In the 1930s, he became an ally of Prince Ernst Rüdiger Starhemberg, then commander of the Austrian nationalist militia ("Heimwehr"), which he furnished with weapons and ammunition.

Additionally, the factory faced challenges throughout the 1920s due to the ban on weapons exports stipulated by the Treaty of Saint-Germain.

In 1928, Mandl represented the Hirtenberger Ammunition Factory as the Austrian partner in a joint venture in Solothurn, Switzerland.

The other partner was the large corporation Rheinmetall, the second-largest German arms manufacturer after Krupp, represented by weapons engineer Hans Eltze.

The failure of this venture marked the slow decline of Mandl’s political ties with fascist regimes, which began to lean toward Nazi Germany.

They negotiated with Mandl at the Dolder Grand in Zürich, Switzerland, securing his father's release from German detention and guaranteeing him a substantial monthly pension.

However, Mandl had a personal quarrel with the Nazi minister Hermann Göring which, as well as his Jewish descent, led to the expropriation of his property in Europe.

After the Anschluss of Austria by Nazi Germany in March 1938, Mandl transferred as many of his assets as he could to Swiss ownership, resigned as director-general of the munitions company and fled to Switzerland.

Mandl was also involved in political affairs, financing the Austrofascist Heimwehr militia, led by his friend Ernst Rüdiger Starhemberg.

The infamous Hirtenberger Weapons Affair involved the smuggling of arms from Italy to Austria and Hungary in early 1933.

Mandl became friends with German Major Waldemar Pabst, the chief of staff of the Heimwehr, who had been involved in the double murder of Rosa Luxemburg and Karl Liebknecht and had participated in several coup attempts.

He reportedly spent US$280,000 ($6.59 million in 2023 dollars)[5] in an unsuccessful attempt to suppress the film Ecstasy by purchasing every existing print.

He arrived in Argentina as a "refugee", with his Rolls-Royce automobile, a court of maintainers, and a ton of gold bullion.

He acquired a home in Mar del Plata, a castle in Córdoba and a small hotel in Buenos Aires.

[4] He worked closely with French designer Jean-Michel Frank, who was then artistic director of Comte S.A.,[8] which produced most of Mandl's furnishings.

[4] In 1955 after the fall of peronism in Argentina, he left for Austria where he resumed running the Hirtenberg-based factory he had inherited from his father.