  with  its  risk-based  audit  strategy,  the  RH  repeatedly  audited  the  financial 
management of Land Salzburg during the period in question, as set out in the table. 

If  the  Commission  now  considers  the  RH  one  of  ‘the  main  actors  involved  in  the  events 
described in this report’, this is not in line with the facts, nor can it be deduced in any way from 
the  findings  of  the  report.  In  the  light  of  the  extensive  audit  work  by  the  RH,  which  played  a 
significant part in revealing the Land’s financial situation, this wording is incorrect and is strongly 
rejected. 

4.  Commission report, point 3, p. 37: 

‘During the year 2012, the RH failed to effectively follow up on the discrepancies it had found in the 
accounts of Land Salzburg as pointed out by STAT, namely concerning the mismatch of the lending 
from  OeBFA  to  Land  Salzburg  and  the  EUR  300  million  in  securities  that  were  not  reported  in  the 
balance sheets of Land Salzburg.’ 

72 

 
 
 
 
Comment by the RH on point 3, p. 37: 

The  statement  in  the  Commission’s  report  that  the  RH  failed  to  effectively  follow  up  on  ‘the 
discrepancies it had found in the accounts of Land Salzburg ..., namely concerning the mismatch 
of the lending from OeBFA to Land Salzburg and the EUR 300 million in securities that were not 
reported in the balance sheets of Land Salzburg’ does not correspond to the facts. The RH was 
not  consulted  on  this  issue  nor  asked  for  documents.  This  would  have  made  it  possible  to 
establish the facts. 

The e-mail request of 29 August 2012 to Statistics Austria seeking an explanation of the amount 
of EUR 300 million concerned only part of the anomalies identified by the audit team in the Land 
accounts during the audit of ‘Consolidation measures for the Länder of Upper Austria, Salzburg 
and  Steiermark’.  As 
team  repeatedly  came  across  unexplained  accounting 
discrepancies, and there was nobody competent on the spot,23 in early December 2012 the RH 
interrupted this audit in order to carry out a much more comprehensive audit of Land  Salzburg 
(see also the comments of the RH on point 3, p. 35, paragraphs 6 and 7): 

the  audit 

Among  other  things,  the  ‘Land  Salzburg  —  Financial  situation’  audit  report  set  out  borrowing, 
assets and liabilities in the voranschlagsunwirksame Gebarung and securities transactions at the 
time  of  the  audit.  The  audit  results  were  given  to  the  Land  Governor  in  person  by  the  lead 
auditor at the end of March 2013. 

The RH’s procedures went far beyond the EUR 300 million referred to by the Commission and 
led  to  an  overall  presentation  of  securities  transactions  and  borrowing.  It  therefore  in  no  way 
failed to detect discrepancies; rather, its auditing made a significant contribution to clarifying the 
Land’s actual asset and debt management. 

5.  General comment by the RH 

In conclusion, the RH would point out that the accounting rules for the Länder and municipalities 
do  not  meet  the  requirements  for  modern  and  transparent  accounting.  It  has  therefore 
repeatedly emphasised the consequent shortcomings and risks. It is largely due to the ongoing 
audit and consulting work of the RH that new accounting rules for the Länder and municipalities 
came into force on 19 October 2015, providing for a balance sheet, profit and loss account and 
cash-flow statement. 

23 

The RH was informed that the financial manager was absent on health grounds. 

73 

 
 
                                                            
Opinion of the Austrian Federal Statistical Office of 16 January 2017 

on the 
Preliminary report of 20 December 2016 on the findings of the investigation related to the 

manipulation of statistics in Austria as referred to in Regulation (EU) No 1173/2011 of the 

European Parliament and of the Council on the effective enforcement of budgetary 

surveillance in the euro area (Commission Decision of 3 May 2016) 

The opinion of the Austrian Federal Statistical Office (Statistics Austria) includes 

A)  a general description of the links between clearance data from the Länder, data in 
accordance with the European System of Accounts (ESA) and notifications to the Commission 
(Eurostat) under the excessive deficit procedure (EDP) 
B)  comments on the content of individual sections of the preliminary report of 20 December 
2016 (with proposed amendments to the wording in individual cases) 

C)  technical comments/proposed corrections. 

In summary: 

-  Data transmitted from the Länder under the Order of the Federal Minister for Finance 

on management statistics in the public sector (GebStat-VO) should be primarily 
compliant with the VRV [Budgeting and Accounts Regulation].24 The task of STAT is to 
verify that the transmitted data is suitable for the calculation of ESA/EDP data and not 
whether they are VRV-compliant in individual cases. 

- 

In  serious  cases  where  the  VRV  systematically  has  insufficient  detail  for  ESA/EDP 
data  to  be  derived  directly,  STAT  informs  the  competent  bodies.  In  the  version  in 
force  until  financial  year  2018,  for  example,  the  VRV  makes  no  provision  for 
reporting  flows  or  stocks  in  financial  derivatives.  As  early  as  2008,  STAT,  together 
with the Austrian Central Bank, submitted to the VR Committee (Standing Committee 
on the Estimates and Accounts of Local Authorities) a proposal for such amendments 
to the VRV. The proposal was not incorporated in the VRV until 2015, and is to be 
applied by the Länder by the 2019 financial year. 

-  Differences between data according to the VRV and the ESA/EDP are not specific to a 

certain Land or municipality and not an indication of ‘manipulation’. 

-  Notifications under the EDP Regulation were made mandatory in 2013 for the 

reference years 2009 to 2013, and in 2014 for the reference years 2010 to 2014. 
Under the EDP Regulation, therefore, in April 2014 any amendments to data for years 

24 
Accounts Regulation, VRV] in agreement with the Rechnungshof. 

Voranschlags-  und  Rechnungsabschlussverordnung  des  Bundesministers  für  Finanzen  [Budgeting  and 

77 

 
 
 
 
 
                                                            
prior to 2010 did not need to be notified to the Commission. 

-  Any amendments or revisions of data compared to previous EDP notifications are to 

be applied to the entire reporting period (and not just for one year). 

- 

- 

Liabilities  from  financial  derivatives  are  not  included  in  the  government  debt.  An 
incorrect presentation of financial derivatives does not necessarily imply, therefore, 
that government debt also needs to be amended. 

Interest flows resulting from swaps arrangements and forward rate agreements are 
the difference between expenditure and revenue, and therefore increase or decrease 
the government deficit. Thus an increase in government debt resulting from swaps 
arrangements does not mean that the government deficit also increases. 

-  The  press  conference  in  Salzburg  on  6 December  2016  had  considerable  impact25 
not  only  in  all  German-language  media  in  and  outside  Austria,  but  was  reported 
internationally  in  Europe  and  beyond.  It  is  difficult  to  understand  how  the 
Commission (Eurostat) would not have been aware of it. 

-  The Commission (Eurostat) has in fact been aware since the end of January 2013 at 

the latest, through information from STAT, that financial derivatives had been 
concluded in Land Salzburg which had not been taken into account in the Austrian ESA 
statistics. There is further evidence26 that the Commission (Eurostat) had been aware 
of data problems in Salzburg since the EDP notification in April 2013. 

-  The preliminary report also contains inconsistencies. On page 33, for instance, it is 
noted that the Maastricht debt contribution by Land Salzburg for 2011 has been 
revised upwards by EUR 3.507 bn. According to Table 1 on page 15, the correction 
was only EUR 879 million, which corresponds to the facts. 

-  A general finding from the report is that some allegations are made without evidence 
or corresponding documentation (... apparently higher liabilities ... apparently not 

A  query  in  APA  AOM  Manager  (Austria  Presse  Agentur  Online  Manager)  found  327  APA  reports 

Quotation from the concluding remarks by Eurostat of 16 April 2013 as part of the verification of the data 

25 
containing the keywords ‘Salzburg’ and ‘financial scandal’. 
26 
notified on 31 March 2013: 
‘Question by Eurostat: We understand that this issue has been explicitly addressed in your exchanges with the 
data providers and it has been confirmed that such transactions have not taken place in Austria in the EDP 
reference period. Otherwise, please explain to us whether, and if yes, on which grounds, it can be concluded that 
the transactions would not have any major impacts on the state government debt measurement. 
Answer by STAT: To get more information on financial derivatives, already in 2009 STAT and OeNB made 
proposals to the MoF for additional break down in the state and local government budgets but didn't succeed these 
proposals being implemented in the National Regulation (VRV). Again, this issue was presented by STAT to the 
responsible committee for developing the VRV in March 2013. In March 2013 we also contacted the states of Lower 
Austria, Burgenland and Salzburg and requested flow- and stock-data on financial derivatives but there was no 
answer so far (in fact, in Salzburg closed accounts as such for the year 2012 will not be available before September 
2013 due to the well-known reasons).’ 

78 

 
 
 
 
 
 
 
 
 
                                                            
informed ... appears that ...  this falsification might have ...). These allegations should 
either be backed up with conclusive evidence or removed from the report. 

