Background to large armoured personnel carriers deal under scrutiny

A huge deal the Czech Republic signed last year to buy armoured personnel carriers for the country’s army has been back in the news this week, amid accusations of corruption involving leading political parties. While Czech politicians have denied any wrongdoing, the police have begun looking into the matter.

In March last year the Czech Republic signed one of the biggest military contracts in its history, buying 107 Pandur armoured personnel carriers from the Austrian firm Steyr. The deal was worth CZK 14.4 billion, or just over USD 750 million.

This week the background to that purchase has featured heavily in the newspaper Mladá fronta Dnes. It reported on Wednesday that in 2002 Steyr hired lobbyist Jan Vlček on the explicit promise that he would deliver meetings with particular Czech politicians and senior military figures.

Vlček was in line for a large payout from Steyr, but failed to organise meetings with the promised names. He told the daily he had broken off contact with the Austrian firm.

In 2003 Social Democrat prime minister Vladimír Špidla announced a tender to supply the army with APCs, a tender which Steyr eventually won. In fact they landed the contract twice. The first was abrogated by a Civic Democrat-led cabinet, only for the Austrian firm to later win a second tender.

Two former executives from the company were quoted by Mladá fronta Dnes on Thursday as saying the deal had involved the bribery of Czech politicians. Wolfgang Habitzl and Herwig Jedlaucnik told the paper that two or three percent of the cost of the APCs went to Czech political parties in the form of kickbacks.

The Czech Social Democrats have reacted angrily to the allegations, filing libel charges. The country’s other main party the Civic Democrats have also denied any wrongdoing.

Meanwhile, former Steyr men Habitzl and Jedlaucnik have reportedly said the allegations of bribery they made to a Mladá fronta reporter were nothing but a “bad joke.”

The Czech police said on Friday that they had begun looking into the matter, which is already being investigated by their counterparts in Austria.