Fresh blow to government’s anti-corruption efforts

Martin Kocourek

The Czech government’s anti-corruption efforts took a beating when the lower house of Parliament last week watered down its public procurement bill, leaving a loophole for non-transparent companies to reach public money. The centre-right cabinet is also fighting an uphill battle against corruption in its own ranks after reports that Civic Democrat minister Martin Kocourek’s mother became rich overnight, with no explanation given by her or her son.

The new public procurement act was meant to be the flagship of the Czech government’s anti-corruption drive. An estimated 60 billion crowns are lost each year in non-transparent public contracting, or 10 percent of the overall 600 billion procurement budget. To curb this, the bill introduces a series of measures including a lower, one-million threshold for public tenders; it cancels the notorious practice of picking the contract winners in a draw, and, most importantly, it requires bidders to reveal their owners and shareholders.

But heavy lobbying in the lower house resulted in some last minute changes to the law, which critics say effectively crippled the new anti-corruption tool. MPs eventually relaxed the new rules for declaring the owners of bidders and their sub-contractors; that means it will still be possible to siphon public money through companies with anonymous owners registered in tax havens.

Under criticism from the opposition and leading NGOs, the coalition said it would deal with this issue separately next year. Viktor Paggio is an MP for the coalition Public Affairs party.

Viktor Paggio
“What you are talking about is the issue of anonymous bearer shares. That’s something we are about to start working on. The justice minister has finally agreed to our proposals and next year, we will abolish these bearer shares in the Czech Republic. And as far as foreign-registered companies are concerned, we will have to consult international corporate law. But that does not really concern the Czech public procurement act.”

Some of these defects might in fact be fixed sooner than that. The bill will now go to the Senate controlled by the opposition Social Democrats who vowed to amend it accordingly.

But the Czech centre-right government also faces an old-school scandal in its own ranks, centring on the industry and trade minister, Martin Kocourek, of the Civic Democrats. The daily Mladá fronta Dnes reported last week that in 2008, the firm Key Investments sent securities worth 16 million crowns, or nearly 880,000 US dollars, to an account owned by the Minister Kocourek’s mother. At that time, Mr Kocourek was the head of the board of directors of ČEZ, the state-owned power producer, which awarded Key Investments contracts worth millions of crowns.

Martin Kameník is a member of a leading Czech pro-transparency NGO, Oživení. He says the government seems to have relaxed its anti-corruption zeal, which played a crucial role in the last general elections.

Martin Kocourek
“I’m a little sceptical. I think that various hidden lobbying groups are very strong and the government’s original anti-corruption drive has fizzled out. The government has often made big compromises in this respect and its efforts are weaker and weaker.”

Minister Kocourek and his mother refused to provide any details about the deal but this was not good enough for Prime Minister Petr Nečas, and other coalition leaders who will discuss the case at their meeting later on Tuesday. Meanwhile, the Civic Democrat leadership has given Mr Kocourek a week to explain his mother’s millions.