A)  General description of the links between clearance data from the Länder, data 
in accordance with the European System of Accounts (ESA)27 and notifications to 
the Commission (Eurostat) under the excessive deficit procedure (EDP)28  

Aa) The form and structure of the Länder accounts are regulated by the Budgeting and 

Accounts Regulation (VRV

29

). The VRV is issued by the Federal Minister for Finance in 

agreement with the Rechnungshof. 

Ab) In the Order on management statistics (GebStat-VO

30

) the Federal Minister for Finance, in 

agreement with the Chancellor, orders as follows: 

§ 1. (1) The Bundesanstalt Statistik Österreich [Austrian Federal Statistics Institute, Statistics 
Austria] shall compile statistics on the performance of the public sector in application of the 
following European provisions: 

1.  Council Regulation (EC) No 2223/96 of 25 June 1996 on the European system of 
national and regional accounts in the Community, OJ L 310, 30.11.1996, p. 1, as last 
amended by Commission Regulation (EC) No 113/2002, OJ L 21, 24.1.2002, p. 3. 
2.  Council Regulation (EC) No 479/2009 of 22 November 1993 on the application of 
the Protocol on the excessive deficit procedure annexed to the Treaty establishing the 
European Community, OJ L 145, 10.6.2009, p. 1, as amended by Regulation (EU) No 
679/2010, OJ L 198, 30.7.2010, p. 1. 

(2) Statistics Austria shall conduct surveys within the meaning of these regulations 

for the purpose of the statistics referred to in paragraph 1. 

The GebStat-VO lays down that, in principle, all units classified in the general government 

sector in accordance with Regulation (EC) No 2223/96 are survey units. The Federal 

Government, the Länder and the municipalities shall forward data to Statistics Austria in an 

automated manner. Prior to transmission, the data shall be checked for formal errors (layout 

and coding) and for compliance with accounting regulations (Kontenplanverordnung, Federal 

27 
For the statistics examined, ESA 95 is relevant: Council Regulation (EC) No 2223/96 of 25 June 1996 on 
the European system of national and regional accounts in the Community (OJ L 310, 30.11.1996, p. 1) (ESA 95). 
Regulation  (EU)  No  549/2013  of  the  European  Parliament  and  of  the  Council  of  21  May  2013  on  the  European 
system  of  national  and  regional  accounts  in  the  European  Union,  OJ  L  174,  26.6.2013,  p.  1,  (ESA  2010)  is 
applicable from 1 September 2014. 
28 
deficit procedure annexed to the Treaty establishing the European Community, OJ L 145, 10.6.2009, p. 1. 
29

Council Regulation (EC) No 479/2009 of 25 May 2009 on the application of the Protocol on the excessive 

 VRV 1997 (Federal Law Gazette 787/1996) applies for the financial years up to and including 2018. 

30

 Federal Law Gazette II No 361/2002, Federal Law Gazette II No 465/2004 or Federal Law Gazette II 

No 345/2014 (from 1 January 2014). 

79 

 
 
 
 
 
                                                            
Law Gazette No 507/1987, as amended, or the Voranschlags- und Rechnungsabschluss-

verordnung 1997 [Budgeting and Accounts Regulation], Federal Law Gazette No 787/1996 

as amended. 

Summary 1: Data transmitted from the Länder under the GebStat-VO should be primarily 

VRV-compliant. The task of STAT is to verify that the transmitted data is suitable for the 

calculation of ESA/EDP data and not whether they are VRV-compliant in individual cases. 

Ac) The main source for the calculation of ESA/EDP data is the data submitted to STAT 

pursuant to the GebStat-VO. The starting point for these calculations, as far as data from the 

Länder and municipalities are concerned, are the standardised mapping tables of positions 

according to the VRV using ESA characteristics. The semi-annual review of the data submitted 

by the Länder and municipalities and the taking into account of other data sources leads to 

the adaptation or supplementing of the standardised mapping tables with Land- or 

municipality-specific classifications. To calculate ESA or EDP data, STAT also takes into 

account additional data sources, particularly financial management data submitted by extra-

budgetary units or statistics from other institutions (especially securities issues statistics and 

banking statistics from the Austrian Central Bank for calculating government debt). One result 

of all these stages of calculation are so-called transition tables per Land, each with one for 

government deficit and one for government debt. 

Prior to the semi-annual notification to the Commission (Eurostat), both these Land-specific 

transition tables are sent to the individual Länder for comments or information, in order to 

document the differences between the VRV data submitted to STAT and the ESA/EDP data. 

Since September 2010 these differences, as far as government deficit is concerned, are also 

forwarded to Eurostat semi-annually, in the form of a supplementary table to EDP notification 

table 2B. 

For the EDP notification of 30 September 2012, the following differences in the data 

according to VRV/EDP for government debt at the end of 2012 were documented by STAT: 

-  Länder, total (ESA term S.1312): 
-- VRV: EUR 8.5 bn 

-- EDP: EUR 17.4 bn 

-- Difference: EUR 8.9 bn 

-  Land Salzburg: 
-- VRV: EUR 1.0 bn 

-- EDP: EUR 2.3 bn 

-- Difference: EUR 1.3 bn 

80 

 
 
Summary 2: Differences between data according to the VRV31 and the ESA/EDP32 are not 

specific to a certain Land or municipality and not an indication of ‘manipulation’ or 

‘misreporting’. 

Ad) In the version in force until financial year 2018, the VRV makes no provision for reporting 

flows or stocks in financial derivatives. As early as 2008, STAT, together with the Austrian 

Central Bank, submitted to the VR Committee (Standing Committee on the Estimates and 

Accounts of Local Authorities)33 a proposal for such amendments to the VRV.

34

 The proposal 

was not incorporated in the VRV until 2015.35  

Ae) Article 3 of the EDP Regulation36 governs which data on government deficit and 

government debt the Member States have to forward to the Commission (Eurostat) twice a 

year37. These are planned data for year n and actual data for years n- 1, n-2, n-3 and n-4. 

Summary 3: Notifications under the EDP Regulation were mandatory in 2013 for the reference 

years 2009 to 2013, and in 2014 for the reference years 2010 to 2014. Under the EDP 

Regulation, therefore, in April 2014 any amendments to data for years prior to 2010 did not 

need to be notified to the Commission. 

Summary 4: Any amendments or revisions of data compared to previous EDP notifications are 
to be applied to the entire reporting period (and not just for one year). 

38

Af) Financial derivatives – government debt 
The EDP Regulation
securities other than shares, excluding financial derivatives (AF.33) and loans (AF.4), as 
defined in ESA 95.39 
Summary 5: Liabilities from financial derivatives are not included in government debt. An 

 defines ‘government debt’ as the sum of currency and deposits (AF.2), 

incorrect presentation of financial derivatives does not necessarily imply, therefore, that 

government debt also needs to be amended. 

Regulation of the Federal Minister for Finance in agreement with the Rechnungshof. 
EU Regulation; data for Austria are drawn up by STAT in accordance with the Bundesstatistikgesetz 2000 

31 
32 
(Federal Statistics Act), Federal Law Gazette I No 163/1999, or the GebStat-VO. 
33 Standing Committee within the meaning of the Agreement of 28 June 1974 on the estimates and 
accounts of local authorities. 
34

 Cf. invitation of 16 January 2009 to a meeting of the VR Committee on 2 February 2009. 
35 Federal Law Gazette II No 313/2015, to be applied by the Länder by the 2019 financial year. 
36 Council Regulation (EC) No 479/2009 of 25 May 2009 on the application of the Protocol on the excessive deficit 
procedure annexed to the Treaty establishing the European Community, OJ L 145, 10.6.2009, p. 1. 
37 Before 1 April and before 1 October in year n. 
38

 Council Regulation (EC) No 479/2009 of 25 May 2009 on the application of the Protocol on the excessive deficit 

procedure annexed to the Treaty establishing the European Community, OJ L 145, 10.6.2009, p. 1. 
39 Financial instruments according to ESA 95; according to ESA 2010, government debt consists of 
liabilities of general government in currency and deposits (AF.2), debt securities (AF.3) and loans 
(AF. 4). 

81 

 
 
 
                                                            
Ag) Interest flows resulting from swaps arrangements and forward rate agreements 
An amendment to the ESA 95 Regulation40 lays down that ‘government deficit’ is the balancing 

item ‘net borrowing/net lending’ of general government, including streams of interest 

payments resulting from swaps arrangements and forward rate agreements. This balancing 

item is codified as EDPB9. For this purpose, interest includes the abovementioned flows and is 

codified as EDPD41. 

Summary 6: Interest flows resulting from swaps arrangements and forward rate agreements 

are the difference between expenditure and revenue, and therefore increase or decrease the 

government deficit. It may be the case, therefore, that swaps arrangements increase 

government debt (if swap liabilities are higher than swap assets), while government deficit is 

lower (if interest flows result in more revenue than expenditure).

