Appeal in party-financing case turned down

Libor Novak (right)

The Court of Appeal in Prague has rejected an appeal in what is the Czech Republic's most widely publicised political-financing scandal of the 1990s. The former deputy chairman of the Civic Democratic Party, Libor Novak, who previously managed the party's finances, was put on trial and acquitted earlier this year for allegedly covering up fake sponsors when the party was in power in the mid-1990s. While the judge in charge of hearing the case said that a crime had obviously been committed, a lack of evidence meant that Mr. Novak could not be found guilty. Nick Carey has the story:

In 1995, former tennis player-turned-businessman Milan Srejbr donated fifteen million Czech Crowns, or just under four hundred thousand dollars to the Civic Democratic party, which was then in government. As Mr. Srejbr was interested in purchasing a steel mill that was up for privatisation, which he duly did, someone in the leadership of the Civic Democrats decided to cover up the donation with the names of fake sponsors. Unfortunately, they didn't do their homework, as one of the alleged sponsors had died some time before making his generous gift. The resulting scandal hastened the fall of the coalition government led by Civic Democrat Prime Minister Vaclav Klaus in late 1997.

The case against former Civic Democrat deputy chairman Libor Novak

Libor Novak (right)
was that he allegedly committed tax fraud by hiding the source of the donations. Donations to a political party of up to a certain amount are tax free. Mr. Srejbr's single donation would have been liable for tax, but divided up between fake sponsors, it wasn't. Mr. Novak's defence was that he signed the party's accounts without knowing about the discrepancies.

In court, the party's former and present leadership claimed no knowledge of the cover up, and Mr. Novak was exonerated in June. The Court of Appeal came to the conclusion that, although a crime had been committed, no-one could prove who had committed it, and that Mr. Novak's signature on the accounts was insignificant evidence of guilt. I spoke to independent commentator Vaclav Pinkava, and asked him what he thought of the verdict: The trial of Libor Novak was beset by problems from the start. No-one within the party could remember a thing about the case, claimed that they had not heard the names of the fake sponsors involved, because they were either late for meetings or out on a cigarette or coffee break. And the case's key witness, Milan Srejbr, whose donation led to all the fuss, had moved to the US and refused to return for the trial. According to independent commentator Vaclav Pinkava, the prosecutors in the case against Libor Novak were not after Mr. Novak himself, but bigger fish within the party: