Czech prime minister’s reputation on line in privatisation court case

Eleven years after the event a court will start proceedings over the privatization of Czech hard coal mining company OKD. And one of those following the trial closely will be Czech prime minister Bohuslav Sobotka. As the then finance minister, he piloted the controversial sale of the state’s remaining stake in the mining company for what many say was a fraction of its real value.

Defendants Rudolf Doucha, Pavel Kuta and Jan Škurek, photo: CTK

Three men will be in court today over the controversial privatisation of mining company OKD. They are one of the employees of the consulting company, Vox Consult, that carried out the expert evaluation of the value of the mining company that helped set the sale price. The other two of highly placed employees of the then state holding company, the National Property Fund, which was in charge of the privatisation.

The central charge is that they underestimated the value of the remaining OKD shares held by the state to the tune of 5.7 billion crowns with the employees at the state holding company failing in their duty to protect the wider public interest.

But the main personality who will be on trial is none other than prime minister Sobotka, who was finance minister at the time of the OKD sale. That episode probably represents the biggest stain on his political career and has dogged him consistently over the intervening years.

Bohuslav Sobotka, photo: Filip Jandourek

Sobotka was asked Thursday about the sale on the eve of the court case opening on public broadcaster Czech Television. And once again said that he has a clear conscience with regards to the past events.

“The ministry acted in the belief that the expert valuation was in order. When we acted as a government, there were no questions about this evaluation. Those misgiving have come up 11 years later. Eleven years on they it is now questioned as part of a criminal process and the court must decide whether during that evaluation the expert made a mistake or not.”

The prime minister has already given evidence to the police over this case and could well be called into the witness stand. Even if this does not happen he will be closely following how the case plays out. The prime minister again:

“I will certainly be following what happens because the court must decide on guilt or innocence. It is part of the criminal proceedings and I have already as part of those proceedings been involved as a witness. I must say that I will be very interested because our government acted in accordance with that expert evaluation.”

Photo: Podzemnik, CC BY-SA 3.0 Unported

There were other valuations and judgements that comforted the government’s impression that the 2004 sale was okay. But another later estimate by Ernst and Young put the total value of the mining firm at more than 50 billion crowns. The government eventually sold its remaining 46 percent stake for just 4.1 billion crowns. One of the mining company’s main assets was not the coal mines themselves but the massive property portfolio of 44,000 flats in and around Ostrava which appear to have been seriously undervalued.

The OKD sale fits in with a sad saga of Czech episodes after the fall of Communism where the state first lost control of key companies and was then backed into a corner and forced to sell up the rest for a fraction of the real value. Few cases eventually came to the courts and even fewer ended up with any convictions or a finger pointing to those at fault.