40 Regulation (EC) No 2558/2001 of the European Parliament and of the Council of 3 December 2001 
amending Council Regulation (EC) No 2223/96 as regards the reclassification of settlements under swaps 
arrangements and under forward rate agreements supplementing Annex V to ESA 1995: definition of 
government deficit for the purpose of the EDP. 

82 

 
 
                                                            
B)  Comments on the content of individual sections of the preliminary report of 

20 December 2016 (with proposed amendments to the wording in individual 

cases) 

B.1 
Text of the preliminary report (p. 3): Even if in the April 2014 EDP notification Maastricht Debt was 

revised for years 2010-2012, it appears that the misreporting of debt, as well as possibly deficit, may have started 

at least from 2008 onwards, and that the level of Maastricht debt presented by the Austrian statistical authorities 

for the years 2008 and 2009 is still underestimated. 
Comment: According to the EDP Regulation, Member States are obliged to give notification of 

data for years n-4 to n. Under the April 2014 notification, therefore, only data for the years 

2010 to 2014 were to be forwarded. The notification of amendments to data concerning 

previous years is compulsory only in respect of other EU regulations.41 

Proposal 1 for an amended wording: ... and that the level of quarterly government debt 

presented by the Austrian statistical authorities for the years 2008 and 2009 is still 

underestimated. 

Proposal 2: Allegations which cannot be supported by documentation – ‘it appears’ – and 

refer to reference years which are not relevant to the subject of the investigation (such as 

2008) should be removed from the report. 

B.2 
Text of the preliminary report (p. 3): Finally, the report concludes that whereas the Commission 

(Eurostat) was only informed of this case on the 10 October 2013, the Austrian statistical authorities were aware of 

the possibility of misrepresentation of the accounts of Land Salzburg since, at least, the 6th of December 2012.  

Comment: ‘Representation of the accounts’ of a Land or municipality is carried out in 

accordance with the Budgeting and Accounts Regulation (VRV) of the Federal Minister for 

Finance. STAT verifies that the data transmitted by the Länder is suitable for the calculation 

of ESA or EDP data and not whether they are VRV-compliant in individual cases (cf. Summary 

1 under point Ab) above). Therefore STAT could not be aware of the possibility of 

misrepresentation of the accounts of Land Salzburg. In contrast, the Commission (Eurostat) 

had been informed of problems with the data at the end of January 2013 and, as part of the 

EDP notification, in April 2013 (see below). 

B.3 
Text of the preliminary report (p. 3): Also, the report concludes that both Statistics Austria and the 

41 Council Regulation (EC) No 1222/2004 of 28 June 2004 concerning the compilation and transmission of data on 
the quarterly government debt and Regulation (EU) No 549/2013 of the European Parliament and of the Council of 
21 May 2013 on the European system of national and regional accounts in the European Union. 

83 

 
 
                                                            
Austrian Central Bank were aware of sizeable inconsistencies in the data reported by Land Salzburg, before the 

so called 'financial scandal' became public at the end of 2012. 
Comment: The data transmitted pursuant to the GebStat-VO42 are the main, but not the 

only, source for the calculation of ESA/EDP data. There is therefore in all Länder a significant 

difference between ‘debt according to VRV’ and ‘EDP Maastricht debt’. For 2012, as far as 

STAT was aware as at 30 September 2013, it was EUR 1.3 bn for Land Salzburg and EUR 8.9 

bn for all Länder. Differences between data according to the VRV and the ESA/EDP are 

therefore not specific to a certain Land (summary 2 under point Ac) above). 

Proposal for an amended wording: Also, the report concludes that both Statistics Austria and 

the Austrian Central Bank were already aware of the need to supplement the data reported 

by Land Salzburg for calculating ESA or EDP data before the so-called 'financial scandal' 

became public at the end of 2012. 

B.4 
Text of the preliminary report (p. 7): ... serious deficiencies in the organisation of the data flows between 

public entities and the statistical authority ... 
Comment: STAT does not understand the Commission’s assessment. The ‘data flows 

between public entities and STAT’ are clearly defined in the Gebarungsstatistik-Verordnung. 

B.5 
Text of the preliminary report (p. 7): . ... the central verification of accounting data by Member States at 

all levels of general government, and robust and effective supervisory and control systems at national level. 
Comment: Data transmitted from the Länder under the GebStat-VO should be primarily VRV-

compliant data. The task of STAT is to verify that the transmitted data is suitable for the 

calculation of ESA/EDP data and not whether they are VRV-compliant in individual cases. 

B.6 
Text of the preliminary report (p. 8): After an examination of the facts by the Commission (Eurostat), it 

became clear that the case of unreported debt in the Land Salzburg was serious. The elements that led to this 

conclusion include, amongst other, the fact that the Court of Auditors had published findings indicating the 

existence of several and severe irregularities in the financial management of Land Salzburg, that as a result of 

these irregularities there was an incorrect reporting of debt figures for non-negligible amounts, on which the 

national statistical authorities were allegedly not informed during many years and finally, that the regional 

government in Land Salzburg, in exercising its legal powers, seemed to have facilitated the incorrect reporting of 

transactions. Consequently the Commission (Eurostat) assessed that a more thorough analysis of the facts 

occurred in Land Salzburg was needed. 
Comment: This entire paragraph refers to the view of the Commission (Eurostat) prior to the 

more thorough analysis. STAT therefore proposes a reference in the first sentence to the fact 

42 Gebarungsstatistik-Verordnung (Order on management statistics); Federal Law Gazette II No 361/2002, Federal 
Law Gazette II No 465/2004 or Federal Law Gazette II No 345/2014 (from 1 January 2014). 

84 

 
 
                                                            
that e.g. ‘After an examination of the facts, the Commission (Eurostat) arrived at the 

assessment that ...’ 

B.7 
Text of the preliminary report (p. 8): The first row of the table reflects the financial debts (Finanzschulden) 

of Land Salzburg as reported in the balance sheets compiled by the State Office of Land Salzburg for the years 

2002-2012. According to information from STAT, these 'Finanzschulden' should include both loans and 

government bonds, and are in this sense the relevant liabilities to be taken into account for the compilation of 

Maastricht Debt.  

Comment: On 11 October 2013, i.e. two days after the publication of the report by the 

Rechnungshof on the financial situation of Land Salzburg, STAT informed Eurostat that the 

definitions of ‘financial debts’ (Finanzschulden) and ‘total debts’ (Gesamtschulden) used by 

the Rechnungshof were not identical to the term ‘Maastricht debt’.43 It was made clear that 

the amount of EUR 3.507 bn referred to in the Rechnungshof report could not be used for 

calculating the Maastricht debt without detailed research. 

B.8 
Text of the preliminary report (p. 12): For example, the estimation by STAT took into account a 

considerable part of the Voranschlagsunwirksame Erläge, i.e. cash transited through the accounts of Land 

Salzburg that is owed to a third entity, ... 
Comment: It is stated that none of the Länder reported the voranschlagsunwirksamen Erläge 

(transfers) to Statistics Austria. The additional data sources were the balance sheets of the 

Wohnbaufonds and other balance sheets from hived-off units (Land fund and Land chamber) 

and information from the OeBFA and OeNB used for validation and cross-checks. 

B.9 
Text of the preliminary report (p. 13): Furthermore, and after receiving information from the OeNB, STAT 

concluded that Land Salzburg had financed itself, in 2010, through the issuing of government securities amounting 

to EUR 300 million. Even if such an amount was nowhere visible in the balance sheets of Land Salzburg, STAT 

took the decision to follow the direct data source of the OeNB and to include these amounts in the debt of Land 

Salzburg. 
Comment: This is an example of STAT's general approach to the calculation of ESA/EDP data 

described above under point Ab), that the data provided in accordance with the 

Gebarungsstatistik-Verordnung represent the main, but not the only, data source.44 It is also 

43 This information was provided under the ‘Requests for clarification’ according to the EDP notifications: ‘As at 
31 December 2012, the Land accounting system had financial debts of EUR 1.370 bn. However, as at 
31 December 2012 there were total debts with a nominal value of EUR 3.507 bn. Neither ‘Finanzschulden’ nor 
‘Gesamtschulden’ can be taken 1:1 as Maastricht debt.’ 
44 The semi-annual review of the data submitted by the Länder and municipalities and the taking into account of 
other data sources leads to the adaptation or supplementing of the standardised mapping tables with Land- or 

85 

 
 
                                                            
stated that the information concerning the existence of a bond was verified on the Vienna 

Stock Exchange portal on the basis of the ISIN (securities identification number). As the bond 

appeared on the Vienna Stock Exchange, and the ‘thumbstone’ (proof of listing) was also 

found on the Internet, the information from the OeNB securities issues statistics was 

confirmed by an independent institution (Vienna Stock Exchange) and was then used to 

calculate the debt. 

