Chrono

Czech Position suspends publication

Brian Kenety — Tue, 17 Jul 2012 08:31:55 +0000

Czech Position launched in December 2010 with the lofty goal of becoming the world’s daily English-language source for Czech political, business and cultural news, by offering a mix of breaking news reports, feature articles, analysis and investigative reporting. Alas, all good things must come to an end.

We were well on our way — thanks in no small part to being able to draw on the work of our parent publication, Česká pozice, which is staffed by more than a dozen veteran Czech reporters, editors and commentators. And that was what truly made this English-language publication unique on the market.

How it all began

Editor-in-chief István Léko left his stewardship of the weekly Euro after 12 years to found Česká pozice/Czech Position convinced of the demand for a news server that would expose and track corruption and incompetence in politics and business without bias. It was he, for example, who first exposed the dodgy dealings of the brokerage Key Investments, to which several Prague districts had entrusted nearly 1 billion crowns of taxpayers’ money.

Putting such complicated stories into context for the world at large (i.e., in English) were senior editor Brian Kenety, a former Interfax bureau chief in Prague and Inter Press Service EU correspondent; news editor Chris Johnstone, a former AFP reporter in Prague and AP-Dow Jones correspondent in Brussels; and reporter/editor Tom Jones, a co-founder of the English-language version of Gazeta.ru. All three had previously worked (though not at the same time) for the Czech Business Weekly (Johnstone as launch editor, Kenety as managing editor, and Jones as a reporter). The English staff also broke its share of hard new stories on the Czech market and often were the first to report in English on Czech stories of global interest.

The English staff also broke its share of hard new stories on the Czech market and often were the first to report in English on Czech stories of global interest — as evidenced by citations from venerable publications like Time magazine, The Economist, The Guardian, The Telegraph, The Huffington Post, and other international media, including news agencies like Bloomberg, Dow Jones and Reuters.

While keeping readers current on key events, we also covered the lighter stories — the kind everyone loves to share on Facebook (remember the “gay caveman” and caped crusader/guerilla marketer “SuperVáclav”?) — and published a cultural feature each weekday.

Writers Raymond Johnston and Michael Stein (founder of Literlab) — who were both instrumental in the Czech Position launch — continued to cover arts and leisure for us, and the publication benefited greatly from having a stable of other experienced freelancers on hand, such as Radio Prague veterans Sarah Borufka, Christian Falvey, Dominik Jůn and Ian Willoughby, along with Martina Čermáková, Hana Gomoláková, Jacy Meyer, Joann Plockova and Sam Beckwith.

Unfortunately, with the recession still ongoing, advertising revenue proved insufficient to sustain the English section. Perhaps when the global economy has bounced back, so too will Czech Position. In the meantime, Česká pozice is going strong, and will further expand using resources previously allocated for the English section.

Thanks to all our readers for your insightful comments over the past year and a half. We bid you Adieu.

Czech Position suspends publication

Brian Kenety — Tue, 17 Jul 2012 08:31:55 +0000

How it all began

Thanks to all our readers for your insightful comments over the past year and a half. We bid you Adieu.

Czechs bought three CASA aircraft for price of four, 2005 document shows

Martin Shabu — Mon, 16 Jul 2012 10:38:26 +0000

Vlasta Parkanová (TOP 09) was stripped of her parliamentary immunity last week so that she can be prosecuted for having signed off on a Kč 3.6 billion contract to buy CASA transport planes for the Czech Army when she was defense minister. At the heart of the matter is the price ultimately paid for the planes, which were unneeded and allegedly deliberately overpriced by at least Kč 658 million, according to an assessment by the firm American Appraisal.

Czech Position has obtained a document from November 2005 that lends support to allegations that the Ministry of Defense knowingly entered into a disadvantageous deal: an official offer from the Franco-German consortium EADS of four CASA C-295 transport planes for € 97.2 million (Kč 2.8 billion), not including VAT or servicing, addressed to the Ministry of Defense’s armament section.

Before the lower house of Parliament on Wednesday, Parkanová called into question the “quality” of the work of American Appraisal — as has her most vocal and powerful supporter, Finance Minister Miroslav Kalousek (TOP 09), himself a former deputy defense minister responsible for budget and acquisitions (1993–1998).

“Yes, there are CASA planes with a slightly different label in the civilian version, but what does that tell us about the price and valuation of the military version of the machines, which are armored, have passive and active protective features, and special navigational equipment, and among other things include equipment for the transport of the wounded. It does not say anything about it. This makes the claims of the police [of the CASA contract being overpriced] worthless, and further it is not known upon what their information is based,” Parkanová told fellow MPs in her defense.

