Business News

In business news this week, high-ranking government officials face jail for accepting illegal perks from energy giant CEZ. The Czech Republic's budget deficit for 2006 is far higher than expected. The governor of the Czech central bank criticises the euro adoption criteria, and an increasing number of foreigners are being recruited to work in the Czech Republic.

State officials face jail for illegal CEZ perks

At least 10 high-ranking government officials have been accused by the police of unjustly lining their pockets while serving on the supervisory board of Czech energy giant CEZ, in which the state holds a major stake. They have been charged with illegally taking cheap share options in the company and accepting gifts in the form of capital life insurance. Those accused include the former deputy minister of finance Tomas Potmesil and civic democrat MP Oldrich Vojir. If found guilty they could face between two and eight years in prison. All the people involved deny the charges.

Budget deficit higher than expected

As we reported earlier in the week, the Czech budget deficit for 2006 was higher than expected despite robust economic growth. Public spending was ninety four billion Czech crowns or four and a half billion dollars over budget, around thirteen billion more Czech crowns than forecast. The finance ministry blames the deficit on lower tax and social insurance revenues, but many independent analysts say it is down to high social welfare spending and bad use of public funds. The deficit will mean higher interest rates for Czechs and will also hinder the country's chances of adopting the euro in the near future. In order to adopt the euro, governments must meet strict EU targets for public debt, deficits and inflation.

Governor of Czech central bank attacks euro entry targets

Meanwhile, the governor of the Czech central Bank, Zdenek Tuma has criticised the EU's euro adoption criteria, saying that they are obsolete and need to be changed. Writing in London's Financial Times, Mr Tuma said that the old benchmarks for inflation and public deficits were appropriate when the European Union was smaller, but were now outdated and counterproductive in an enlarged EU.

Large increase in Czech recruitment agencies and foreign workers

The Czech Republic's booming labour market has contributed to a massive rise in the number of Czech recruitment agencies Hospodarske noviny reports. The Czech daily says that the number of agencies almost doubled last year from 800 to 1500. The paper also says that agencies are making up for labour shortages on the Czech market by recruiting an increasing number of foreign workers

Taiwanese electronics firm to build plant in Brno

Finally, the Taiwanese electronics firm BenQ is to build a new plant to make LCD screens and monitors in the Czech Republic. The plant will be located on a 50,000 square meter site at the Cernovicka terasa industrial park in Brno and it will employ 700 workers. BenQ wants to make the screens and monitors for markets in Central and Eastern Europe and says it may subsequently expand the plant to cater for the entire continent. The plant should make around 500,000 LCD monitors a year, and production is scheduled to start in the autumn.