B.10 
Text of the preliminary report (p. 13): In case of discrepancies, STAT consistently chose to rely on the 

information provided by OeBFA. 
Comment: See comment B.9 

B.11 
Text of the preliminary report (p. 13): Even if STAT has the possibility to change the figures from the data 

sources when compiling national accounts, it does not have the power to oblige entities to amend the data 

reported. 
Comment: cf. Summary 1 under point Ab) above. 

B.12 
Text of the preliminary report (p. 14): It can be observed that data for the years prior to 2010 were not 

revised by the statistical authorities. In a letter sent by STAT to Eurostat on 28 March 2014 it was stated: "As one 

outcome of our bilateral meeting with officials from Land Salzburg it can be taken for sure that no additional 

resources will be dedicated to further clarify earlier years. That means that our estimates will remain unchanged. 

Notwithstanding this statement by STAT, ...” 

Comments: 
a)  Between October 2013 and March 2014, STAT received from the State Office only 
information for a revision of the data for 2012. A revision of ESA data for 2010 and 2011 was 
based on a range of estimates. Since, under the EDP notification, before 1 April 2014 only 
data for 2010-2014 were to be transmitted to the Commission (Eurostat), there has been no 
further processing of the years before 2010. 
b)  The statement quoted in the letter of 28 March 2014 referred exclusively to 2010 and 
2011.45 

municipality-specific classifications. To calculate ESA or EDP data, STAT also takes into account additional data 
sources, particularly financial management data submitted by 
extra-budgetary units or statistics from other institutions (especially, for calculating government debt, 
securities issues statistics and banking statistics from the Austrian Central Bank). 
45 ‘iii. Availability of information for years 2010-2011 
Eurostat/Question: You state in the report that: 'The officials of Land Salzburg are not in a position to provide 
quantitative information for earlier years due to constraints in resources and lack of information available'. 
Is it intended by the Land Salzburg to dedicate additional resources to the issue in the future or to take any efforts 
to obtain the information which is at present lacking? Or will the estimation of the data by Statistics Austria 
continue? 
STAT/Answer: As one outcome of our bilateral meetings with officials from Land Salzburg it can be taken for sure 

86 

 
 
 
                                                                                                                                                                                           
B.13 

Text of the preliminary report (p. 14): Finally, row (6a) reflects the difference between the calculation of 
Land Salzburg's debt taking into account all data sources available in March 2014 (row (4)) and the debt 
effectively reported by Land Salzburg (row (1a)) for those years, under the Finanzschulden. This means that even 
if the reported impact of the revisions to the Austrian Maastricht debt amounted to only 0.4% of GDP in 2012, the 
effective amount of underreporting and/or misreporting of debt in that year by Land Salzburg was de facto 0.9% of 
GDP in that year. 
Comment: The investigation in question relates to the Austrian EDP notification and not to 

‘de facto’ results of the financial management of Land Salzburg. The finding that the 

misreporting of debt figures for Land Salzburg in that year was de facto 0.9 % of GDP should 

therefore be eliminated. 

B.14 
Text of the preliminary report (p. 25): Firstly, it is the understanding of the Commission that the interest 

payable should have been revised by STAT at least also for years 2010 and 2011, along with the revisions 

undertaken to the debt (see Table 1). 
Comment: Between October 2013 and March 2014, STAT received from the State Office only 

information for a revision of the data for 2012. Only 2012 could therefore be audited. For 

2010 and 2011 neither an ‘audit’ nor a ‘control’ could be carried out. STAT revised the 

government debt data for 2010 and 2011 on the basis of various estimates (specifically 

retropolation of data for 2012). As the impact of interest payable on the deficit following the 

audit of data for 2012 was less than before the audit, and owing to the lack of 

supplementary information for 2010 and 2011, there was no estimate of interest payable 

based on an estimate of government debt (see also comment B.15). 

B.15 
Text of the preliminary report (p. 25): Furthermore, it is the understanding of the Commission that, 

following the fact that it was ascertained that debt is underestimated for years prior to 2010, consequently interest 

payable is also underestimated, and therefore the Austrian government deficit for those years. 
Comment: To calculate government deficit, interest flows resulting from swaps arrangements 

and forward rate agreements are also taken into account.46 These interest flows are the 

difference between expenditure and revenue, and may therefore increase or decrease the 

government deficit. The audit of data for 2012 found that some (non-deficit-relevant) 

repayments also contained settlements based on swaps arrangements, which are to be 

regarded as deficit-decreasing revenue. According to Table 2 (p. 24 of the preliminary report, 

that no additional resources will be dedicated to further clarify earlier years. That means, that our estimates will 
remain unchanged.’ 
46 Regulation (EC) No 2558/2001 of the European Parliament and of the Council of 3 December 2001 
amending Council Regulation (EC) No 2223/96 as regards the reclassification of settlements under 
swaps arrangements and under forward rate agreements supplementing Annex V to ESA 1995: definition 
of government deficit for the purpose of the EDP. 

87 

 
 
 
                                                                                                                                                                                           
penultimate line), this audit gave rise to a reduction of EUR 7 million in government deficit 

for 2012  (see also summary 6 under section Af) above). Consequently, no automatic 

conclusion can be drawn regarding the impact on the Austrian government deficit. 

The Commission (Eurostat) should produce evidence for the allegation that debts for the 

years prior to 2010 was underestimated or, if this is not possible, delete it. 

B.16 
Text of the preliminary report (p. 25): In a meeting held on 8 September 2010 between STAT and the 

Budget Unit of the State Office of Land Salzburg, STAT explained that all the funds lent by OeBFA should be 

reported under the Finanzschulden (as they are, de facto, debt of Land Salzburg in relation to OeBFA). 
Comment: As already mentioned above under point B.7, the term ‘debt’ (Finanzschulden) is 

not identical to the term ‘Maastricht debt’. At the meeting on 8 September 2010 there was 

reference to the description in the ESA.

47

Proposal for an amended wording: ... any funds lent by OeBFA should be noted in the 

ESA/EDP statistics as loans granted by the Federal Government and taken up by the Land. 

B.17 
Text of the preliminary report (p. 26): Furthermore, it should be stated that consolidation practices do not 

only involve using the most reliable data when realizing that a considerable discrepancy exists, as was done by 

STAT during these years. The best consolidation practices should also concern informing the relevant authorities 

of the existence of such discrepancies, given that misreporting in one item may imply misreporting in other items.  
Comment: As already pointed out on several occasions, those responsible for data deliveries 
have been and are kept informed of consolidation procedures and transfers to ESA. 
Discrepancies do not automatically imply misreporting. General suspicion is therefore 
inadmissible. The text of the report should therefore be corrected. 

B.18 
Text of the preliminary report (p. 29): Finally, it is important to mention that, for the years under analysis, 

no flows or stocks of financial derivatives were reported in national accounts for the whole S.1312 sector (state 

government sector).  The Commission is aware that sizeable cross-currency swaps existed at least between Land 

Salzburg and OeBFA. 

Comment: The Commission has been aware since the end of January 2013 at the latest 
that financial derivatives had been concluded in Land Salzburg which had not been taken into 
account in the Austrian ESA statistics. This is set out in the internal minutes of a telephone 

47

 The financial accounts in ESA 95, consolidated/non-consolidated: Consolidated meant that cash flows and 

stocks were reduced to those quantities which took place within the general government sector. Non-consolidated 
meant that the quantities of national flows/stocks were included in the results. Typical flows/stocks to be 
consolidated were loans to the Länder from the Austrian Federal Financing Agency (OeBFA). The consolidation 
process did not take these loans into account in the results as loans granted by the Federal Government and 
taken up by the Land. 

88 

 
 
 
 
                                                            
conversation with the former Eurostat desk officer [MW] on 31 January 2013.48 In addition, 
STAT informed the Commission (Eurostat) in April 2013, as part of the usual requests for 
clarification of the EDP notification, of the initial research into financial derivatives, and that 
information from Salzburg would not be available before the end of September 2013 ‘due to 
the well-known reasons’.49 It pointed out that in 2009, it and the OeNB had already put a 
proposal to the Ministry of Finance to provide for a separate description of financial 
derivatives in the VRV.50 The report should therefore also state that the Commission 
(Eurostat) had been informed of those circumstances since the end of January 2013. 

B.19 
Text of the preliminary report (p. 31): It was only on 22 January 2013 that the State Office of Land 

Salzburg officially informed STAT on the issue of the existence of unrecorded liabilities. 

Comments: 
a)  From the notes by STAT it is not evident what additional information the State Office 
provided to STAT on 22 January 2013 that was not already known since the press conference 
on 6 December 2012. For instance, on 6 December 2012 the Salzburger Nachrichten stated: 
‘The deputy head of the Land finance department is alleged to have speculated with public 
funds and concealed the losses in the budget.’ (see also footnote 48 on p. 31 of the 
preliminary report). 
b)  The notes by STAT concerning contacts with the State Office on 22 January 2013 show: 
ba)  Telephone conversation with [CM] on 22 January 2013 at approx. 8.30: He introduces 

himself as the new contact person for data transmissions to STAT and asks whether there is 

a backlog in data reports to STAT. 

bb)  Detailed information to [CM] on content requirements and technical details for data 

reports. 