Itemized costs were known to the Czechs

The 2005 offer from EADS includes a table that stipulated prices not only of the four Casa C-295 transport planes but also for other specific equipment. Among the items listed include: the cost of putting armor plating in cabins of the four planes and the cost of the Defensive Aid Sub-System (DASS), which included installing radar warning receivers and missile approach warning systems, among other features for the military versions.

The document is part of the file upon which the Czech anti-corruption and financial crime police unit (ÚOKFK) is basing its charges that Parkanová, who served as defense minister from 2007 to 2009, violated her fiduciary duties in signing off on the deal, on the day before she was replaced as minister by Martin Barták (Civic Democrats, ODS), who later came under investigation for having allegedly solicited a bribe from former US ambassador William J. Cabaniss, who went on to join the Tatra truck maker.

Presumably, American Appraisal also used the 2005 document in coming up with the amount of damages (Kč 658 million). ÚOKFK chief Tomáš Martinec said during an appearance on Sunday on the Czech public television show “Questions of Václav Moravec” that investigators had been working on the case for two years, and charges against Parkanová were based on a large body of evidence.

The 2005 price offer from EADS became the basis for a market study prepared for the Ministry of Defense in 2006, which Czech Position first reported on in October last year. The 2006 market study was prepared by the Defense Ministry’s own experts, who approached four global manufacturers of transport aircraft — Alenia Aeronautica (Italy), Antonov (Ukraine), EADS CASA (Spain) and Lockheed Martin (US) — about terms for the delivery of four comparable aircraft. During the negotiations, the Czechs ruled out the AN-74s from Ukraine planes (which weren’t designed according to Western standards or up to snuff as far as NATO regulations and compatibility) and the four-engine C-130s from the US (which were deemed too expensive).

In the end, in 2009, the Czech Republic bought three CASA C-295M aircraft. The intermediary, the Czech arms deal Omnipol, was paid Kč 3 billion (not including VAT) for its services. The Czech Army obtained the fourth aircraft in exchange for five Czech-made L-159 fighter planes. To the price of the contract must be added the framework service contract, which was concluded a year later (with Omnipol again acting as middleman) for Kč 982.3 million. Not counting the value of the L-159s, the deal cost the Czech Republic a total of Kč 4.6 billion.

Overcharged by 40 percent

In her remarks before the lower house last week, Parkanová also referred to the market study (of which she was no doubt also aware of during her time as defense minister). She insisted that the aircraft and installed equipment purchased in 2009 were fundamentally different from those outlined in the 2005 offer from EADS.

“The final configuration is based on the needs and requirements of the Czech Army, which in 2006 was not specified. On the basis of the specific requirements, the price of the aircraft then rose by about a quarter, which is not unusual for military technical purchases,” Parkanová told fellow MPs.

However, the price of the closed contract in 2009 for the three aircraft amounted to Kč 3 billion (not including VAT), and the quoted price in the 2005 letter from EADS (leaving aside the cost of the bartered L-159s and accounting for currency fluctuations) comes to just Kč 2.1 billion (minus VAT). Thus, between 2006 and 2009, the price increase was not “about a quarter” but more than 40 percent. Furthermore, according to Czech Position’s information, the price increase did not stem from any dramatic mark-up in the planes or equipment itself.

Did then-deputy defense minister Martin Barták and Jaroslav Kopřiva, the ministry official in charge of armament purchases (later dismissed by current Defense Minister Alexandr Vondra (ODS) over allegations of corruption) know of the initial 2005 offer? Ministry spokesman Jan Pejšek did not have an immediate answer when Czech Position’s posed this question last week, but has promised to findt out.

Why are services so costly?

The 2005 price quotation shows another interesting fact: the Czech Ministry of Defense armament section certainly knew that the service offer for the four CASA transport planes was € 9.2 million without VAT (Kč 266 million). Implementation of the framework service contract, negotiated with Omnipol by then Defense Minister Barták in 2010, however, cost three times as much — and was criticized by military experts. In June, the Czech police charged the former head of the armament section, Jiří Staňek, in connection with the CASA case.

Czechs bought three CASA aircraft for price of four, 2005 document shows

Martin Shabu — Mon, 16 Jul 2012 10:38:26 +0000

Itemized costs were known to the Czechs

Overcharged by 40 percent

Why are services so costly?

Speculators await massive Prague city property sell-off

Kateřina Menzelová — Fri, 13 Jul 2012 12:13:25 +0000

Prague councilors have approved the sale of nearly 3,855 city-owned dwellings — just a few hundred shy of the entire number of apartments sold last year in the Czech capital — for which the city hopes to fetch at least Kč 4 billion. There is talk, however, that speculators will manage to circumvent controls seeking to grant favorable terms only to current tenants.

Why is Prague looking to unload the property now? At the end of 2011, the city owned nearly 11,000 dwellings. Many were built or renovated using grants and government regulations had prevented them from changing ownership for a 20-year period. The majority of tenants living in these apartments have fixed-term contracts, normally for two years, after which the city has the chance to increase the rents.

