Transparency International claims some Czech offshore companies have close ties to public officials

The number of Czech companies registered in tax havens has been steadily increasing during the past decade. Only in the last five years, offshore companies won public tenders in this country worth more than 150 billion crowns, according to analysis by the advocacy group Transparency International and the consulting company Bisnode. On Tuesday, they presented their findings about the links between offshore companies, public tenders and Czech politicians.

David Ondráčka, photo: CTK

More than 220 companies with offshore ownership have won Czech public tenders since 2008, According to the Czech branch of Amnesty International. These firms, or those whose owners are based in tax havens, have also been successful in receiving EU funding. The TI study shows that at least 277 such companies received some 6 billion crowns from European funds, with more than three billion crowns already paid out. The advocacy group’s director David Ondráčka says the results of the analysis were surprising.

“The level of non-transparency and opacity is beyond our imagination. We realized that there are almost 200 billion Czech crowns in public and government contracts over the last five or six years which went to companies that are offshore, which actually efficiently hide the real beneficiary owners.”

Almost 13,000 companies are based offshore which means that the Czech Republic loses billions of crowns in tax revenues, says the consultancy firm Bisnode. However, anti-corruption campaigners from Transparency International and a local group called Our Politicians (Naši politici) are more concerned about the connection between the offshore companies that receive public funds and public officials.

František Koníček, photo: Filip Jandourek

At least 1% of the offshore companies included in the survey employ or are otherwise closely connected to active Czech politicians or lobbyists. For example, Labor Minister František Koníček has ties to a Cyprus-based energy company, Equity Brokers. Firms in its portfolio have reportedly won public contracts awarded in the Czech Republic, and the company itself might take part in the future expansion of the Temelín nuclear plant.

Transparency International’s David Ondráčka says that while active politicians linked to offshore companies have not necessarily committed any crime, their involvement in companies that may be committing tax fraud or might have manipulated public tenders is highly problematic.

“In my view it’s completely suspicious, it’s against public interest and I believe that the conflict of interest is obvious. We analyzed a database of over 12,000 companies, but we believe that there are many more of them, because if we were to go into the second on third layer of ownership we would get to some 60 or 70 thousand companies. And then, my guess is that there will be many more links between politicians and top officials and those offshore companies.”

Photo: Barbora Kmentová

In a reaction later on Tuesday, Minister Koníček denied the allegations, and said the firms he had worked for had always paid taxes in the Czech Republic. But Transparency International and their partners feel the issue is not so clear cut and deserves a lot more public attention and discussion, since they believe offshore and anonymously-owned companies are often the vehicle for corruption and economic crime in the country.

“If our authorities, if our tax and revenue office, if our police and state prosecutors office are not able this kind of criminality, then we would be just lying that we are really fighting corruption and financial crime,” says David Ondráčka.