STAT was not informed on 22 January 2013 of the issue of the existence of unrecorded 

liabilities. The text of the report should therefore be corrected. 

48 ‘Just had extended conversation with MW (had read in the media about Salzburg, Linz and Lower Austria), she 
is surprised there is nothing in EDPT3C and 3D under F.34. I told her we were working with Sbg and LA to check 
data deliveries to us in this regard.’ 
49 Quotation from the concluding remarks by Eurostat of 16 April 2013: 
‘Question by Eurostat: We understand that this issue has been explicitly addressed in your exchanges with the 
data providers and it has been confirmed that such transactions have not taken place in Austria in the EDP 
reference period. Otherwise, please explain to us whether, and if yes, on which grounds, it can be concluded that 
the transactions would not have any major impacts on the state government debt measurement. 
Answer by STAT: To get more information on financial derivatives, already in 2009 STAT and OeNB made 
proposals to the MoF for additional break down in the state and local government budgets but didn't succeed 
these proposals being implemented in the National Regulation (VRV). Again this issue was presented by STAT to 
the responsible committee for developing the VRV in March 2013. In March 2013 we also contacted the states of 
Lower Austria, Burgenland and Salzburg and requested flow- and stock-data on financial derivatives but there was 
no answer so far (in fact, in Salzburg closed accounts as such for the year 2012 will not be available before 
September 2013 due to the well-known reasons).’ 
50 Voranschlags- und Rechnungsabschlussverordnung des Bundesministers für Finanzen [Budgeting and 
Accounts Regulation, VRV] in agreement with the Rechnungshof. 

89 

 
 
 
 
                                                            
B.20 
Text of the preliminary report (p. 32): On 22 January 2013, the State Office of Land Salzburg and STAT 

exchanged some emails. In one of these emails, STAT states: ‘For our part, we are very interested in the interim 

reports on the finances of Land Salzburg in order to get a picture of the changes/revisions that have come to us, 

or to what misreporting and manipulations we have been exposed.’  

Comment: The actual text in the e-mail reads: ‘For our part, we would be very interested in 

the interim reports on the finances of Land Salzburg in order to get a picture of the 

changes/revisions that have come to us, or to what misreporting and manipulations we have 

been exposed.’ The conclusion is that on 22 January 2013, STAT had no information other 

than that brought to light since the press conference on 6 December 2012. 

The text of the report should therefore be corrected. 

B.21 
Text of the preliminary report (p. 32): On 5 March 2013, there was a bilateral meeting between STAT and 

the State Office of Land Salzburg in Vienna; 

Comment: Two representatives of the State Office

51

 and a number of STAT representatives 

took part in this meeting on 5 March 2013 in Vienna. The participants from Salzburg were 

announced by [CM] on 4 March 2013 (see also proposed correction C.8). 

B.22 
Text of the preliminary report (p. 32): On 27 March 2013, the State Office of Land Salzburg informed 

STAT that, following a report by an external independent private auditor, it had been ascertained that the 

consolidated liabilities of Land Salzburg amounted to EUR 3,507 million, although no breakdown of this amount 

could be provided. The Commission is not aware of any specific follow-up having taken place in order to ascertain 

the nature of such liabilities. 

Comments: 
a)  Since no breakdown of the amount of EUR 3.507 bn (relating to only one reference year, 
2012) had been presented on 27 March 2013, there is also a possibility that this amount also 
included liabilities arising from financial derivatives. STAT had already asked Land Salzburg 
on 19 March 2013 to provide detailed information on financial derivatives. Eurostat was 
informed of this on 16 April 201352 (see also comment B.18). 
The text of the report should therefore be corrected. 

b)  We do not understand the statement that ‘The Commission is not aware of any specific 
follow-up having taken place in order to ascertain the nature of such liabilities’. In 2013 there 
were discussions between Land Salzburg and Statistics Austria on 19 March and 7 May, with 
numerous e-mail contacts before and afterwards. The sole purpose of these discussions was 

51 [RO] and [PS]. 
52 ‘In March 2013 we also contacted the states of Lower Austria, Burgenland and Salzburg and requested flow- 
and stock-data on financial derivatives but there was no answer so far (in fact, in Salzburg closed accounts as 
such for the year 2012 will not be available before September 2013 due to the well-known reasons).’ 

90 

 
 
 
                                                            
to acquaint the representatives of Land Salzburg with the different data requirements and 
contents of the data reports. STAT does not draw up statistics on the basis of a number in a 
pdf document which even the sender cannot properly explain. 

B.23 
Text of the preliminary report (p. 32): On 7 May 2013 a meeting took place between STAT and the State 

Office of Land Salzburg. In this meeting, STAT recognized that there might be problems with the recording of 
derivatives and debt in Land Salzburg.tt (The quotation according to footnote tt is correct (see p. 49 of the 

preliminary report). We read it in the press on 6 December 2012. In this context, we had a first meeting with 

representatives of the Land Salzburg in May 2013. From this we recognized that there might have been issues 

with the reporting of derivatives and EDP debt (reporting of loans).  

Comment: The text should be corrected (see proposed correction C.9). 

B.24 
Text of the preliminary report (p. 33): In July 2013, still in the absence of annual data, STAT compiled the 
accounts of Land Salzburg on the basis of the quarterly data provided.vv (The quotation according to footnote vv is 

correct (see p. 49 of the preliminary report): During the meeting with STAT on 26 September 2016, the RH 

representative, who in July 2013 was an employee of STAT, stated: ‘As final annual data on the closed accounts 

of the Land Salzburg for the year 2012 were not available for the calculation of ESA National Accounts, STAT 

used quarterly data to compile the National Accounts (…).’ 

Comments: 
a)  STAT does not compile the accounts of Land Salzburg, but ESA/EDP statistics. 
b)  On p. 6 of the minutes of the discussion between the Commission and STAT on 
26 September 2016 it is stated that: Before October 2013, Land Salzburg had not officially 
informed STAT and we did not receive updated data (corrections) from them. They provided 
only the quarterly debt data according to the existing reporting obligations without any 
further comments. 
The text should therefore be corrected (see proposed correction C.10). 

B.25 
Text of the preliminary report (p. 33): On 10 October 2013, the issue is brought to the attention of 

Eurostat for the first time, i.e. ten months after the issue had been brought to the attention of STAT. 
Comment: The press conference in Salzburg on 6 December 2016 had considerable impact 

not only in all German-language media in and outside Austria, but was reported 

internationally in Europe and beyond. It is difficult to understand how the Commission 

(Eurostat) would not have been aware of it. The issue was clearly ‘brought to its attention’ 

owing to the media reporting, as can be concluded from an enquiry to the former Eurostat 

desk officer [MW] on 31 January 2013 (see comment B.18). The Commission had been 

aware since the end of January 2013 at the latest that financial derivatives had been 

concluded in Land Salzburg which had not been taken into account in the Austrian ESA 

statistics. 

91 

 
 
The text should therefore be corrected (see proposed correction C.11). 

B.26 

Text of the preliminary report (p. 33): On 31 March 2014, STAT reported the April 2014 EDP Notification 

to Eurostat. The level of Land Salzburg's contribution to Maastricht debt, for 2011, was revised upwards by EUR 

3,507 million, i.e., exactly the amount which had been signalled by the State Office of Land Salzburg to STAT on 

the 27 March 2013. 
Comment: As shown in Table 1 of the preliminary report (p. 15), the EDP data report of 

31 March 2014 contained an amount from Land Salzburg, including the Wohnbaufonds, for 

2011 of EUR 3.172 bn, and the EDP data report of 30 September 2013 contained 

EUR 2.293 bn. The correction therefore amounted to EUR 879 million (see proposed 

correction C.12). 

The text should therefore be corrected. 

B.27 
Text of the preliminary report (p. 33): STAT informed the Commission (Eurostat) about the misreporting 

in Land Salzburg only on the 10 October 2013. Nevertheless, it has been ascertained that STAT was gradually 

informed about these facts from 6 December 2012 onwards. Notably, it was clear to STAT, at least since the 22 

January 2013, that "misreporting and manipulations" had occurred in Land Salzburg. 

Comments: 
a)  On 29 January 2013, STAT informed all Länder of the extent to which they had not yet 
complied with the requirements for financial management statistics in terms of data reports 
to STAT and asked them to improve the quality of data reporting as soon and as 
comprehensively as possible. The Federal Ministry of Finance was also informed of the 
situation on 29 January and was asked for its support in improving the quality of the fiscal 
data transmitted. The Ministry immediately replied that it also considered improving the 
quality of the data from sub-national levels to be essential. 
b)  One instance of ‘misreporting’ (at least in the financial derivatives field) was known to 
Eurostat at the latest on 31 January 2013 (see comment B.25 above). On the basis of this 
communication on 31 January 2013, STAT requested information on financial derivatives 
from Land Salzburg on 19 March 2013; The results of this search were communicated to 
Eurostat on 16 April 2013 (see comments B.18 and B.22 above). The communication also 
pointed out that final data from Land Salzburg for 2012 were not expected before the end of 
September 2013 ‘due to the well-known reasons’. 
c)  On 9 October 2013 the RH published its report ‘Land Salzburg – Financial situation’. 
Following a phone conversation between STAT and the former Eurostat desk officer [MW] on 
10 October 2013 concerning this report, on 11 October STAT sent initial comments on the 
report to Eurostat (see proposed correction C.11 below). 

