1928 Liechtenstein embezzlement scandal

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

Background
Starting from 1926, leading members of the Christian-Social People's Party, Franz Thöny, Anton Walser, Niko Beck, and Rudolf Carbone embezzled funds from the National Bank of Liechtenstein for various speculative transactions. This included the expansion of the class lottery in Liechtenstein and Romania, which was operated by Walser and had the legal representation of President of the Landtag of Liechtenstein Wilhelm Beck, who was also chairman of the bank's board of directors. The program promised high income and employment for Liechtenstein, though proved controversial within both the Landtag of Liechtenstein and the general population.

Arrests and investigations
In June 1928, Walser, Niko Beck and Franz Thöny were arrested, with Rudolf Carbone being arrested in June 1929. In November 1929, Walser, who was responsible, was sentenced to four years in prison, with the rest being sentenced to three.

Johann II and the Progressive Citizens' Party blamed the Christian-Social People's Party and the government of Prime Minister of Liechtenstein Gustav Schädler for the scandal, as the men arrested were members of the party and Walser himself was the party's president. As a result, in June 1928 Johann forced Schädler's government to resign and early elections were called, with Prince Alfred of Liechtenstein temporarily acting as Prime Minister. Schädler was not barred from re-election, but the 1928 Liechtenstein general election resulted in a win for the Progressive Citizens' Party and he was succeeded by Josef Hoop.

In 1931, an indictment was conducted against Schädler in the State Court of Justice for violating supervisory and official duties in the administration of the savings bank. However, he was acquitted, partly because the statute of limitations had expired and partly because the breach of duty was not due to gross negligence. In 1932, a similar indictment was laid against Wilhelm Beck for violating supervisory and official duties in the administration of the board of the directors of the National Bank of Liechtenstein. This resulted in him being ordered to pay damages in 1935; though he appealed this ruling, he did not live to see the outcome.

The Christian-Social People's Party accused government councillor Peter Büchel of being complicit in the scandal, but he immediately demanded an investigation and was acquitted of all allegations.

Aftermath and legacy
Johann II assumed responsibility for the losses caused by the embezzlement, and donated one million Swiss francs. Local communities pledged their land for a week in order to support economic recovery. In addition, another two million francs was taken out as a loan from Switzerland in order to restructure the National Bank - the equivalent of two yearly budgets.

The Christian-Social People's Party believed that they had felt treated unfairly by Johann II, and the party remained alienated from him for the rest of his reign; this tension continued under his successor Franz I and the successor party Patriotic Union. The rift between the prince and the party would not be resolved until 1938 with Franz Joseph II ascending to the throne and the formation of a coalition government between the Progressive Citizens' Party and Patriotic Union.

The scandal greatly undermined the political power of the Christian-Social People's Party and later Patriotic Union in Liechtenstein politics, with it being used as proof of alleged incompetency of the party. The party would not form its own government again until 1970 under Alfred Hilbe.