Central Europe Review find out about advertising in CER
Vol 2, No 16
25 April 2000
 CER INFO 
front page 
overview 
sponsor us 
advertising 
classifieds 
submissions 
jobs at CER 
internships 
CER Direct 
e-mail us 
 ARCHIVES 
year 2000 
year 1999 
by subject 
by author 
kinoeye 
books 
news 
search 
 MORE 
bookshop 
music shop 
video store 
conferences 
diacritics 
FreeMail 
papers 
links 

 

Culik's Czech RepublicThe Profits of Privatisation
Jan Čulík

Libor Novák, former deputy chairman of Václav Klaus's Civic Democratic Party (ODS), is currently on the docket of Prague's Municipal Court. He is accused of perpetrating tax evasion on behalf of the ODS. Novák is alleged to have divided a financial gift, donated to the ODS by a former Czech tennis star Milan Šrejber in 1995, into several smaller sums and ascribing each of them to a different donor. As a result, he is accused of depriving the taxman of 1,077,000 Czech crowns (some USD 30,000).

Milan Šrejber took part in the privatisation of Třinec Iron Works in northern Moravia. Subsequently, in an expression of gratitude to the Civic Democratic Party, he donated 7.5 million Czech crowns (some USD 250,000) to the party. However, this gift was then registered by the party as a donation from two fictitious donors – Radzhiv M Sinha from Mauritius and Lajos Bacs from Budapest. The gift of another 7.5 million crowns from a former employee of the Silas Group Company, Jarmila Mlejnková, was entered into the ODS books by Libor Novák as four smaller donations from four other fictitious donors.

The scandal of these fraudulent registrations was one of the reasons why the right of centre coalition goverment of Václav Klaus fell at the end of November 1997. Another reason was the allegation that Klaus's ODS had a secret account in Switzerland where it had deposited bribes from the Czech privatisation process.
Send this article to a friend
While a forensic audit, conducted by a reputable Western auditing firm, did confirm that there were serious irregularities in the funding of the Civic Democratic Party, the allegations surrounding the ODS's foreign bribe account have never been sufficiently explained.

Letting the cat out of the bag

On 19 April 2000, Petr Kolář, the current Czech Ambassador to Ireland and a former advisor to former ODS Foreign Minister Josef Zieleniec told the court in Prague that the ODS leadership must have known as early as spring 1996 that the fictitious names of Bacs and Singha in fact covered up a donation from Milan Šrejber. In 1997, the Civic Democratic Party tried unsccessfully to sweep the matter under the carpet, but Kolář had already given his information to the media by then.

Prague political commentator Václav Žák wrote in Britské listy on 30 November 1997:

The organisers of the Czech privatisation, including Václav Klaus, decided that the economic restructuring in the Czech Republic should be driven by people's desire to get rich quick. The Civic Democratic Party was united by the common desire of its members to acquire money and power. This meant that corruption became absolutely common.

The Civic Democratic Party believed that law and order should be based on private ownership. In their view, private ownership originated by "switching off the light for five minutes" while everyone was free to grab what they wanted of the former state-owned assets.

After Klaus became prime minister in 1992, corruption became a normal part of the Czech economy. Bribes were generally given to government officials for privatisation favours. The Czech public refused to see this as a problem, although some cases of corruption were published. The ruling Czech political parties concluded that it was enough to deny everything and nothing bad could happen.

A change took place after the Czech economy began stagnating in 1997. This is when Klaus admitted mistakes for the first time. This shook the confidence of many people in Klaus's government. The public began to see corruption as a more serious problem than it really was.

Corruption is primarily an economc problem. It caused allocation mistakes in the Czech Republic: as a result of corruption, Czech businesses came to be owned by pseudo-owners who asset-stripped them.

Jan Čulík, 16 April 2000

The author is the publisher of the Czech Internet daily Britské listy.

Moving on:

 

THIS WEEK:
Jan Čulík
Profitisation

Mel Huang
Lithuania's Loons

Sam Vaknin
More Yugoslav Myths

Gusztáv Kosztolányi
EU Identity Crises

Oliver Craske
The UK and Eastern Emigrants

Pavel Pafko
Czech Healthcare

Sue Bagust
Early Modernism

Slavko Živanov
Milošević on the Way out?

Kinoeye:
Elke de Wit
Passion and Terror

Elke de Wit
Ossies on Ice

Arts:
Culture Calendar:
Poland | UK | USA

Essay:
Hall and Perrault
Europe's Right

News:
Albania
Austria
Bulgaria
Croatia
Czech Republic
Estonia
Germany
Hungary
Latvia
Lithuania
Romania
Serbia
Slovakia
Slovenia
Ukraine