B.28 
Text of the preliminary report (p. 34): Moreover, on the basis of information provided by the State Office 

of Land Salzburg concerning the results of an independent external audit, it should have been clear to STAT, at 

92 

 
 
 
least since 27 March 2013, that the level of debt of Land Salzburg was in fact considerably larger than what had 

previously been estimated by STAT. Given that STAT would, four days later, report data to Eurostat in the context 

of the April 2013 EDP Notification, it is the opinion of the Commission that an immediate and urgent practical 

follow-up should have been undertaken by STAT after receiving this information from Land Salzburg. This appears 

not to have been the case. Furthermore, even if in such a short delay it would not be possible to give the issue a 

comprehensive follow-up, it is the opinion of the Commission that, under the principle of due diligence, STAT 

should have informed Eurostat immediately after 27 March 2013. 

Comments: 
a)  Liabilities from financial derivatives are not included in government debt. STAT’s task is to 
calculate government debt, as defined in the EDP Regulation, and report it in the course of 
EDP notifications for the years n-4 to n (for 2009 to 2013 in the specific case of the EDP 
notification of 31 March 2013). For the results of the‘ independent external audit’ of 27 March 
2013, which related to the situation as at the end of 2012, it was not known to what extent 
any liabilities from financial derivatives were included, nor was there any information on 
other years. Eurostat does not usually accept a significant revision of only one year, with no 
evidence base under EDP notifications. 
b)  Please see comments B.22 and B.26 above regarding ‘immediate and urgent practical 
follow-up’. 

B.29 
Text of the preliminary report (p. 35): These irregular practices were made public in 2012, following a 

press conference held on 6 December 2012 by the Finanzreferent, the Director of the Financial Department and 

the Head of the LRH of Land Salzburg. ... Furthermore, this report also demonstrates that the Commission 

(Eurostat) could and should have been informed by STAT several months earlier about these facts. 
Comment: Eurostat must have been aware of the existence of irregular practices from the 

wide media coverage following the press conference on 6 December 2012. There was 

communication between STAT and Eurostat regarding the availability of data on financial 

derivatives in Land Salzburg on 31 January and 16 April 2013 (see in particular comments 

B.18 and B.22 above). 

The text should therefore be corrected. 

B.30 
Text of the preliminary report (p. 37): Even if STAT correctly implemented in the context of the EDP 

notifications the necessary changes to the data provided by the State Office of Land Salzburg, it is the opinion of 

the Commission that other relevant Austrian entities, notably the BMF and the RH, should have been informed.  

Comment: There is no Austrian legislation requiring STAT to undertake such a procedure. 
Rather, there are reasons to believe that the institutions referred to were fully informed of 
events, if only through the wide media coverage. 

B.31 
Text of the preliminary report (p. 38): Secondly, even if STAT was fully informed, at least since 22 

93 

 
 
 
January 2013, that misreporting and manipulation had occurred in the accounts of Land Salzburg, it failed to 

immediately inform the Commission (Eurostat) of these facts. 

Comments: 
a)  On 22 January 2013 STAT had absolutely no knowledge of the extent of the anticipated 
revisions. It therefore immediately asked Land Salzburg for information
above) and agreed on a meeting for a comprehensive exchange of information at the 
beginning of March 2013. 
b)  It can be assumed that, on 22 January 2013, Eurostat was as well informed of ‘irregular 
practices’  in  Land  Salzburg  from  the  media  reporting  following  the  press  conference  on 
6 December 2012 as STAT itself. 
The text of the report should therefore be corrected accordingly. 

 (see comment B.19 

53

B.32 
Text of the preliminary report (p. 40): Finally, the report concludes that whereas the Commission 

(Eurostat) was only informed of this case on the 10 October 2013, the Austrian statistical authorities were aware of 

the possibility of misrepresentation of the accounts of Land Salzburg since, at least, the 6th of December 2012. 
Comment: One instance of ‘misreporting’ (at least in the financial derivatives field) was 

known to Eurostat at the latest on 31 January 2013 (see in particular comments B.26 and 

B.28 above). Eurostat was clearly also aware in April 2013 of a data problem with Land 

Salzburg over EDP notification. 

The text of the report should therefore be corrected accordingly. 

B.33 
Text of the preliminary report (p. 40): Also, the report concludes that both Statistics Austria and the 

Austrian Central Bank were aware of sizeable inconsistencies in the data reported by Land Salzburg before the so 

called 'financial scandal' became public in the end of 2012. 
Comment: As this text is an exact repeat of the text on page 3 of the preliminary report, 

comment B.3 above also applies here: 

Comment: The data transmitted pursuant to the GebStat-VO54 are the main, but not the 

only, source for the calculation of ESA/EDP data. There is therefore in all Länder a significant 

difference between ‘debt according to VRV’ and ‘EDP Maastricht debt’. For 2012, as far as 

STAT was aware as at 30 September 2013, it was EUR 1.3 bn for Land Salzburg and EUR 8.9 

bn for all Länder. Differences between data according to the VRV and the ESA/EDP are 

therefore not specific to a certain Land (summary 2 under point Ac) above). 

53

 E-mail of 22 January 2013: ‘For our part, we would be very interested in the interim reports on the finances 

of Land Salzburg in order to get a picture of the changes/revisions that have come to us, or to what 
misreporting and manipulations we have been exposed.’ 
54 Gebarungsstatistik-Verordnung (Order on management statistics); Federal Law Gazette II No 361/2002, Federal 
Law Gazette II No 465/2004 or Federal Law Gazette II No 345/2014 (from 1 January 2014). 

94 

 
 
                                                            
Proposal for an amended wording: Also, the report concludes that both Statistics Austria 

and the Austrian Central Bank were already aware of the need to supplement the data 

reported by Land Salzburg for calculating ESA or EDP data before the so-called 'financial 

scandal' became public at the end of 2012. 

C)  Technical comments/proposed corrections 

 C.1 

Text of the preliminary report (p. 2): The report contains a detailed description of the main reasons for the 
1.2 billion euro revision in the government debt of Austria in 2014, relating to the years 2010-2012, ... 
Proposed correction: The report contains ... for the revision amounting to EUR 1.2 billion for 

2012, EUR 0.9 bn for 2011 and EUR 0.5 bn for 2010, ... 

C.2 
Text of the preliminary report (p. 3): The misrepresentation of the government debt of Austria was, as of 

2012, of EUR 1.2 billion. 
Proposed correction: The misrepresentation of Austria’s government debt as at the end of 

2012 amounted to EUR 1.2 billion. 

C.3 
Text of the preliminary report (p. 8): On 10 March 2014, STAT provided the Commission (Eurostat) with 

the results of its internal analysis of the statistical implications of the RH findings and announced that, after the 

incorporation of the new data for Land Salzburg, the general government debt of the years 2010, 2011 and 2012 

would be revised upwards (+0.3pp of GDP in 2010, +0.3pp in 2011, +0.4pp in 2012). 
To be corrected: On 10 March 2014, STAT provided the Commission (Eurostat) ... (+0.2 

percentage points of GDP in 2010, +0.3 percentage points in 2011 and +0.4 percentage 

points in 2012). 

C.4 
Text of the preliminary report (p. 9, footnote 7): OeBFA provides data and metadata to the statistical 

authorities to be used for the calculation of the interest accrual adjustment, data on federal government receipts 

and on the federal government debt. 
Proposed correction: OeBFA ... [no material change to EN version]. 

C.5 
Text of the preliminary report (p. 26, footnote 33): This follows from the email exchange of 27 

September 2010 ... 
To be corrected (see footnote 13 on p. 13): This follows from the email exchange of 27 

September 2012. 

C.6 

Text of the preliminary report (p. 29): ‘... in national accounts for the whole S.1312 sector (state 

95 

 
 
government sector).’  

To be corrected: ‘... in national accounts for the whole S.1312 sector (sub-sector Länder).’ 

C.7 
Text of the preliminary report (p. 32): In one of these emails, STAT states: ‘For our part, we are very 

interested  in  the  interim  reports  on  the  finances  of  Land  Salzburg  in  order  to  get  a  picture  of  the 

changes/revisions that have come to us, or to what misreporting and manipulations we have been exposed.’ 
To be corrected: In one of these e-mails, STAT states: ‘For our part, we would be very 

interested in the interim reports ... 

C.8 
Text of the preliminary report (p. 32): On 5 March 2013, there was a bilateral meeting between STAT and 

the State Office of Land Salzburg in Vienna. 
To  be  corrected:  On  5  March  2013,  there  was  a  bilateral  meeting  between  STAT  and  the 

State Office of Land Salzburg in Vienna. 

C.9 
Text of the preliminary report (p. 32): In this meeting, STAT recognized that there might be problems with 

the recording of derivatives and debt in Land Salzburg. 
To be corrected: In this meeting, STAT became aware that there might be problems with the 

recording of derivatives and debt in Land Salzburg. 

C.10 
Text of the preliminary report (p. 33): In July 2013, still in the absence of annual data, STAT compiled the 
accounts of Land Salzburg on the basis of the quarterly data provided. Proposed correction: In 
September 2013, still in the absence of annual data,  STAT compiled the ESA/EDP 
statistics, taking into account the quarterly data provided by Land Salzburg. 

C.11 
Text of the preliminary report (p. 33): On 10 October 2013, the issue is brought to the attention of 

Eurostat for the first time, i.e. ten months after the issue had been brought to the attention of STAT. 
Proposed correction: On 11 October, STAT sent initial comments on the RH report ‘Land 

Salzburg – Financial situation’ to Eurostat.55 

55 ‘Comments on the Report of the Austrian Court of Audit (CoA) on Land Salzburg - Financial situation (published 
on 9 October 2013) 
a) General: 
STAT has neither  been  involved  in nor informed  on the auditing  process of the Austrian Federal  CoA about the 
financial situation in Land Salzburg. The report itself has been downloaded by STAT from  the CoA-website on 9 
October 2013. According to the usual "auditing procedures" the draft report has probably been transmitted to Land 
Salzburg already in June 2013 for comments. 
b) Remarks on some details of the report: 
- ‘300 bank accounts with a turnover in 2012 of EUR 9.5 bn’: The total inflows and outflows on all these bank 

accounts sum up to this amount, which refers to the transactions during the year ("im Jahr"). This must not be 
mixed with stocks of assets or liabilities. 

- ‘As at 31 December 2012, the Land accounting system had financial debts of EUR 1.370 bn. However, as at  

96 

 
 
 
                                                            
C.12 
Text of the preliminary report (p. 33): On 31 March 2014, STAT reported the April 2014 EDP Notification 

to Eurostat. The level of Land Salzburg's contribution to Maastricht debt, for 2011, was revised upwards by EUR 

3,507 million, i.e., exactly the amount which had been signalled by the State Office of Land Salzburg to STAT on 

the 27 March 2013. 

To be corrected: 
Variant A: On 31 March 2014, STAT reported the April 2014 EDP Notification to Eurostat. The 

level  of  Land  Salzburg's  contribution  to  Maastricht  debt  for  2011  was  revised  upwards  by 

EUR 879 million. 

If 2012 was meant, variant B would apply: 

Variant B: On 31 March 2014, STAT reported the April 2014 EDP Notification to Eurostat. The 

level of Land Salzburg's contribution to Maastricht debt for 2012 was revised upwards by 

EUR 1.191 bn. 

C.13 
Text of the preliminary report (p. 40): Based on the findings in this report regarding the behaviour of the 

authorities of the Member State in the period from 13 December 2011 until the launch of the investigation on 5 

May 2016, the Commission may decide to adopt a recommendation to the Council to impose a fine on the 

Republic of Austria, as foreseen in Regulation (EU) No 1173/2011. 
To be corrected: ... 3 May 2016 ... 

___________________________________________________________________________ 
31 December 2012 there were total debts with a nominal value of EUR 3.507 bn.’ Neither ‘Finanzschulden’ nor 
‘Gesamtschulden’ can be taken 1:1 as Maastricht debt. Statistics Austria has published on 30 September 2013 
the Maastricht debt of S.1312 by state (for the years 2009 to 2012). The result for Land Salzburg is € 2.315 bn. 

-  The difference between "Buchhaltungssystem" and Maastricht debt originates from the inclusion of extra-
budgetary units (for instance the "Wohnbaufonds"), information provided by the Austrian Treasury and 
comparison with data of the security by securitiy database of OeNB. - On the other hand the difference between 
the result of CoA ("Gesamtschulden") and STAT data of about € 1.2 bn (0.4 as percentage of GDP) cannot be 
interpreted as "to be added 1.1 to the debt data notified on 30 September 2013 (for instance it could be the case 
that "Gesamtschulden" comprises financial derivatives as liabilities). STAT will urge the officials of Land Salzburg 
to provide detailed data necessary for a comprehensive evaluation as soon as possible. 
-  The chapter "Risikobetrachtung einzelner Geschäftskategorien" which deals with "swaps" gives no indication 
that there have been off-market swaps. 

c)  There are no diverging results on the existence of financial derivatives in the individual state 
government units when comparing the information which has been provided independently to STAT and OeNB. 

d)  The current compilation procedure for financial accounts implies the use of many indirect data sources. 
For example for deposits of the Sector S.1312 money and banking statistics is used or for securities other than 
shares (F.331 and F.332) the security by security data base of the OeNB is used. Therefore, all deposits of S.1312 
with Austrian banks are recorded in financial accounts. Furthermore, security holdings of the Land Salzburg in 
custody of Austrian Banks are recorded in financial accounts. To ensure full coverage of securities other than 
shares, the OeNB reminded the Land Salzburg on the reporting obligation of security holdings in custody with 
foreign banks as laid down in the Foreign Exchange Act 2004 (this has been done along with the letter on the 
reporting obligation of financial derivatives).’

97 

 
 
 
200 JAHRE 

seit 1816 

200 JAHRE  
seit 1816 

Θ N B 

OESTERREICHISCHE NATIONALBANK (Austrian Central Bank) 
E U R O S Y S T E M  

S 

EXECUTIVE BOARD 

Dr [KP] 

Director-General, Austrian Federal Statistics Institute 

[Bundesanstalt Statistik Österreich] 

Guglgasse 13 

1110 Vienna 

Vienna, 11 January 2017 

Opinion of the Austrian Central Bank on the preliminary report of 17 December 2016 on 
Subject: 
the  results  of  the  investigation  in  connection  with  Regulation  (EU)  No  1173/2011  of  the  European 
Parliament  and  of  the  Council  on  the  effective  enforcement  of  budgetary  surveillance  in  the  euro  area 
(Commission Decision of 3 May 2016) 

Dear Director-General, 

The  Austrian  Central  Bank  rejects  in  the  strongest  possible  terms  the  unjustified  criticisms 

levelled against it in the Eurostat report of 17 December 2016 in connection with the Salzburg 

case,  in  which  criminal  proceedings  are  pending.  The  OeNB  would  therefore  make  the 

following comments on the relevant parts of the report: 

1.  Allegation: ‘The OeNB, although recognising that it was aware of the investments by Land Salzburg in 

financial derivatives, failed to report these to the Commission (Eurostat), in the transmission of the Austrian 

financial accounts (p. 37 of the report): 

Under EU and Austrian law, the OeNB is under no obligation to report to the Commission 

(Eurostat)  under  the  ESA  transmission  programme  (Regulation  (EU)  No  549/2013).  The 

allegation that it failed to report transactions is therefore meaningless. The OeNB has not 

failed to meet an obligation. 

Moreover,  the  statement  by  the  OeNB  at  the  meeting  with  Eurostat  on  26  September 

2016  that  it  was  aware  of  financial  derivatives  (Meeting  report,  reply  to  question  8) 

referred exclusively to the fact that we were informed through the relevant press releases 

in  December  2012  of  possible  derivative  transactions  by  Land  Salzburg.  At  (and  before) 

that time, the OeNB had no relevant data available for the period in question. 

2.  Allegation:  ‘Furthermore,  its  consolidation  practices  regarding  the  financial  accounts  were 
ineffective’ (p. 37 of the report): 

98 

 
 
 
 
 
 
 
 
 
 
These  consolidation  practices  were  in  line  with  the  agreement  between  the  OeNB  and 

Statistics Austria. Moreover, it is not the task of a statistical authority, and certainly not if, 

as  in  the  case  of  the  OeNB,  it  only  has  a  provider  function,  to  verify  the  correctness  of 

local  authority  accounts  (this  is  the  task  of  auditors  or  audit  institutions).  During  the 

meeting  on  26  September  2016  it  was  pointed  out  on  several  occasions  that  the 

verification of accounts was and is not the role of the OeNB (Meeting report, 5 f). 

