Britain launches corruption probe into Czech defence contract

The Czech Republic may be facing one of the biggest corruption scandals in the country's history. Britain's Serious Fraud Office is running an investigation into whether Czech politicians accepted bribes from one of the British military's main arms suppliers, BAE Systems.

In 2002, the government headed by Social Democrat Milos Zeman decided to replace the army's ageing fleet of MiG-21s with twenty-four Gripen fighter jets from the British-Swedish consortium BAE Systems/SAAB. The cabinet approved the 60 billion crown (2.8 billion US dollars) purchasing contract in April but failed to get the green light from the Senate and in the end the Czech Republic leased rather than bought the planes.

But a closer look into the accounts of BAE Systems has the British Serious Fraud Office suspecting that the company spent large amounts of money on bribes in an effort to get Czech politicians to support the deal. The case is now under investigation by anti-corruption police departments in the Czech Republic, Britain, and Sweden but also by investigative journalists.

The scandal developed further, when Swedish TV broadcast secretly made recordings of former Czech foreign minister Jan Kavan. In them, he confirms that Czech politicians took bribes and implies that a Czech police investigation could be influenced.

Reporter: "Would it be possible to have an effect on the police investigation?"

Mr Kavan: "I would think that it's not out of the question but I would discuss that directly and not necessarily on the phone."

Reporter: "But it could be possible?"

Mr Kavan: "I think so, yes."

Fredrik Laurin is one of the three Swedish reporters who made the documentary:

Fredrik Laurin, photo: www.fgj.se

"What we did was we set up this business intelligence company that pretended to work for BAE, although we never said that but we made it look like we worked for BAE and then we approached, if not everyone then most of the members of those governments who were involved in major decisions on the Gripen deal because those governments and a few other people in the Czech business and political life were indicated to us either as having received bribes or as being possible receivers of bribes. So we basically had a whole palette of people that we let the ESID company [the fictitious company] approach and Kavan as being a former foreign minister was obviously someone who should be approached."

When confronted by the Swedish journalists and told that everything he had said was caught on tape, Jan Kavan had the following to say:

Mr Kavan: "When, in fact, I acquired the suspicion, not that they were journalists but that this is about corruption that they are involved in something that I consider illegal, I went to the Czech police and informed them about this and gave the names and the name of this organisation and described in detail my suspicion that they actually want us to circumvent or slow down the police investigation over corruption."

Reporter: "Well, Mr Kavan, the camera does not lie and you were heard on tape saying that money changed hands, that this would send chills down the spines of many important people, that a number of people were bribed, and that the BEA's manager in Prague was handling the kickbacks. Now you are saying something else. Are you taking a responsible position here? Are you upright about this?"

Mr Kavan: "I am absolutely honest and forward. I am saying that I was sharing with them what I described as rumours and speculation about certain kickbacks that might have taken place. I am not denying that those speculations were heard and that I passed them on to these two gentlemen. But I'm saying that I personally cannot prove it, I have no evidence that any such corruption has taken place."

David Ondracka of the corruption watchdog Transparency International in Prague has been following the case. Should the investigations confirm the suspicions, the country will have to brace itself for serious consequences, he says:

"The reputation of the country would be harmed seriously. The Czech Republic would be seen as a country that is unable to enter into defence contracts in a clean way and that is why it would need to draw some consequences from this. Those people would definitely have to leave their posts and there would potentially be criminal proceedings. In my view this is one of the major corruption cases in the country's history and that is why it is very important for the investigation to proceed smoothly and come to a successful end. In my view it is important for the country."