Oziveni tries to tackle corruption in public sector

01-09-2003

The Czech Republic has often been criticised for its relatively high level of corruption and economic crime. A recent survey carried out by PricewaterhouseCoopers showed that the number of detected cases of economic crime has risen since 2001 - by some seven percent. While the most common type of economic crime is fraud, more than 50 percent of Czech companies say the most widespread type of economic crime in the country is corruption and bribery. One of the organisations trying to tackle corruption in the public sector is the civic association Oziveni. Recently, it focused on Prague City Hall and faults which were found with the public tenders it announced and which, according to Oziveni, potentially encourage corruption.

"As you know, the Czech Republic is one of the most corrupt countries within OECD. It has been found in many researches of Transparency International, and the City of Prague is a leader in this. The city recently audited 133 public tenders, and all 133 were found unlawful. It resulted in damage to the city which can be calculated in millions of crowns, with specific people responsible for it. They include employees [of the city hall] and politicians."

Petr Stepanek is the head of the association Oziveni and also a member of the city hall's anti-corruption committee. He is referring to the outcome of an internal audit the city hall recently commissioned. The audit found formal flaws with a large number of public tenders announced by the city. City representative for the opposition European Democrats Marketa Reedova called for the list of those responsible for the mistakes to be made public. However, she was turned down.

"It turned out that some data in the lists was inaccurate and some turned out to be false altogether."

Prague Mayor Pavel Bem, explaining why the city hesitated to made the list public. After Marketa Reedova's request was rejected by the city hall's director Pavel Tahan, the civic association Oziveni published the secret list on their website, declining to disclose how they got hold of the material. The audit points at both politicians and employees of the city hall who acted in violation of the law on public tenders. City councillor Zdenek Kovarik is reported to have made 76 mistakes and the head of the investments department of the city hall Jozef Macko erred 206 times according to the internal audit. I asked Petr Stepanek from the anti-corruption committee whether any of those people have faced any consequences.

"Some of the bureaucrats were fired but they were not held accountable further and no politician has been held accountable so far. Some of the bureaucrats loyal to the townhall were only punished with fines of an amount of only several euros or dollars and the city pretty much made a mockery of it."

The former deputy mayor Social Democrat Otto Kechner placed second in the list of politicians who made wrong decisions, with 13 unlawfully granted contracts. He denies any wrongdoing.

"In all those public tenders we chose either the cheapest company or clearly the most advantageous offer for the city. That means I deny any wrongdoing."

One of the opposition parties in the city hall, the European Democrats, and the civic association Oziveni speak about losses for the city amounting to millions of crowns resulting from mistakes and irregularities in granting contracts. Are there any more specific figures?

"One of the auditors did not estimate the damage and the other only estimated the damage when fines were not requested and the companies were paid beforehand, basically against the law. For example, Mr Macko, who was the head of the investors department, caused direct harm of 4.7 million crowns, but our estimate is that the total damage to the city could be in tens or even hundreds of millions of crowns."

Among the public tenders the audit found flaws with are contracts for the construction of a new sewage system, public lighting, apartment blocks or roads. Petr Stepanek mentions another example.

"One of the public tenders which went completely wrong was a greenhouse in a city-owned botanical garden called "Fata Morgana" and the damage to the city has been in tens of millions of crowns."

The cost of the giant glass structure located on a hillside above the residential district of Troja has surpassed the original estimates many times and now amounts to hundreds of millions of crowns.

"It's ten times higher than it was supposed to be and the forensic audit for this particular matter has not been finished yet. So at this moment it is not known whether it was a low original estimate or if people who were responsible overcharged almost ten times for it."

Pointing a finger at those responsible is only a first step. What other measures does Oziveni propose to prevent situations encouraging corruption?

"The solution is of two types. One is punishment of the people who caused this. It is pretty clear - bureaucrats can be fired on the spot and politicians, at least those who repeated their offence several, tens of times, such as City Councillor Kovarik who broke the law seventy-six times, should resign. And then there is an even more important measure - a preventative measure. The City Assembly has to adopt a code of conduct and has to have measures on how to check it and how to punish those who do not follow the code of conduct. New bureaucrats should be hired in an open process and should be requested to behave professionally from day one. And they should be fined and fired from day one if they do not do this."

Now back to the PwC report that has found improvement in the detection of economic crime in the country. Sirshar Qureshi from PricewaterhouseCoopers Czech Republic.

"If I compare it with our previous survey in 2001, which showed that twenty percent of Czech companies had suffered crime, this time we are reporting figures at twenty-seven percent - which may appear to be saying that there is an increase in the level of economic crime. But from our experience, that is not how we are interpreting these figures. Because of the increasing level of awareness of fraud, better control mechanisms and better detection mechanisms, more incidents are being picked up, whereas previously they may not have been known about. And in terms of a comparison with Western Europe, you find that the numbers are higher. In Western Europe the figure is at thirty-four percent, therefore it shows there is a higher incidence than in the Czech Republic, but I believe, again, interpreting these figures, we would say that the Czech Republic has some way to go in terms its awareness-building, in terms of its control mechanisms and detection mechanisms. So it's got better but there is some more to go in order to meet the level of Western Europe."

01-09-2003