3.  Allegation: ‘Moreover, the Commission concludes that some declarations of the OeNB officials during 

the meeting between the OeNB and the Commission on 26 September 2016 were not correct. OeNB stated 

that it had found nothing unusual in the accounts of Land Salzburg for the period between 2002 and 2012, 

but the Commission has proof that, in fact, the EUR 300 million in securities not reported in the accounts of 

Land  Salzburg  had  been  unveiled  by  OeNB  in  2010.’  (p. 37  of  the  report)  and:  ‘[...]  both  Statistics 

Austria and the Austrian Central Bank were aware of sizeable inconsistencies in the data reported by Land 

Salzburg before the so called 'financial scandal' became public in the end of 2012.’ (p. 40 of the report): 

Firstly, the OeNB representatives did not state at the meeting that the OeNB had found 

nothing  unusual  in  the  accounts  of  Land  Salzburg,  particularly  as  the  auditing  or 

inspection of these accounts was not the task of the OeNB. Eurostat's broader conclusions 

that  certain  statements  made  by  the  OeNB  representatives  were  incorrect  are  clearly 

based  on  the  statement  concerning  financial  derivatives  already  referred  to  in  point 1 

(Meeting  report,  reply  to  question  8).  This  statement  by  the  OeNB  has  been 

misinterpreted and should be understood only in the context of point 1. In the course of 

the routine quarterly data exchange relating to the entire general government sector, the 

OeNB only transmitted to Statistics Austria the security issue data gathered by the OeNB 

and formally checked as regards the master data (including the EUR 300 million referred 

to in 2010) which are taken into account in the Maastricht debt. This was therefore in no 

way a discovery, as claimed in the report. Plausibility checks were also not carried out on 

the  accounts  by  the  OeNB  –  as  already  stated  above  –  as  it  lacked  the  necessary 

competence. 

We would ask you to attach this opinion to that of Statistics Austria. 

Yours faithfully, 

Austrian Central Bank 

Executive Board 

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Austrian Treasury 

12.1.2017 

Factual corrections to the: 

‘Preliminary report on the findings of the investigation related to the manipulation 
of statistics in Austria as referred to in Regulation (EU) No 1173/2011 of the 
European Parliament and of the Council on the effective enforcement of budgetary 
surveillance in the euro area (Commission Decision of 3 May 2016)’ (Ref. 
Ares(2016)7070219 - 20/12/2016 EN) 

1.  One  general  point  is  that  the  Federal  Government,  represented  by  the  OeBFA,  is  a 
contracting party and therefore the lender, not the OeBFA (e.g. p. 13: ‘debts of Land 
Salzburg to the OeBFA’ — correct: ‘to the Federal Government’, p. 25: ‘Lending from 
OeBFA  to  Land  Salzburg’  –  correct:  ‘Lending  from  the  Federal  Government’;  ‘funds 
lent by the OeBFA’ – correct: ‘funds lent by the Federal Government’; page 26: ‘use of 
the lending from OeBFA’: correct: ‘use of the lending from the Federal Government’; 
page 27: ‘the loans from OeBFA on-lent to the Landeswohnbaufonds’: correct: ‘funds 
lent  by  the  Federal  Government’;  page  29:  ‘cross-currency  swaps  ...  between  Land 
Salzburg and OeBFA’ – correct: ‘cross-currency swaps ... between Land Salzburg and 
the Federal Government’; p. 37: ‘beneficiaries of lending from OeBFA’ or ‘framework 
agreement of OeBFA with the Länder’: in each case: ‘the Federal Government’ instead 
of  ‘OeBFA’  is  correct).  We  would  ask  you  to  make  the  corrections  throughout  the 
report.  Alternatively,  footnote 7  could  refer  to  the  OeBFA  acting  on  behalf  of  the 
Federal  Government,  as  laid  down  in  § 2(1)  of  the  Federal  Financing  Act 
(Bundesfinanzierungsgesetz). 

2.  P. 13, third paragraph: The wording ‘The difference (EUR 166 million) to the amount of 
debt  estimated  by  STAT  in  2011  (2,293  million  euro)  is  mainly  explained  by  the  
contradictions  inconsistencies  in  the  lending  between  the  reports  on  the  financing 
operations  from  OeBFA  to  Land  Salzburg  between  the  reports  from  both  institutions.’ 
expresses the issue more clearly. 

3.  p.  25,  subchapter  2.3.4,  second  paragraph:  ‘The  OeBFA  has  the  delegated  authority, 
amongst others, to take on loans on the capital market and to on-lend these funds to the 
Länder.  The  amount  of  the  loans  is  was  [sic]  determined  by  the  BMF.’  After  the 
speculation  came  to  light,  and  as  a  consequence  thereof,  the  national  process  for 
lending to the Länder was tightened up and restructured. 

4.  p. 25, subchapter 2.3.4, second paragraph: ‘The upper limit of the loans to be conceded 
by OeBFA is the administrative deficit of the Länder.’ This finding is incorrect. Please see 
the minutes of the interview of 26 September 2016, point 3. It should read: ‘The upper limit 
of  the  funds  that  the  Federal  Government  can  make  available to  the  Länder  via  the 
OeBFA consists of the government deficit of the Länder, as laid down in the Austrian 
Stability Pact, plus repayments.’ 

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Austrian Treasury 

5.  p. 25, subchapter 2.3.4, second paragraph: ‘Nevertheless, since there is neither a legal 
obligation for the Länder to provide OeBFA with any information on the effective use 
of the money, nor for OeBFA to keep track of the use of these funds this obligation 
not to reinvest the funds appears to have had a cosmetic, i.e. a pro forma, character.’ 

The words ‘this obligation not to reinvest the funds appears to have had a cosmetic, i.e. a 
pro forma, character.’ should be deleted; this is incorrect and misleading. Agreements 
are basically set up in order to comply with them. The OeBFA does not see this as 
being a ‘pro-forma character’. The respective supervisory bodies (e.g. Landtag or 
LRH) are responsible for verifying compliance with agreements. The OeBFA has no 
legal right of inspection. 

6.  p. 26, final paragraph: ‘The role of the LRH in the recording and use of the lending 

from OeBFA remains unclear to the Commission. On one side OeBFA has stated that 
the cross-checking of the information regarding these funds is the responsibility of the 
LRH, but on the other side the LRH has stated that this cross-checking is the 
responsibility of OeBFA..’ 

The LRH is responsible for the recording and use of loans. 

7.  p.37, third paragraph: ‘The framework agreement of OeBFA with the Länder laid down 
that  the  beneficiaries  of  lending  from  OeBFA  should  not  engage  in  speculative 
behaviour by means of the loans provided, but did does not [sic] contain any control 
mechanisms  to  ensure  compliance  with  that  clause  other  than  direct  reporting  by  the 
Land. As such, the framework agreement proved, in the case of Land Salzburg, to be an 
invitation to circumvent the said clause.’ 

The last sentence should in any case be deleted as it amounts to an assessment 
without any factual basis. Agreements are basically set up in order to comply with 
them. A contracting party can never ensure compliance with an agreement by the 
other party, but only seek to ensure it (e.g. through repayment or penalties), or verify 
non-compliance (e.g. by gathering the corresponding information). After the 
speculation by Land Salzburg came to light at the end of 2012, national processes in 
connection with the granting of loans to the Länder by the Federal Government were 
overhauled and tightened up. Additional corresponding information is now gathered 
from the Länder (e.g. on their use of the funds), and in the event of an infringement 
of the contract conditions there is a possibility of calling in the loans granted to them. 

8.  p. 47, footnote gg: ‘When asked during the Commission investigation what actions are 
undertaken  and  what  information  is  exchanged  with  the  LRH  if  the  information 
regarding lending from OeBFA is not identical to information reported by the Länder, 
OeBFA replied: “This information sent to the LRH is part of the works on the closing 
of accounts done by the LRH. In this sense, the cross-checking is the role of the LRH, 
and  not  the  role  of  OeBFA,  which  means  we  do  not  cross-check  these  data.

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As well, we have never received any feedback from the LRH stating that there were 
discrepancies in the data.” 

The sentence ‘This information sent to the LRH is part of the works on the closing of 
accounts done by the LRH.’ is incorrect. Please see also the minutes of the interview of 
26 September 2016. It should instead read as follows, in line with point 14 of the minutes: ‘Since the 
closing of the 2013 Land accounts, the LRH (Salzburg) has been using the instrument of 
'Bankbriefe' (where the LRH asks OeBFA about the amounts of on-lending provided to Land 
Salzburg).  The OeBFA then provides this information to the LRH. In this sense, the cross-
checking is the role of the LRH, and not the role of OeBFA, which means we do not cross-
check these data. Nor have we ever received any feedback from the LRH stating that there 
were discrepancies in the data.” 

9.  p. 47 footnote hh: ‘When asked during the Commission investigation what kind of information 
the LRH received from OeBFA and how this information was used, the representative of LRH 
explained that: “OeBFA  was receiving the financial statements from Land Salzburg so they 
should have cross-checked. (...)” 

The OeBFA rejects this allegation by the LRH. Its internal records show that no accounts 
were received. In fact, only in February 2014 (i.e. after the events had come to light) did 
the Landesrechnungshof receive from the OeBFA for the first time a list of loans to Land 
Salzburg in order to be able to match the information with that used by the Land to draw up 
the accounts. 

105