It’s quite another situation for those renters with indefinite contracts, in flats that were financed without grants and it is these that are slated for privatization. In a report, councilor Ivan Kabický (Civic Democrats, ODS) said the reason was: “Due to unreasonable legal protections, as exhaustively set out in the Civil Code, it is not possible to terminate these leases. Prague is therefore providing assistance in the form of housing for people who do not need help."

Most of the apartments for sale were built in the 1980s or in the late 1890s. Roughly a third are located in the district of Hlubočepy, as well as in Černý Most, Stodůlky and Chodov. The city plans to privatize the apartments in four states, with preference given to existing tenants and housing cooperatives established by them. If the city were to sell them to individuals, however, it would take considerable time and increase administrative costs.

About 170 apartments intended for privatization are now vacant, and Prague is looking for tenants to fill them. At present seven apartments in Prague 5 are on offer. Applicants may apply by the end of July. Tenants will be selected in an open tender, with the only criterion the rent for the month. In the coming months, there will become tenants with indefinite contracts, and pay on a scale according to the location and condition of the dwelling.

White horses

In a given apartment house, an individual can apply for only one flat — but there is always the possibility of “white horses” (proxies) as speculators look to take advantage of the beneficial conditions offered to long-term tenants of municipal housing. A source familiar with the deliberations told Czech Position that the fact the tenders have not been widely promoted also plays into the hands of speculators; however, city spokesperson Tereza Králová said these were standard tenders, and published on the server www.reality.cz.

Regardless, the apartments are meant to sold at market price and enrich city coffers by some Kč 4 billion, or roughly Kč 1 million per flat, the proceeds of which will go into the general budget. “Some of this will be used to invest in city-owned property and to create a fund for suitable housing for the elderly, disabled and other applicants needing housing,” Králová said, adding that the particular form and manner had yet to be decided.

Prague experienced a privatization wave from 1995 to 2006, with the ownership of 236 houses and 4,825 apartments transferred, 93 percent of which were sold, for some Kč 1 billion. Although over the next three years nearly 4,000, it should not have a dramatic effect on the overall residential market. Ondřej Novotný, head of market research at Jones Lang LaSalle said. “It depends under what conditions they appear on the market and how they can be accessed. If above all it concerns sales to current tenants the influence will not be too noticeable, as has been the case in sales over a number of years,” he said.

Speculators await massive Prague city property sell-off

Kateřina Menzelová — Fri, 13 Jul 2012 12:13:25 +0000

White horses

More will follow after Vlasta Parkanová. Hopefully.

Zdeněk Ondráček — Thu, 12 Jul 2012 14:18:06 +0000

Vlasta Parkanová (TOP 09) resigned on Wednesday as deputy speaker of the House after MPs lifted her parliamentary immunity so she can be prosecuted over alleged negligence in signing a contract to buy CASA transport planes for the Czech Army — which were allegedly unneeded and deliberately overpriced by at least Kč 658 million. Former police investigator and Czech Position commentator Zdeněk Ondráček explains how her prosecution could ultimately lead to higher levels of responsibility for the nation’s politicians.

I have followed with great interest the political debate over the past month following the request from the Czech anti-corruption and financial crime police unit (ÚOKFK) to strip Parkanová of immunity from prosecution. It was clear to me from the outset that the case is not about the vote but rather the precedent and which politicians, past or present, could be next. The police needed to hook a relatively small fish to test their strength and the political climate.

After the arrest of opposition MP David Rath (Social Democrats, ČSSD), the former regional governor of Central Bohemia allegedly caught red-handed taking a Kč 7 million cash bribe related to plot to overcharge for the partly EU-funded reconstruction of a chateau in Buštěhrad, and his release for prosecution, came that of Parkanová. A well-planned political tit for tat, but more are yet to come. At least we can hope so.

Every Czech voter can name numerous cases of alleged corruption that merit police investigation and a public examination of the facts, even if it would prove impossible to put criminal responsibility on individual politicians. The politicians, of course, are well aware of this and are doing their best to politicize each case as a witch hunt.

Political arrogance

The most vocal advocate on Parkanová’s behalf has been Finance Minister Miroslav Kalousek, her party colleague. He has gone to remarkable lengths in this regard.

First, Kalousek managed through his ministry and then via the Czech Institute of State and Law to have it a matter of public record that the former defense minister had not been legally obliged to get an independent opinion on the value of the four CASA transport planes, which the ÚOKFK, based on an assessment by the private firm American Appraisal, were overpriced by at least Kč 658 million. Be that as it may, she did not carry out due diligence.

