Incoming government promises overhaul of defence contracting policy

The incoming Czech government has declared the fight against corruption as one of its top priorities. One of the hotspots has long been the Czech Defence Ministry whose contracts with foreign arms producers have to go through mediating firms. On Tuesday, Prime Minister Petr Nečas vowed to change the practice and make the ministry’s arms deals more transparent.

Pandur, photo: www.army.cz

In 2003, the Czech government agreed to pay some 20 billion crowns for a ten-year lease of 14 Swedish-made Gripen fighters.

Four years later, the Defence Ministry bought 19 German armoured vehicles Dingo for 735 million crowns.

In March 2009, the ministry paid 14.4 billion crowns for 107 Austrian armoured personnel carriers Pandur.

A month later, the government spent 3.5 billion crowns on four Spanish-made CASA transport planes.

All of these contracts have come under the spotlight on suspicion of corruption, and all of them were concluded through mediating companies. On Tuesday, Czech Prime Minister Petr Nečas said this would have to change.

“I consider it to be very important, even crucial, in the coming period, for the Defence Ministry to lose its reputation of some sort of a cash cow from which a group of parasitical firms draws taxpayers’ money through all kinds of contracts, licences, and so on.”

Petr Nečas (left), Czech Defence Minister Alexandr Vondra, photo: CTK

According to a controversial 1994 act, the defence ministry cannot buy arms directly from foreign producers, but has to go through mediating firms, a practice many see as inviting corruption. The incoming government now wants to change the law and allow the ministry to purchases arms and other equipment directly. PM Nečas again.

“The times when people claimed these firms were indispensable even for purchases from foreign governments, when some politicians shed crocodile tears over what the army and the defence ministry would do without these mediators, well, those times are over.”

While anti-corruption watchdogs have welcomed the promise of change, the plan has also met with objections.

One of the politicians who have consistently opposed any change of law is Miroslav Kalousek, the new finance minister and deputy chair of one of the coalition parties, TOP 09. On Tuesday, he expressed concern about the planned change, saying getting rid of the middlemen would not help anything.

Iveta Jordanová, who heads the Czech anti-corruption watchdog Růžový panter, says Mr. Kalousek should stay out of the debate.

Miroslav Kalousek

“I am personally surprised that Miroslav Kalousek should comment on these changes. He himself has close ties to a big arms dealer which greatly benefits from the current law.

“Mr Kalousek spent five years at the Defence Ministry and was responsible for its finances and acquisitions and I think he still has a lot of explaining to do.”

Prime Minister Petr Nečas and his cabinet will soon have a chance to turn their words into deeds. The lease of Gripen fighters will expire in 2015, and next year, the government will have to decide about their replacement in a new multi-billion deal.