Agriculture Minister's role in 'speculative' property deals under investigation

07-11-2005

Allegations that state officials - including Agriculture Minister Petr Zgarba - have passed on inside information to land speculators has prompted an intensive review of land transfer and privatisation deals made this summer. At the centre of the investigation is a state-owned parcel of land sold to a friend of Minister Zgarba for just $160,000 (4 million crowns) that is now said to have a market value of over $60 million.

Petr Zgarba, photo: CTKPetr Zgarba, photo: CTK As agriculture minister, Petr Zgarba also serves as chairman of the Czech Land Fund, the government body that manages state-owned real estate. Mr Zgarba has steadfastly denied any wrongdoing in the land deal through which his friend Gabriel Vecera obtained some 100 hectares of land that is now worth an estimated 375 times the original purchase price.

When the story first broke last week, Mr Zgarba claimed to have voted against the transfer in question, but the Czech daily Mlada fronta Dnes has since reported he merely abstained from voting, and the main opposition Civic Democrats are now loudly calling for Mr Zgarba's resignation.

The land in question, part of the Prague district of Uhrineves, in Prague 22, skyrocketed in value this summer after a change in the local zoning plan, which would allow for the construction of a lucrative housing project. Mr Zgarba denied having known that the district wanted to buy the land from the state, and therefore should have been given first crack at it. The daily Mlada fronta Dnes published excerpts of a letter that the mayor of Uhrineves allegedly sent to the Fund in March this year which warned against the possibility of speculative transfers.

So far, Prime Minister Jiri Paroubek has stood by his agriculture minister. This weekend, his ruling Social Democratic Party even named Mr Zgarba, a long-time party member, as election leader for the region of Vysocina.

In the meantime, two members of the Czech Land Fund have been dismissed over alleged mishandling of land transfers, and Fund vice chairman Karel Machovec has promised that the results of an internal audit of some 170 land transfer and privatisation deals will be known this year. All together, the deals would make a tidy profit of some 80 million dollars for alleged "land speculators," if the parcels were resold at today's market value.

At least one former member of the Land board is claiming that the Agriculture Minister's in the transfers was far greater than he's let on: In an interview with the online newspaper Aktualne.cz, Roman Skopal says that another board member -- whom he refused to name "at this time" - had urged him to sign off on a contract, saying Minister Zgarba had made clear it was "in the minister's personal interest".

07-11-2005