The wide-ranging video that brought down the Austrian government also prompted police searches at the homes of Graf, other Novomatic executives and government officials -- including Former Finance Minister Hartwig Loeger -- allegedly touched by the scandal.
Prosecutors paint a picture of influence peddling on a large scale, alleging that the company promised politicians up to 500,000 euros for favorable legislation and “to help Novomatic gain a casino license in Vienna and a nationwide online license.” Monthly fees were part of a sham consulting contract, they claimed in documents seen by Bloomberg News.
Novomatic denies the allegations, saying the company, its executives and Graf haven’t been involved in any bribery attempts and that the case will be dropped once the facts are established. Heinz-Christian Strache has since retracted his Ibiza comments about the company.
Still, the case marks a turning point for Graf and the gambling empire he built. If charges are brought, banks and customers may reduce or cut ties with the company. S&P says its negative outlook on the company reflects the risk of prosecution, other legal action or “findings of unethical behavior.” Even if no charges are brought, the company may be forced to significantly cut back its Austrian presence.
In either case, it may mean a sea change for Novomatic and its founder, diminishing the role of the country where the enterprise started.
When he created Novomatic as a maker of advanced gambling terminals and slot machines in 1980 with a few thousand euros in savings, Graf was choosing a different path from his butcher father.
He realized early on that there was a huge untapped market of ordinary people wanting to gamble in just plain old jeans. That was in contrast with state-owned Casinos Austria AG’s glamorous halls that could easily be the setting for a James Bond movie with its tuxedo-clad guests and evening-gown-adorning women floating around with flutes of Champagne. Graf put his machines in smoky back rooms of cafes and inns, helping his business take off in the 1990s.
Novomatic moved to fancier digs, with an office and event hall in an elegantly renovated art deco building next to Vienna’s famed Secession building. The entrepreneur and his executives also wanted to make a splash on the international stage. Jennifer Lopez sang at the company’s opening of Latin America’s biggest casino in Chile in 2009. Novomatic invested in showy stalls at gambling conventions in Las Vegas and London.
Graf brought Austrian specialties like Sacher Torte and Mozart chocolate balls as he zipped across the globe in his Bombardier Challenger 300 corporate jet. The company burnished its image by sponsoring the arts, including the Vienna State Opera.
For all that, Graf, an avid vintage-car collector, keeps a low profile, eschewing flashy parties and preferring to meet a handful of old friends once a year in a specialty-butcher shop in Vienna.