Next, the finance minister (himself a former deputy defense minister responsible for budget and acquisitions from 1993–1998) went further and directly telephoned an investigators in the CASA case who says Kalousek tried to intimidate him, saying he would be fired if he didn’t behave (a charge that the minister, who says he was in fact returning the call and offering additional information, flatly rejects).

Personally, I would be strongly inclined to take the investigator at his word — not because I am myself a former one but because I know how people in power tend to behave in such situations. Out of political arrogance Kalousek then called for the General Inspectorate of Law-enforcement Bodies to investigate the matter."Last week, I was accused and scandalized with the false claim that I threatened over the phone an investigator of the CASA case,” Kalousek said.”After taking into account all circumstances, I have come to the conclusion that is not enough just to dismiss the slander verbally.”

Kalousek’s statement “I firmly believe that there is an authentic and unedited recording of the interview in question” is outrageous. Does he really believe all calls in this country are recorded? Does he imagine that a court order is in place allowing for the automatic wiretapping and recording of all calls to and from that number? Of course not: He knows full well that only he and the investigator know what was discussed.

The coalition government of Prime Minister Petr Nečas (ODS) pledged that it would not tolerate corruption in any form. Why then was it such a problem to allow Parkanová to defend herself in court? Does it have no trust in the independence of the judicial system? In fact, the step can be considered a great leap to a true Western-style democracy. I believe it can also serve to boost the confidence of the police, prosecutors and courts. I hope it will result in greater accountability among politicians and state officials.

More will follow after Vlasta Parkanová. Hopefully.

Zdeněk Ondráček — Thu, 12 Jul 2012 14:18:06 +0000

Political arrogance

The most vocal advocate on Parkanová’s behalf has been Finance Minister Miroslav Kalousek, her party colleague. He has gone to remarkable lengths in this regard.

Ex-Czech MoD stripped of immunity to face prosecution over CASA

Brian Kenety — Thu, 12 Jul 2012 09:36:46 +0000

Vlasta Parkanová (TOP 09) resigned on Wednesday as deputy speaker of the House after MPs voted 117 to 45 (with 14 abstentions) to lift her parliamentary immunity so that she can be prosecuted over a contract to buy CASA transport planes for the Czech Army, which were allegedly unneeded and deliberately overpriced by at least Kč 658 million.

Parkanová, who served as defense minister from 2007 to 2009, will be tried for allegedly violating her fiduciary duties regarding the purchase of four CASA C-295M planes from Spanish aircraft maker EADS, a subsidiary of Airbus Military. She has become the first Czech politician to be subjected to criminal prosecution for something that occurred while serving in the cabinet.

Parkanová had signed off on the Kč 3.6 billion deal on the day before she was replaced as minister by Martin Barták (Civic Democrats, ODS) — who later came under investigation for having allegedly solicited a bribe from former US ambassador William J. Cabaniss after the latter joined the Tatra truck maker. As Czech Position reported in October 2011, a market study showed that the Czech Republic could have obtained four CASA transport planes from the EADS consortium for Kč 2.83 billion back in 2006.

“I dismiss any allegations of any criminal act,” said Parkanová. Although she has previously acknowledged that the Czech Army may not have gotten the best deal, the law did not oblige her to have an external expert opinion on the price drafted.

Finance Minister Miroslav Kalousek (TOP 09) — her fiercest and most outspoken advocate and himself a former deputy defense minister responsible for budget and acquisitions (1993–1998) — had argued it was absurd to look to prosecute only one minister when the entire Cabinet approved the CASA deal.

Furthermore, Kalousek said the Czech anti-corruption and financial crime police unit ÚOKFK’s appraisal of the CASA deal, based on the work of a private company, completely lacked credibility. It was prepared by the American Appraisal, which describes itself as a leading global provider of evaluating and consultancy services for commercial, financial, legal, taxation and court purposes.

Defending Parkanová during Wednesday’s debate, Kalousek said that although the firm had the word “American” in its name, it was in fact an obscure outfit and “headed by a purely Czech former member of the Communist-era StB secret service.” He called the appraisal “absolute rubbish.”

The cabinet of Mirek Topolánek (ODS) in April 2009 approved a proposal to trade five Czech L-159 fighters, which the army had been trying to unload for years, for a CASA transport plane, but to buy the other three well above market price. Whereas the original basic price per unit stood at Kč 638 million, suddenly it shot to nearly Kč 1.2 billion following the partial barter deal. Just how the total contract price was arrived has not been made public.

There have long been suspicions regarding the CASA deal. In September 2010 — a month before the European Court of Justice (ECJ) in Luxembourg began looking into allegations of corruption related to the purchase (which the European Commission later investigated for breaching public procurement rules, as it was done without a tender).

Ex-Czech MoD stripped of immunity to face prosecution over CASA

Brian Kenety — Thu, 12 Jul 2012 09:36:46 +0000